Bill Cara’s Blog for Sept 3, 2010 [See post-close report]

Good morning.

There is nothing to report at this time.

Top o' the morning to you and yer lasses Bill.

Private-sector companies added 67,000 jobs, following an upwardly revised 107,000 gain in July.

DJIA futes jump +120 points on jobs data.

So I left significant profits on the table.

That said, no telling where we close, so my 'regrets' only extend to the trading half at this point.

Congrats to those who held positions.

When it comes to trading, Regrets outnumber gains 10:1. Maybe more. That's the nature of the game.

30 min. into job report. EUR/USD retraced more than 50% of gain, faster then EUR/JPY or AUD/JPY. I would thought the other way around.

Positive non non-mfg numbers at 10 could take this gap up even higher. Higher new orders number suggests the numbers could be good.

http://fidweek.econoday.com/byshoweventfull.asp?fi...

might be an all-in day.

This feels like March 2009 all over again when the big boys did their magic behind the closed doors! Alternatively, end of November 08 comes to mind when after initial bull ecstasy, professional traders come back from holiday to trim the enthusiasm some.
I may need to follow 2nd_ave's advice and check the gains today.

jack- Nice conundrum to have. I would imagine you've had a great week. Then on Friday your wife surprises you with a new Lexus in the driveway.

As for me- opened TZA @ 31.34, closed @ 31.48- enough to surprise my wife with dinner tonight.

The clowns at CNBC are all hailing the great unemployment report. Truth be told, the U.S. economy shed 54,000 nonfarm jobs in August. The unemployment rate ticked higher to 9.6% in August from 9.5% in the previous month.

This is news to celebrate?

Is prostitution legal in the entire state of New Jersey or only in Englewood Cliffs?

Too funny, BH. Depends on the definition of 'prostitution,' as well as the definition of 'legal.' Liberal interpretations of both would probably lead to a mind-blowing conclusion...

Is this the point in the market were the cool aid drinkers and the great unwashed converge in the sick but popular orgy of indemnification and only those on their toes will know were it goes?

edit:

sorry for the convoluted nature and such...My question is really how long do you think this rally will climb the wall? How important will be the trading range of late?

ISM non-mfg came in below consensus at 51.5

http://fidweek.econoday.com/byshoweventfull.asp?fi...

market ain't happy, but apparently shrugging it off

I would expect to see the market test buyers who opened this morning.

So far Bears hiding in their dens. Bulls rushing towards the goal line!

The Service ISM evidently left a bad taste in the bulls’ mouths so far.

Overall index declined from 54.3 to 51.5 net -2.8
New Orders declined from 56.7 to 52.4 net -4.3
Employment declined from 50.9 to 48.2 net -2.7 (WE HAVE CONTRACTION)
Backlog of orders dec from 52.0 to 50.5 net -1.5

So this report is saying very little growth with a 51.5 overall index, with new orders flat, and backlog down; therefore the way to make a quarterly number is to fire employees or reduce their pay. That would explain why all my friends are flying to India and Uruguay (PriceWaterhouseCoopers just offmountained a lot of their backoffice to Uruguay).
FD:long SDS and S&P puts

what is this saying about the health of the "recovery"? I have not looked at the other metals precious or otherwise...just saying...maybe I am to short-term focused.

Yet monthly jobs numbers are considered good?

Its been 4 months since the last interview at our house (total of 4 actual interviews for at least 500, maybe 1000 job apps for jobs she was qualified or overqualified for in the 2 yrs since she has been looking), and essentially, there is no hope left whatsoever.

When they eventually stop extending the unemployment (it almost covers heath insurance only), we will dump the house for whatever we can get and try to retire somewhere the cost of living is lower.

That's GROWTH for you! You can surely expect our spending to increase in future, LOL.

Whom to believe and is initial price action appropriate?

http://tinyurl.com/2f67j23

Implications of a $.05 move in silver on the broader economic conditions? Other than the fact that my improved silver position might prompt me to have an extra celebratory brew this holiday weekend, I am not so sure.

He covers growing risk in currency markets due to the arrival of algos and of "pajama-hadin" and implied risk to central banks, as well as global agriculture as impacted by climate, Russia's extension of grain export ban, Mozambique's food riots, etc.

http://www.bellwebcasting.ca/audience/auditorium/i...

you may have to get there via:

http://www.bellwebcasting.ca/audience/auditorium/i...

scroll down, and click on his face … it’s about 30 mins of audio.

I don't understand why these charts are bearish. Couldn't it be a consolidation before a breakout?

I just nibbled on APEI. Why?

They sell higher education only to the military (well, a few “first responders” as well), and their paymaster is the Pentagon - they shouldn’t really be hit by the furor from the student loan scams, because the troops don’t come away with debt. BTW, the Pentagon is a pretty reliable "account receivable".

I’ve spoken with soldiers who’ve taken their online courses and liked them.

For those of us who take into consideration such quaint matters, APEI’s revenues and profits have grown strongly in recent years: net income grew from US$2M to US$24M in the last 4 years.

Chart shows they have bottomed after crashing from the recent student loan scandal.

disclosure: I own a chihuahua position.

Exeter(XRA) is issuing a resource update this month, September. I like to call it a mini Freeport McMoran. It's current estimates are 6.4 billion lbs. of copper and 24.3 million oz. of gold. FCX as of 12/31/2009 had recoverable and proven reserves worldwide of 104.2 billion lbs. of copper and 37.2 million oz. of gold.
The new resource estimate should considerably increased the recoverable and proven reserves for XRA and additional drilling is scheduled to begin in October with the end of the Chile winter to further increase reserves. I have heard estimates exceeding 30 million ounces of gold which doesn't put it too far away from FCX total.
The stock has started to move recently from it's lows in the mid 5s and is now $6.80 range.
This seems an ideal speculation for risk takers. XRA will never produce the mine but will sell to the highest bidder starting next year due to the costs involved. Only well-heeled bidders will make an offer. However, there are a lot of big boys out there including countries like China that will pay up for the copper. Do your own due diligence.

Accumulation on 3 time frames [positive divergence]. Looks like they are planning a move up soon for EDZ

1 min http://www.screencast.com/t/YmFmNzRj

5 min http://www.screencast.com/t/NzYzYWUxOT

15 min http://www.screencast.com/t/NGM4YzAxZ

Accumumlation for UUP

1 min http://www.screencast.com/t/MTc0MDZjY2

5 min http://www.screencast.com/t/N2Y3ZmYyN2E

Bev - Thank you for the chart. Can you tell me what is or how to draw that "orange" line on your chart?

Hi Bev,
I haven't left yet and I find your charts most interesting. Don't know how to duplicate them on Worden as of yet. Info would be helpful.

today ate up some of my profits past two weeks. and i have only made 2 trades. i cannot imagine how frustrating it could be for active traders these days.

