Bill Cara's Blog for Apr 22, 2011

Submitted by Grym (3379 comments) on Fri, 04/22/2011 - 07:05 #84410 (in reply to #84384)

"There is no denying the economy has recovered but whether or not it is sustanable is up for debate."

The "Recovery" is Crap!

KAIMU: "From my level in small business discretionaries I have yet to see a recovery. "

Main Street doesn't get asked — we get told. It's like telling a kid with a skinned knee it doesn't hurt... It may make you feel better, but he thinks you are nuts!

The latest 8.8% unemployment is a fabrication.

The media issues such data without a clue how it is gathered or what constitutes a job. When a politician wants to look good — all he needs to do is change the yardstick. We know FASB accounting is history. We know much spending is "off budget". We know the Fed has never been audited.

To get Obama reelected a suitable number will emerge.

"I'm paying close attention to Armstrong's cycle expectations."

You, me, and every hedge fund manager on the planet.

Cheers.
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Dr. & 4ever,

I wonder how many others have even heard of him. I would not have if not for the CaraCommunity connection.

His explanations are complex (well beyond the sound-bite mentality) and I have yet to find any of my friends and acquaintances who have ever heard of him.
A criticism based on my days designing ads: His ads in the Economist were not likely to have been read by many. The reverse type (white on a dark background) soon tires all but the most dedicated reader. The amount of text is also a way to lose readership.

A small criticism: I found several of his illustrations in the current report hard to read and the PDF format makes it impossible to enlarge them.

I for one will be watching 6-13-11 with keen interest.

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An aside: It is my belief that any government system, whether Arnstrong's reference to Marxist-Socialism vs Liaise Fair Economics or what I think we see today Capitalist-Socially Manipulated Economics, will ultimately result in a black market economy. (I think Vad can bring us insight on the Soviet Union result.)

I found this commentary of Japan interesting.

http://www.japaneconomynews.com/category/black-mar...

Grym

Armstrong asks:
"...once QE2 ends, will the markets make new lows or is the worse truly past?"

I firmly believe the worst is NOT past, therefore I expect new lows. The question is how low will it go and when "good values" are really reached? I plan to be mostly in cash.

Armstrong again:
"What will happen if interest rates rise when QE2 ends?"

My guess, at least initially, is this will be the reason markets will make new lows. Then it is likely there will be the usual flight to the dollar and treasuries for at least a short time. The gold luster will most likely surge as the cab driver (or Big Mac server) hears it is the "place to be".

Armstrong:
"Will real estate resume the decline as was the case in Japan?"

Probably. The biggest moves in the last year around here have been in the MacMansions perceived as bargains while the middle range and lower have the biggest defaults and walk-aways according to the ZIP code bank repo sales. I think mortgage payers will have a chance to renegotiate better terms then. It may be a time to buy land as an investment or buildings for rentals.

Anyone else care to offer some ideas?

Grym

Hi All - Here is clip from the mentioned progressive bastions: Chesapeake Energy’s fluid spill in Pennsylvania this week looks minor compared to BP’s Gulf of Mexico explosion a year ago. All the same, the incident will galvanize critics of hydraulic fracturing, a process that releases natural gas (and oil) from shale rock by blasting it with water, sand and chemicals (usually a bit of diesel & surfactants (read soap)). Heck I wish we could put the zinc to better use, than thwarting the march of progress in energy development with inordinate news & regulatory crap brought to us by the progressive agenda. Happy Trading

Hi Lessmore - They had a bad connection at the well head which resulted in a discharge - not a good thing for sure, but of limited impact to the enviornment unless you are the farmer whose land is sullied, and who will be well compensted for the temporary loss of use. Generally the fluids and additives do not return to the surface following a frack job. In early production the fluid that does come back up is transported to a re-injection well or other treatment facility. The recent agenda driven frenzied media review of every limited spill would have you think all water sources for miles around are forever destroyed. Happy Trading & Holiday.

South Africa has just initiated a ban on Fracking. Concern is spreading around the US over the technology.

A few months ago I had mentioned a company GASFRAC which uses LNG as a fracking fluid instead of water. No polluted water to take care of as the LNG and Nat Gas are the same. The process uses much less chemicals as well.

From Seeking Alpha article:

It has been successfully used in 700 Canadian wells.
The additives to propane are patented, openly published, and approved by OSHA.
There is no (or negligible) flaring.
There are no settling ponds.
95% of the propane, along with the natural gas, is in a single gaseous wih the natural gas and comes up with some sand and additives. These are separated, with the propane being used for the next well, and the NG going into the pipeline.
For a 6 well platform, only 7 trucks are used to bring in the propane, as opposed to about 30 trucks coming in, and almost 30 going out, with water.

The stock is up about 50% from when I mentioned it... now trading at 12 and change. It has been public less than a year. I'd guess this stock has potential as opposition to the traditional method grows.

We must protect water aquifers at all costs. There's a film Gasland that shows some of the downside of fracking.

FD no position

Luggie,

This excerpt from a NY Times Article indicates that the environmental impacts of hydraulic fracturing generally cause serious environmental impacts.

http://www.nytimes.com/2011/04/17/science/earth/17...

"These contaminants also remain in the fluid that returns to the surface after a well is hydrofracked. A recent investigation by The New York Times found high levels of contaminants, including benzene and radioactive materials, in wastewater that is being sent to treatment plants not designed to fully treat the waste before it is discharged into rivers. At one plant in Pennsylvania, documents from the Environmental Protection Agency revealed levels of benzene roughly 28 times the federal drinking water standard in wastewater as it was discharged, after treatment, into the Allegheny River in May 2008."

Discharging benzene to a wastewater treatment plant is bad. Discharging radioactive materials is shocking. I would hope the regulators now require the energy companies to properly dispose of their toxic waste, but I wouldn't hold my breath till they do.

Now, with respect to Chesapeake's spill: it is definitely not the result of a "bad connection at the well head"; and is not limited to "