I think i am going to fill my time this fall with taking up scuba as a hobby. get certified and ready for some nice dives in 2010. maybe i will find gold in sunken ships.

good advice as always

Even though I consider myself knowledgeable about markets I never figured out how overnight gaps are formed. I suspect gaps are based on the influx of afterhour buy/sell orders and that the market makers adjust the price accordingly? Ie, if mostly buy orders stack up on open, the market gaps up on open.

The part I don't understand is if market makers arbitrarily jack up the price or is this made electronically based on some formula? If there are no clear rules, there could be a potential for market manipulation.

Don'y get me wrong, I actually liked the gaps in the last couple of days as I was (and partally am) long, but still found them unusual.

Anyone have any insights?

Don't forget - bonds, equities, and commodities are trading around the globe all day and night. Many large cap companies are trading on multiple exchanges. The gaps reflect changes in valuation implied from market changes that are occuring outside of market hours. Market makers can not "arbitrarily jack up" prices without having to take on position risk of their own.

duplicate entry

Thanks Vadym. The reason I asked, the last several days were peculiar as there were huge gaps and the gaps covered most of the action. I just happened to be on the right side of the trade but I feel sorry for the bears discovering their stops triggered at valuation very far from their stops (or not triggered at all depending on stop type). I was in that situation not long ago when my bets were wrong and I lost far more than the 2-5% on the trade I would normally allow. Is there a way to deal with that other than daytrading? Are futures a solution?

Sorry lost the address: Today's dispatch
I just think there is too much government in the market.

Today the government released the latest unemployment data. Bloomberg, always ready to roll up the sleeves to help its friends in government (get reelected), is running a headline that “Companies in U.S. Added 67,000 Jobs in August.”

While I haven’t had time to go through the minutiae of the report, I find myself scratching my head at Mr. Market’s rather positive reaction to the report, given the bullet points:

Manufacturing payrolls declined by 27,000.

Employment at service-providers fell by 54,000.

Retailers cut 4,900 workers.

State and local governments gave walking papers to 10,000 people.

The federal government cut 111,000 jobs (mostly temporary census workers).

The number of “underemployed” – people who want full-time work, but have given up and are now working part-time, increased again, from 16.5% to 16.7%.

Remember the axiom: market tries to move with as few passengers onboard as possible. Gaps is one of the ways it achieves that, by gapping over natural levels of the support or resistance and trapping those caught on the wrong side of trade. Trap in this case is not simply in moving against certain part of market populace, but in the way it's done - stepping way beyond their normal risk tolerance so that they are not willing to take a loss anymore and stand there, holding their loss and hoping it dissipates... or worse yet, adding to their short positions.

Now, I want to offer you this mental experiment. Imagine that you are that beast, the market. After gapping up over bears' stops, what would you, Your Painfulness, do to cause them even more pain and maximize their loss? As you think about it, it becomes quite obvious that the best way to achieve your eternal purpose (max pain) is to continue slow grind up, or just stall and do nothing... only to gap even higher tomorrow. Sounds familiar? It should - that's exactly what market did for months in 2009, remember all those "gap and stall" days?

That's how you analyze the action and determine the most likely scenario, a.k.a. path of the least resistance, a.k.a. max pain - and when you determine it, you take the right side, a.k.a smart money position, maybe not becoming torturer but sure not being tortured anymore.

Again, there is nothing new or unusual in it. Happened zillion times before, will happen zillions times again.

How to protect yourself against it? Well, there is no way to avoid ever being on the wrong side. Thus risk control is paramount. Stops work for day traders; in case of swing traders, stop may not always be a solution as gaps jump over them. Thus, position sizing becomes your main tool for risk control - evaluate the volatility, see the history of the gaps, determine worst case scenario and incorporate it in your position size, so that loss would not exceed pre-planned. And above all - stay nimble. That overconfidence expressed in "they are not fooling me, I know better, I am holding my position whatever they try to do to shake me out" - that's famous last words. Stay sensitive to the changes, observe and try to determine which side is being wrong and avoid being caught with it. Don't forget that market direction is the only indicator of who is right as long as it's the price action we are talking about - too many make this mistake of confusing price action and general economy. Market patterns are the same, be it Great Depression, Tech Boom or today;s market. Pick your time frame and learn those patterns.

Futures are not the answer - they gap just as well. You may hedge via options but that's not my domain, can't help there.

thought this might interest you, per spreads... http://seekingalpha.com/article/223492-preparing-f...

Let me just make a couple of observations on futures.

Vad is right, futures do gap, but they do it less frequently, and then only (from my observation) from news events. Much of what is perceived as an "equity market open gap" is actually the result of slow, continuous overnight movement in the futures market. For instance:

Let's say the market had a big move up, and after market close the E-mini S&P 500 futures contract drifts down all during the next day in asia and london. By market open in NY, the e-minis are down -15 points. The e-minis tend to cause related stocks to open lower than their closes of the previous day, and if the e-minis drop enough, you see a big "gap down open."

From the point of view of the futures trader, there were no gaps, just continuous action, and a stop at the appropriate level would give you the desired behavior - bailing out at exactly the price you placed your stop - maybe at 2am EST when the E-mini contract dropped below your stop for the first time, for instance. Contrast this with the equity trader who has to deal with the (to him) instantaneous move of -15 points from yesterday's close to today's market open.

Of course, news causes gaps in futures too. One moment the e-mini contract is flat and the next (usually after a jobs report, ISM manufacturing, etc) its now trading -15 with very little time between the two points. If you have a stop, you probably get out "somewhere" in that area, but you might well get filled at -15. Sometimes gold has this happen when some big seller just decides the price needs to be lower, and gold drops ten bucks in two minutes. Those moves do not seem to be instantaneous, however.

Most often I observe the gap moves in futures during US news events - starting at 830 with the employment or GDP numbers, and during the morning by housing, retailing, or commodity related news events.

There's a reason for this. I recently went on a job interview at a company who supplies super fast computing hardware/software systems to wall street. They co-locate their devices as close as possible to the exchange computing servers, and receive realtime data updates for news events. Prior to a big report coming out, these boxes have an if-then statement that a trader can set up. "if jobs report exceeds expectations by more than 20k, buy up to 50k e-mini futures up to a price level of 1085." And the superfast box executes this trade much faster than any human ever could, and since it is sitting (electronically) very close to the exchange, its buy orders get there before anyone else's. A few milliseconds advantage is all you need in this race, where coming in second means you might as well not bother. (My guess is, the actual buy algorithms may be more refined than this - including automatic unloading of some amount of the just-bought futures once the prices move to a point where the hapless public has their stops, but this is the general concept)

To the outside observer, the move is instantaneous - one second the market is flat, and in the next second, the price quote is 15 points down, a very real gap.

In those cases, Vad is right, your stop on your futures contract is no help at all, and as such its wise to use his "position sizing" so you don't freak out when things move against you. (That's why I trade the QG mini-natgas contract, and not the NG - in the current market environment, one QG is just about right for my risk profile, while the losses on one NG just freaked me out when the market went against me).

Continuously traded futures generally behave better than equities, which are only traded 10 hours per day, except when big reports are due, when really anything can happen. Anytime a computer can be programmed to execute an buy or sell program based on one or two numbers, you should be wary of big moves being possible.

Yesterday's job report included 115,000 jobs created by the birth/death model (Happy Assumption Guessing Method).

Don't drink the Kool-Aid.

Blackwater Won Contracts Through a Web of Companies
By JAMES RISEN and MARK MAZZETTI
Published: September 3, 2010
WASHINGTON — Blackwater Worldwide created a web of more than 30 shell companies or subsidiaries in part to obtain millions of dollars in American government contracts after the security company came under intense criticism for reckless conduct in Iraq, according to Congressional investigators and former Blackwater officials.
While it is not clear how many of those businesses won contracts, at least three had deals with the United States military or the Central Intelligence Agency, according to former government and company officials. Since 2001, the intelligence agency has awarded up to $600 million in classified contracts to Blackwater and its affiliates, according to a United States government official.
The Senate Armed Services Committee this week released a chart that identified 31 affiliates of Blackwater, now known as Xe Services. The network was disclosed as part of a committee’s investigation into government contracting. The investigation revealed the lengths to which Blackwater went to continue winning contracts after Blackwater guards killed 17 Iraqi civilians in Baghdad in September 2007. That episode and other reports of abuses led to criminal and Congressional investigations, and cost the company its lucrative security contract with the State Department in Iraq.
The network of companies — which includes several businesses located in offshore tax havens — allowed Blackwater to obscure its involvement in government work from contracting officials or the public, and to assure a low profile for any of its classified activities, said former Blackwater officials, who, like the government officials, spoke only on condition of anonymity.
Senator Carl Levin, the Michigan Democrat who is chairman of the Armed Services Committee, said in a statement that it was worth “looking into why Blackwater would need to create the dozens of other names” and said he had requested that the Justice Department investigate whether Blackwater officers misled the government when using subsidiaries to solicit contracts.
The C.I.A.’s continuing relationship with the company, which recently was awarded a $100 million contract to provide security at agency bases in Afghanistan, has drawn harsh criticism from some members of Congress, who argue that the company’s tarnished record should preclude it from such work. At least two of the Blackwater-affiliated companies, XPG and Greystone, obtained secret contracts from the agency, according to interviews with a half dozen former Blackwater officials.
A C.I.A. spokesman, Paul Gimigliano, said that Xe’s current duties for the agency were to provide security for agency operatives. Contractors “do the tasks we ask them to do in strict accord with the law; they are supervised by C.I.A. staff officers; and they are held to the highest standards of conduct” he said. “As for Xe specifically, they help provide security in tough environments, an assignment at which their people have shown both skill and courage.”
Congress began to investigate the affiliated companies last year, after the shooting deaths of two Afghans by Blackwater security personnel working for a subsidiary named Paravant, which had obtained Pentagon contracts in Afghanistan. In a Senate hearing earlier this year, Army officials said that when they awarded the contract to Paravant for training of the Afghan Army, they had no idea that the business was part of Blackwater.
While Congressional investigators have identified other Blackwater-linked businesses, it was not the focus of their inquiry to determine how much money from government contracts flowed through the web of corporations, especially money earmarked for clandestine programs. The former company officials say that Greystone did extensive work for the intelligence community, though they did not describe the nature of the activities. The firm was incorporated in Barbados for tax purposes, but had executives who worked at Blackwater’s headquarters in North Carolina.
The former company officials say that Erik Prince, the business’s founder, was eager to find ways to continue to handle secret work after the 2007 shootings in Baghdad’s Nisour Square and set up a special office to handle classified work at his farm in Middleburg, Va.
Enrique Prado, a former top C.I.A. official who joined the contractor, worked closely with Mr. Prince to develop Blackwater’s clandestine abilities, according to several former officials. In an internal e-mail obtained by The New York Times, Mr. Prado claimed that he had created a Blackwater spy network that could be hired by the American government.
“We have a rapidly growing, worldwide network of folks that can do everything from surveillance to ground truth to disruption operations,” Mr. Prado wrote in the October 2007 message, in which he asked another Blackwater official whether the Drug Enforcement Administration might be interested in using the spy network. “These are all foreign nationals,” he added, “so deniability is built in and should be a big plus.”
It is not clear whether Mr. Prado’s secret spy service ever conducted any operations for the government. From 2004 to 2006, both Mr. Prado and Mr. Prince were involved in a C.I.A. program to hunt senior leaders of Al Qaeda that had been outsourced to Blackwater, though current and former American officials said that the assassination program did not carry out any operations. Company employees also loaded bombs and missiles onto Predator drones in Pakistan, work that was terminated last year by the C.I.A.
Both Mr. Prince and Mr. Prado declined to be interviewed for this article.
The company is facing a string of legal problems, including the indictment in April of five former Blackwater officials on weapons and obstruction charges, and civil suits stemming from the 2007 shootings in Iraq.
The business is up for sale by Mr. Prince, who colleagues say is embittered by the public criticism and scrutiny that Blackwater has faced. He has not been implicated in the criminal charges against his former subordinates, but he has recently moved his family to Abu Dhabi, where he hopes to focus on obtaining contracts from governments in Africa and the Middle East, according to colleagues and former company officials.
After awarding Blackwater the new security contract in June, the C.I.A. director, Leon E. Panetta, publicly defended the decision, saying Blackwater had “cleaned up its act.”
But Rep. Jan Schakowsky, an Illinois Democrat and a member of the House Intelligence Committee, said she could not understand why the intelligence community had been unwilling to cut ties to Blackwater. “I am continually and increasingly mystified by this relationship,” she said. “To engage with a company that is such a chronic, repeat offender, it’s reckless.”
It is unclear how much of Blackwater’s relationship with the C.I.A. will become public during the criminal proceedings in North Carolina because the Obama administration won a court order limiting the use of classified information. Among other things, company executives are accused of obtaining large numbers of AK-47s and M-4 automatic weapons, but arranging to make it appear as if they had been bought by the sheriff’s department in Camden County, N.C. Such purchases were legal only if made by law enforcement agencies.
But defense lawyers say they hope to argue that Blackwater had a classified contract with the C.I.A. and wanted at least some of the guns for weapons training for agency officers.

Thanks Dave. It took me a while to learn how to trade options well. However, there are many things stacked against option buyer. I may as well learn to trade futures. Any good resources that you are aware of?

I didn't use any resources to learn futures other than descriptions of the futures contracts. They are pretty much like trading USO, UNG, GLD, or SPY, except they expire at the end of the month, or the quarter, at which point they are settled in cash. The most important thing to realize is the leverage that futures give you. That's why I keep my trades quite small, since I don't like using leverage.

For instance, a GC (gold 100 oz) contract lets you control $125,000 of gold by putting up a margin of maybe $6,000. Now that's some pretty hairy leverage - terrifying to me actually. If I want to buy that much gold, I think I'd go buy little gold bars instead. :)

At thinkorswim (a division of TD Ameritrade) it costs $3.50 per contract to buy or sell, and their futures trading UI is really nice.

The futures market is a shark pit, because the big guys seem to have the power to run the market up, and down, gunning stops in both directions every chance they get. In a side-tracking market, they end up stopping out both bulls and bears. All Vad has said about the market trying to shake out everyone is there with a little extra venom in futures, it seems. If you look at the intraday chart for natgas over the past 5 trading days, you'll see what I mean.

You can download the TOS app (it's a java app!) and practice trading futures with fake money. That might be the best way to learn. And check out natgas. /NG.

I seem to do best when I focus on swing trades, use wide stops, and keep my position size small.

Dave,

very good additions about futures, thank you. You are right about "extra venom" - e-minis in particular is a very effective stop-gunning machine. There is practically no way to place and trail stops with them as you would with stocks - you'll be rinsed 9 times out of 10.

Blackwater is America's nightmare. It is a secret organization. It is a private paramilitary organization. It is a private espionage organization. And most importantly and notoriously it is an alleged criminal organization. Its only concern appears to be increasing Blackwater's profits and power, and assuring Blackwater's survival regardless of the cost to America.

It has no loyalty to America. Yet America gives it untold amounts of money on which it probably avoids taxes via its tax haven locations. America probably gives it state secrets mostly through its connections with the CIA. Nobody in Congress appears interested in discovering what American secrets it possesses and how such information might be used against America. It would be a good idea to discover if it uses its possession of such information to sell its services to foreign governments and non-governmental entities whose interests are opposed to the interests of America?

It and its principals appear mysteriously to have been held harmless from the consequences of the worst of its alleged criminal acts.

If the Armed Services Committee wants to conduct a serious investigation of the Blackwater affair it needs to investigate a lot more than the use of Corporate aliases to allegedly deceive the US government officials or agencies who award it contracts, or perhaps to deceive the American public.

Bill,
The new European financial supervision structure is a welcome addition and I expect a positive effect on the Euro. It was the second to last sentence that gave me pause

"Although the new mechanism will take away some powers from the national regulators, member states will still have the upper hand as they will be able to overturn the European authorities’ decisions if they impinge on national fiscal competences."

Had this structure been in effect prior to the problems with Greece and their austerity program, as the situation degraded, I wonder if Greece would have exercised their "upper hand" and not swallowed the pill, which would "impinge on national fiscal competences".
J

Ah, the old Maltese Falcon bait and switch. Is it gold or is it lead? Will it lead to growth or is it dead. New Harpies will now splay the bones of the outliers of the Euro and pronounce them safe and solid. What hubris. It is all FASB let's extend and pretend but we will now use olive oil as the lubricant.

The outliers are bankrupt. The Euro has been toasted on one side. When it has been carbonized and it will, it will take an anthropologist to determine whether or when it ever lived!

To again state the obvious, How Can There Be Fiscal And Economic Union without POLITICAL UNION?

Why this tripe is even a subject for debate signifies that we all must be bored as hell. As far as I know, plus 2's still equal 4...

The currencies, Cable and Euro, have not followed SPX as expected. However my long call on SPX

(/ES futures) was spot on. Not sure if it has more to run.

My call on today's Jobs Report as being "not as bad as expected" and a 1.5% rally today, was pretty good.

It's time for a weekend. From my point of view, it is quite obvious that people are just getting more and more whacked out, completely losing their senses.

It is very interesting to observe this mass social psychosis, as an observer with "skin in the game".

Astro was implying a SPX run to 1105, and a blog reader emailed in this chart of the Russell.

The overthrow looks perfect, the Astro is completed, but currencies seems to still have legs.

Tim Knight closed the last of his short positions yesterday....the perfect wave 2, tiring out bears by time and price, with a final push up to make even the most strident bear capitulate. PS holding QID from 17.8, but now that my ES futures long "hedge" is gone, The QID could stress me out if market continues higher next week.
This is odd.

But here is the scary part for bears...EWI released a new monthly Financial forecast. Of course they are predicting imminent doom, and we all know how the MM's HBB games EWI, ramping against their calls to take money from the bears.

Think of it, how many retail, buy and hold type, long only type, are still playing this market after being whipsawed around for a whole year. Almost none. The only source of fresh money for HBB is to game the bears, who are committed as "smart observers" who realize the horrific fundamentals that this country and the whole world face.

ALOHA!!

Dave ... so true! I mean the EMERGENCY BANKING ACT of 1933 was suppose to end bank crisis forever yet how many crisis have blossomed since then and here we sit running up the count of bank failures since 2007 to 350!

Does this not seem familiar today?
The Emergency Banking Act was introduced on March 9, 1933, to a joint session of Congress and was passed the same evening amid an atmosphere of chaos and uncertainty as over 100 new Democratic members of Congress swept into power determined to take radical steps to address banking failures and other economic malaise. The sense of urgency was such that the act was passed with only a single copy available on the floor and most legislators voted on it without reading it.

Go here and read the powers that were conveyed to FDR, the US FED and the Treasury Sec by this ACT that no representatives were allowed to read since only one copy existed ...
LINK: http://en.wikipedia.org/wiki/Emergency_Banking_Act

So all that and we are still bankrupt, still making new regulations and creating new bureaucracies some 77 years later. Why should I be confident of anything the US FED or the ECB does or says with such a lousy track record?

If the EU needs yet more regulators to insure financial stability then I have to ask what good is the ECB, a central bank? Aren't those central banks suppose to be the watchdogs of the various global financial systems? Seems as if the new EU financial bureaucracy is another step towards a ONE WORLD CURRENCY with a ONE WORLD CENTRAL BANK(BIS). Are we really that stupid and gullible? Since when has any government or any bank been deserving of our CONFIDENCE(aka C WORD)... our TRUST? Come on ... isn't there a law against FRAUD in the EU? Well then start prosecuting ...

Clearly we can all breathe a sigh of relief knowing our financial system in America is now safe thanks to the Dodd-Frank Bill passed in June. It started out with 1300 pages and at passage was 2300 pages long. It requires 243 new federal rules which in turn requires hundreds of more pages of regulations once they reach State and Local levels and the end-users like you and me and small businesses all over America. How many of our Congressional members have read the entire 2300 pages? Then how many will read the hundreds of pages each new rule will generate for their constituents? I guess I should ask first ... How many of our Congressional members even care? Probably the answer to all those questions is "NO" and "less than five"!

Dave I think your metaphor clearly spells out to me who the "thief" is and to me it is the US FED. All they ever do is buy time. They have been buying time since 1913 while we Americans and our Treasury sink further into debt.

Okay ... I have been publishing info on the US TREASURY Statements here for over two years now and of course on Thursday, Sept 2nd, the US Treasury issued more debt to the tune of some $234BIL for the week. Every time I read those statements and read the notes in small fonts it refers me to the same fact. That fact is that the US Treasury has an account at the US Federal Reserve Bank. It is no different than you and I and our accounts at private banks, like Bank America or Wells Fargo. I keep asking myself ... "Why is it that the most powerful Nation in the entire World, the one that was the victor in two World Wars, needs to have an account at a private bank? Why must the most powerful Nation on Earth pay interest to a private bank? Why must we taxpayers who create the wealth be forced to defer that wealth to a group of private bankers who have never been elected by any one?" I mean did Ben Bernanke ever fight in the Vietnam War? Heck, none of our Presidents have. We elect people into power who will effect the lives of our children for decades to come and who have done none of the "heavy lifting" that real wealth creation requires. All that these bureaucrats have ever done their entire lives is shuffle paper(make laws) and shuffle OPM, just like bankers.

Once again I will say that, "you can never make corrupt banks and markets safe until you remove their life blood of corrupt money". Basing new laws and regulations on a fiat monetary system will never yield safe or truly free markets. Ever since I have been alive banks and markets have been in a constant state of flux, forever morphing into more and more fraudulent acts before our very eyes.

What are the chances that if our own elected representatives do not read all of the 2300 pages of the Dodd-Frank Bill or any of the other Bills that are passed daily in Congress that the average US citizen does? Who here has even read the entire US Constitution with all the Amendments?

On that subject I submit this video entitled THREE FELONIES A DAY ...
LINK: http://www.youtube.com/watch?v=JwsLAqjqnxo

I can only add to what Mr.Silverglate presents my experience as an employee at the IRS. Every year tax law changes and every day tax law is litigated. There was a huge volume of phone calls that I fielded every day back in 1983 from the likes of Shell Oil tax attorneys to Joe Blow Taxpayer who wanted me to "rule" on vague tax law and IRS regulations and court rulings. So many taxpayers are confused with tax law and how it applies to their "unique" tax liability situations. After a day and a half of working at the IRS fielding such questions, one after another for eight hours a day I was ready to vote for a FLAT TAX! Yes, get rid of my job PLEASE! How many felonies per tax return does the average taxpayer make? SHOW ME THE MAN AND I WILL SHOW YOU A TAX LAW VIOLATION ...

From THREE FELONIES A DAY ...
What makes these other "crimes" so insidious is that they cannot be instituted without an underlying act, which means they cannot stand alone. If I mail a letter with a fraudulent tax return, then not only am I guilty of "tax evasion," but I also can be charged with "mail fraud" for the simple act of mailing a letter. If I put some of my alleged ill-gotten gains in a bank, or purchase any goods with that money, I have committed "money laundering," for which the penalty is a maximum of 20 years in prison.

IS THE EU THE NEW SOVIET UNION?
LINK: http://www.youtube.com/watch?v=bM2Ql3wOGcU&feature...
The above link was recorded in 2006 ...

I have already commented that UNIONS do not work. Trade unions promote ZERO competition and ZERO Freedom of the individual, they are labor monopolies. Government unions are no different than trade unions. All UNIONS are only as strong as their weakest link. In the EU the first weak link was Greece. The "slippery slope" is alive and well ... even in America!

The EU expansion ...
LINK: http://upload.wikimedia.org/wikipedia/commons/7/75...

The basis of all these UNIONS even the Union of the United States is corrupt money. When you allow corrupt money then you allow complete and total corruption right down to the rule of law, right down to your every day activities.

Ross,

Just to add to the mix:

"To again state the obvious, How Can There Be Fiscal And Economic Union without POLITICAL UNION?"

I sincerely believe it is the "political union" of our two parties which allowed and condoned the features which led to our fiscal and economic predicament in the US... and then to the world at large.

The problem is to be able to develop government which protects its constituents and stays out of the way of honest and truly free enterprise.

A noble goal, but is it possible for more than very short periods?

P.S. I've recently been watching old Bogart movies from Netflix. The latest was "Treasure of the Sierra Madre". I have "The Maltese Falcon" on tape. Whatever happened to real writers? So few movies today are more than a series of special effects strung on a sound track. Pretty faces attract a crowd and dollars measured at the box office set the standard.

Dave,

Funny and cause to pause.

This one has a simpler lesson — timing and wisdom perhaps.

-------

Three women go down to Mexico one night to celebrate college graduation. They get drunk and wake up in jail, only to find that they are to be executed in the morning - though none of them can remember what they did the night before..

The first one, a redhead, is strapped in the electric chair and is asked if she has any last words. She says, 'I just graduated from Trinity Bible College and believe in the almighty power of God to intervene on the behalf of the innocent.' They throw the switch and nothing happens. They all immediately fall to the floor on their knees, beg for forgiveness, and release her.

The second one, a brunette, is strapped in and gives her last words. 'I just graduated from the Harvard School of Law and I believe in the power of Justice to intervene on the part of the innocent. They throw the switch and again, nothing happens. Again they all immediately fall to their knees, beg for forgiveness and release her..

The last one (you know it), a blond, is strapped in and says, 'Well I'm from the University of Texas and just graduated with a degree in Electrical Engineering, and I'll tell ya right now, ya'll ain't gonna electrocute nobody if you don't plug this thing in.

Grym - "ya'll ain't gonna electrocute nobody if you don't plug this thing in...."

Having been an engineer for much of my life, I can definitely attest to the fact that engineers seem to have this drive to tell the truth even if it kills them... :)

NYTimes has a long article on Murdoch's tabloid snooping for YEARS on royals, celebrities and tycoons. Scotland Yard kept the case confined to just a few instances

http://community.nytimes.com/comments/www.nytimes....

There were lots of pious comments about how evil Murdoch is, and how his offending editor was later made head of communications for the Conservative party. My comment goes in a different direction:

"Where was GCHQ (UK's NSA) in protecting the communications of the Royals? BTW, how STUPID are they to leave voicemails? -- any 4 digit PIN can be hacked by a cyber-BABY!

Upper-class twits, celebrities, and tycoons need to know that cellphones can be remotely turned on to record audio. Carriers have the codes to enter this "control channel" and surely phone company personnel can be induced to pass them on to their private-eye-friends who serve the press, business rivals, estranged spouses or foreign governments.

Blackberries can be protected against this maneuver by removing the battery. BUT you can't REMOVE the battery from a trendy (but always-vulnerable) iphone !

Another lesson: don't count on the authorities to intervene even when they KNOW massive spying is going on!

Why choose, we can have both:

http://gonzalolira.blogspot.com/2010/08/how-hyperi...

Edit:

I do not want to imply a short-term dynamic in the above rendering; Schaeffers had this to say:

Sector
Bonds
Bullish

Outlook: Bonds have soared amid heavy inflows in 2010. As a result, the iShares Barclays 20+ Year Treasury Bond Fund (TLT) has rallied more than 15% on a year-to-date basis. Currently, the exchange-traded fund (ETF) is in the midst of a pullback from August's peak just above the $109 level. What's more, Friday's low nearly filled TLT's Aug. 14 gap. This low also corresponds with support from the ETF's 50-day moving average, a 61.8% Fibonacci retracement of the TLT's late-July low and August peak, and former resistance in the $102 region. We expect this confluence of support levels to provide a springboard for TLT. On the sentiment front, there has been a wave of speculation in the financial media regarding a "bubble" in the bond market, including a recent MarketWatch piece titled "What to buy instead of bond funds." While such warnings may eventually prove true, we believe that the immediacy of these concerns is overblown and that they will take longer-than-expected to play out. That said, traders should hedge their bullish positions on the TLT, as bonds, and the market as a whole, have been quite volatile over the short term.

On another point will Greenspan get the financial recognition he deserves?

http://gonzalolira.blogspot.com/

Thats the sub-title of a book by Andrew J. Bacevich, a credentialed conservative. WASHINGTON RULES is the book, reviewed in NYT.

www.nytimes.com/2010/09/05/books/review/Bass-t.htm...

Excerpt........

"Bacevich has two main targets in his sights. The first are the commissars of the national security establishment, who perpetuate these “Washington rules” of global dominance. By Washington, he means not just the federal government, but also a host of satraps who gain power, cash or prestige from this perpetual state of emergency: defense contractors, corporations, big banks, interest groups, think tanks, universities, television networks and The New York Times. He complains that an unthinking Washington consensus on global belligerence is just as strong among mainstream Democrats as among mainstream Republicans. Those who step outside this monolithic view, like Dennis Kucinich or Ron Paul, are quickly dismissed as crackpots, Bacevich says. This leaves no serious checks or balances against the overweening national security state.

Bacevich’s second target is the sleepwalking American public. He says that they notice foreign policy only in the depths of a disaster that, like Vietnam or Iraq, is too colossal to ignore. As he puts it, “The citizens of the United States have essentially forfeited any capacity to ask first-order questions about the fundamentals of national security policy.” "

Five natty charts for your review tonight.

1. The first chart is the daily Oct 2010 contract. I drew in a couple of resistance lines with minor resistance at $4.04 and major resistance starting around $4.26. Hmm, I just noticed that I didn’t draw any support lines.
2. The second chart is a three part chart with the Weekly Continuous Contract on top, the spread between prompt +1 less prompt month in the middle, and the spread between prompt +2 less prompt +1 month a the bottom. UNG players need to watch these spreads. Current prices are right at resistance around the $3.90 area according to the Weekly Continuous Contract. I’m still not sure which chart to use for the identifying key support and resistance, the continuous chart or the individual month. It seems like the continuous chart would probably have priority over the individual month unless we’re looking at very short term support and resistance. In this situation I’m thinking short term would be measured in min, hours, or days but not weeks. I’d love to hear someone else’s opinion on this.
3. The third chart shows the spread between the Nov contract and the Oct contract for years 2005 through 2010. Year 2010 is the black line and according to this chart, we are looking at the tightest spreads we’ve seen over the last six years.
4. The fourth chart shows the calendar strips for 2011, 2012, and 2013. When you look at this chart you can see that prices for natty have been in bear mode since Jun 2009.
5. The fifth chart is a three part chart with the Monthly Continuous Contract on top, the 1 Year Continuous Strip in the middle, and the spread between the 1 Year Continuous Strip less the Monthly Continuous Contract on the bottom. This is the most interesting chart to me because every 2 to 2 ½ years we get a super spike (over $9.00) in price. If I believed that this pattern will repeat itself within the next 12 months then I should just buy into the best natty producer I can find.

Bearish Outlook
Storage is still above the 5 year average but the fills have dropped off due to a hotter than normal summer. I would move this point to bullish if the September fills are less than they were last year.
Per this last Friday’s report, rig counts for natural gas are still going up. Not by much but they are still positive. Two or three weeks of negative rig counts would be bullish.
From what I’m reading in the emails I get, producers are still increasing their CAPX on drilling through the end of this year. At the beginning of the year, one of my coworkers that talks to producers told me that producers would need to drill to retain their lease rights and he thought that most of that drilling would be through 1st or 2nd quarter of 2011. That supports the CAPX commentary.
My personal opinion is that producers are probably getting more efficient at drilling for shale gas. I’m sure I probably read that somewhere and I just don’t remember where.

Bullish Outlook
Just looking at the fifth chart above, the Monthly Continuous Chart, you can see that the lowest prints usually occur in Aug or Sep, especially if we not coming off of a huge spike in price.
We are still in hurricane season and WEATHER we get one or not, any storm with a high probability of hitting the Gulf of Mexico should cause prices to rally. We also think that if a hurricane hits the gulf and it becomes obvious that that there will be little damage to the energy infrastructure, then prices will probably drop pretty fast because it will lower demand while most of the onshore supply keeps producing.

I’m sure I left out a couple of points.

Asia is green as is Europe. Another gap up to start Wall Street's new winning quarter tomorrow? :)

I note that the index that Twiggs uses to track China is already in b'out.

http://www.incrediblecharts.com/tradingdiary/2010-...

http://online.wsj.com/mdc/public/npage/2_3051.html...

The Finviz futures heat map shows that the $ is obliging, now under 82, while other major currencies gain ground. This implies a retest of 80 as support.

http://www.incrediblecharts.com/tradingdiary/2010-...

Meanwhile $silver is racing for new highs while traders rest. Sounds good for $gold.

Enjoy your day off.

for SPX next major bottom?

http://tinyurl.com/26jce7q

[Posted this on another blog yesterday but forgot to add it here. Sorry!]

What do you think about housing in general or the IYR (The iShares Dow Jones U.S. Real Estate Index Fund) in particular. Have you had the chance to notice that put activity has decreased while this indicator has advanced of late; this usually means that managers are becoming less bearish at this point in the cycle?

From Schaeffers:

There is also plenty of negativity from analysts. Specifically, only 39% of the 1,120 analysts covering the sector have doled out "buys." Any upgrades could provide lift for the sector.

http://tinyurl.com/2brdj24

Maybe this could be the reason for the accumulation [positive divergence] in UUP.

Obviously this would caused the EURO to drop and the $$$ to rise.

September 5 2010
Fears rise as EU nations aim to raise borrowing

http://www.ft.com/cms/s/0/abe5bf60-b8dc-11df-99be-...

-The eurozone debt crisis is about to enter a critical phase as governments prepare to step up borrowing in the capital markets to fund their faltering economies.

-Some strategists are warning that some of the weaker economies could fail to raise the amount of money they need as eurozone governments attempt to issue double the amount of debt this month compared with August.

-Spain, Portugal and Ireland , so-called peripheral eurozone economies, are considered most in danger of being shunned by investors as worries persist over the health of their banks and economies. Greece is no longer a concern because it has emergency loans to cover its funding for the next two years.

-Padhraic Garvey [head of rates strategy for developed markets at ING Financial Markets] : “Spain, Portugal and Ireland are the obvious ones to worry about. Are investors willing to stay long, or buy the debt of these countries? I’m still not seeing investors willing to buy into the periphery.”

- Some strategists say the return of most investors from holidays this week could increase volatility in these markets because many have put decisions on their portfolios on hold during the summer.

I am looking for a pull back this week after a possible false breakout to some where in the 1070ish area, before the market tips its hand for its next move.

http://tinyurl.com/24syoqp

heaven help us all gforce if you should look to me for "insight" :)

Apparently I'm in the top 10% for accuracy in stock predictions

It seems that those darts I threw at the great stocks chart board around the time of the great reflation trade paid off. Having forgotten about CAPS at the Motley Fool (my CAPS handle is Swissrobinson) cause my obsessive daily checks of my score failed to elevate me above the bottom 15%, I was invited back into the fold cause I'm now outperforming 88% of other stock pickers. And it was all thanks to Bill saying "this is it!". SLW now up 200% since I picked it.

It's all slowly coming together. Bill's method of learning to dance with the market, Vad's entry, exit and stops, Kaimu's gold is money theme with some hot little speculative trades to boot. One of these years it'll all come together. Now if I could have forgotten all those trades for this duration of time as easily as I'd forgotten the Motley Fool I'd be well ahead of the market, instead of overtrading and tripping over myself all the time.

Now to write to these sly sods for tricking me into signing up to one of their newsletters...

gforce,

I'm not much of a chart watcher and pay zero attention to analysts, since I see them as Snake Oil peddlers — all have a vested interest in kiting the markets they report on. Neither do I watch sentiment to decide on a contrary move. Just the actual daily yield numbers.

Since I seldom trade short term I am the wrong person to ask, but if it matters...

I think nothing has been done to correct the toxic mortgages.

People around here are unable to sell — some on the market for two years or more.

There is an increasing number of tall grass walk-aways in my neighborhood.

Friends were here from FLA this weekend where condos are going now at less than 50 cents on the dollar in 2005.

If I were to trade real estate as an ETF it would be the inverse, but not right now.

I am 90% in government bonds, TLT, VFIIX and WHOSX. The rest is cash except for my gold and silver coins which I don't even think about since I will not sell from now on. I took profit on 20% in the spring and my next move is a buy.

I have gone to 100% cash four times in my 40+ years investing — all four since 2000. If bonds turn sour I will dump by the second or third day max. TLT will be stop protected, so I am shifting more from mutuals to there.

Sorry, I guess I'm not much help.

--------
I did find "How Hyperinflation Will Happen" to be an interesting opinion and will keep an eye out for such happenings, just in case. I am more likely to leave early these days since protecting my principal is my goal.

Here's a rare specialist who can explain things clearly and directly. He's Chief of Security for BT - British Telecom:

EXCELLENT 8 min. video on the essence of threats to individuals' privacy:

http://www.youtube.com/watch?v=I6ZkU2fUM5w

10 min. video on the biggest picture re web security:

http://www.youtube.com/watch?v=IoXoHlI86rQ&feature...

exhibit A: 3 minute video on how to crack windows passwords:

http://www.youtube.com/watch?v=g2Yr4QprDok&feature...

ALOHA!!

Yes, hyperinflation is a monetary event, not an economic event, and the only way to attack such a monetary crisis is with a "monetary" solution. In this case you can follow the footsteps of FDR, which this Gonzo guy did not do. In 1933 FDR first confiscated US citizens gold making it illegal to own through the EMERGENCY BANKING ACT that I have already mentioned just recently. It was decreed then that the average citizen could not own gold except by a permit from the Treasury Secretary. That lasted until JFK days when Congress finally lifted the "emergency" of the EMERGENCY BANKING ACT. An emergency that lasted over 35 years! The US government tried to confiscate silver but realized it was too pervasive and widely held and that attempt failed to materialize, so that is why you never see silver confiscated by FDR or even mentioned in his Executive Orders in 1933. At the time of confiscation the gold price was set at $22 an ounce after FDR steals the people's gold he resets the price to $100 an ounce thereby devaluing the US Dollar and providing a technical default on US Debt. It matters not the inflation vs deflation debate because both are intrinsically tied to DEBT. We did not get to these astronomic debt levels with deflation and we did not get to this asset price deflation by inflation. But the common denominator in both is DEBT and every Empire in the past has collapsed due to too much DEBT! Debt is a LIABILITY on most financial balance sheets, so ergo we are in a LIABILITY BUBBLE and when this bubble bursts people will rightly seek ASSETS for their money. hence touchy feely commodities or stock certs that represent commodities in the ground and/or in production, not a COMEX Gold. A US Treasury Bill or Note or Bond and a US Dollar are not assets no matter what the US Treasury and the US FED says.

If you will notice that phrase comes up in the article "store of value". It is one I mention often as it is "value" that financial institutions and people in the street will seek and value as we all know is highly perceptive as one person's perception of value is based on others, the "herd mentality". Right now the "herd" is all IN at what I call the LIABILITY BUBBLE. In other words not only is the "herd" all IN at the US Treasury auctions but they are all IN on the paper floating currencies, especially the US Dollar, otherwise known here on this blog and others as "cash"!

Back to "value" and "store of value". Now if gold has no value then I have three questions for those who are "hoarded" into US Treasuries safe haven.
#1-Why did FDR confiscate gold and not private debt?
#2-Why does the US Treasury still value its gold reserves at $42.22 per ounce?
#3-Why did Wall Street create GLD and SLV at this time in US Debt history?

For those avid TA people out there try charting the US Treasury's gold pricing and you will see a chart that has been "basing" for over 60 years! To me it is a beach ball the size of Texas being held underwater!

This time around the guys on Wall Street have those PM ETFs loaded to the gills with the "hard" stuff so there will be no need to confiscate gold and this time thanks to the dopes who buy SLV they can easily confiscate silver as well. So the old adage "possession is 9/10 of the law" comes true.

Step One - In a run on US Treasuries, the bursting of the LIABILITY BUBBLE is to stop trading GLD and SLV, whether by official notice or not does not matter.

Step Two - The US Treasury announces they are revaluing their gold reserves from $42.22 to $8,000 per ounce, which now includes GLD and SLV, so it does not matter what gold got leased or loaned as it matters more what country this gold is stored in.

Step Three - The US Treasury announces the elimination of the US FED and the installment of a new gold standard.

By doing the above the US Debt is technically defaulted and the US Dollar is saved, not by the US FED but by gold, which in the end is the only "real money" left standing that has no counterparties to debt.

If you think the US Congress will not eliminate the US FED then think again. Although the common perception is that the banksters own the US Congress they do not own the US Treasury and in fact it is even "by law" that the US Treasury owns the US FED and all the gold that the US FED "stores" on behalf of America. In the face of a monetary crisis, such as hyperinflation, the US Congress will do what they do best ... preserve their own hides first. What good is having all that power and wealth if you cannot go in public and spend it without dodging bullets?

There will be an attempt at a "New World Currency" but it will fail for the same reason people now cannot be forced to take on more debt even with interest rates at historic lows, even with an all-powerful US FED. Banks and the elite that own them cannot force people to do anything. Once WE THE PEOPLE figure that out then the US FED is useless and the US Congress are next in the crosshairs. That is when the US Congress will begin to represent its constituents again and throw the banks under the bus. If the currency is perceived by the masses as worthless then so are the banks and their stock and futures markets. The entire system is based on the perception of "value" and "store of value". Even a day trader will not trade in a currency with no value otherwise Zimbabwe would be the leading market for day traders. The problem with any trading is that unless you plan ahead you will have to jump through huge hoops to get profits out of your internet account and into you wallet. That takes time as most of you already know. I am not so sure the internet will be a viable system in such a crisis. So Grym, add to your list of things to watch, an internet outage. In the old days the first thing a dictator did was cease control of the radio/tv station and the newspapers. Of course ceasing control of the internet will have every person in America in the streets rioting, whether they have an online trading account or not! I mean how will people get their daily dose of email and FaceBook and celebrity porn? HA!! So knowing that I think the government would chose to have internet financial outages only. I see them all the time on IB ... BATS is down .. etc! Imagine if that "bulletin" lasted for days not just minutes. You are totally frozen out of the market and out of your nest egg.

So is this all just fantasy? Not really because in FDR times it did happen. History rhymes doesn't it? I am just trying to apply FDR methodology to modern times. With those GLD and SLV ETFs 90% of the heavy lifting is already a done deal! Just throw up a "trading halt" and its history.

By owning farmland and hard assets I am planning for "everything" monetary ...

IT ALL WORKS ...

We've yet to pay our dues for the biggest-ever binge, which topped in 2000:

http://dshort.com/charts/SP-Composite-regression-c...

All previous (lesser) binges let to "overshooting" to below trend for YEARS. We are still 28% ABOVE the long-term regression line of the market!

(great site with clear charts, btw)

In 87 my broker had no trouble giving me a margin call at work. (Have not been on margin since except for very small amounts for short time periods.) But yeah, its much more fragile today with the internet.

Wonder whats the shelf life of aspirin or tylenol? A water filtration device would be a high-value item under some scenarios.

duplicate

Ran across this and wondered is it accurate and if so does it inform ones social good for goodness sake?

http://blog.mises.org/13788/13788/

edit:

A quick look at were Keynes went wrong:

http://blog.mises.org/10648/mini-review-where-keyn...

interesting opinion...I would agree with him though about equities falling in prices near term but not Gold miners. In a slide of the S&P to 950 or 940, I can see equities selling hard but not Gold shares this time around. Miners can drop a bit but not as much as other equities classes. In fact I would get a golden chance to buy miners like hill if they did actually drop back to the level they hit in July 19, 2010 or lower.

http://www.cnbc.com/id/39023697

Kaimu - "Please ... anyone who claims the US FED cares about the US Dollar and is not going to allow the currency to devalue is just totally blind."

I think you're missing some nuances here Kaimu. I'll try again and maybe you'll pick it up this time.

First let me say that I'm not defending the Fed policies or the system here, or advocating anything really. I'm just trying to examine without judgement the motivations of one of the important actors in the drama, to see how they are likely to react, to attempt to forecast how things might play out.

Look at this from the Fed's point of view. The Fed's sole product is the dollar - the Federal Reserve Note, and its convertible bank credit. Without FRNs, what does the Fed provide? Anything? No. Thus, it wants people to continue using its product, or else it has no reason to exist (and those people at the Fed most definitely want to keep their jobs). As a result, the Fed DOES care about the buck to the extent that it wants it to inflate, but only slowly, in a measured way. Hyperinflation destroys the dollar in one sudden blast.

You understand the difference between slow inflation, and hyperinflation, yes? Clearly people (other than outliers with an eye on the long view like you) maintain faith in the buck under a slow inflation regime, simply because 3% per year is not enough to register on people's every day lives. However, almost definitionally people lose faith in a hyperinflation scenario. In that scenario, nobody wants the Fed's product anymore, and it basically goes out of business.

The Fed produces a faith-based product. Faith is critical. When folks lose faith in the buck, the Fed will die, something the Fed most definitely wants to avoid. That's why I rate hyperinflation as a less likely outcome. Its not impossible if they make some big mistakes, but I think it's less likely. And it certainly won't happen by explicit intent.

I also think that the Fed is 100% likely to TRY to bring us out of deflation and back into inflation again. Whether they are able to under the current monetary structure where money is borrowed into existence by consumers (who currently can't borrow any more) - well that's what I'm watching to see.

Act Three: "The Double Dip" in this drama is coming up soon. Let's watch and see what they do.

S&P -2.30 / -0.21%
Level 1,101.20
Fair Value 1,103.66
Difference -2.46
Nasdaq -2.75 / -0.15%
Level 1,864.25
Fair Value 1,870.23
Difference -5.98
Dow +3.00 / +0.03%
Level 10,439.00

I couldn't help but notice that the Nikkei index is flirting with disaster. Some serious support levels are being breached and, I am guessing, that unless the BOJ weakens the Yen in a meaningful manner then the lows of 2009 are going to be revisited sometime soon.

$ has bounced off 82. Curious to see if that holds today. Don't know if that's in relation to a retest of August lows being made by traders of USD/JPY.

CHF is about to make parity with Uncle buck for the 3rd time in as many years. I wish I knew what that meant, apart from apparent flight to safety. If the $ weakens now, does the Swiss Franc keep going? Talk about squeezing Swiss exporters.

ALOHA!!

Closed at another all time high at $2.36AUD on 1.2mil shares traded, intraday $2.51AUD, a 1400%+ gain over a two year period.

The mover this time was the MAGIC drill results published today with super high grades within 100m-225m depth and still open to the south and at depth. Based on these results drilling will be expedited. This was all outside the current resource.

-8.3m @44.4g/t Au from 167 meters
-4.2M @42.6g/t Au from 184 meters
-6m @19.1g/t Au from 171 meters
-4m @8.6g/t Au from 104 meters
-4.5m @6.2g/t Au from 225 meters

LINK: http://www.asx.com.au/asxpdf/20100907/pdf/31scdtb8...

Right.

Not to detract from his message, but the only people who don't realize this are those as yet not personally touched by the HB&B scam and the garage sale of US mfg.

Dave,

I don't think anyone, even the Fed, would ever actively seek hyper-inflation.

Bernanke made it clear in 2002 that his greatest fear is deflation. I also believe he is so convinced of his own genius, that he still thinks he can control the situation through manipulation.

What I see as the fly in the ointment is the human fear factor currently alive and growing among the masses. Bernanke is a numbers guy and as such can't relate to what it is like to:

• Be faced with the loss of employment for an extended period.

• Fear losing your home.

• Have kids graduate without job prospects, but with a huge student loan balance.

• Be paying a 10% penalty for accessing retirement savings for daily survival.

• Fear of out living your life savings.

All these issues and then some are what many average, middle class people are encountering.

The same out of touch condition describes most of our elected officials who pass bills — unread and massively opposed.

People dealing with this list and more, have little time to think about the dollar's demise or the price of gold — they are living day to day.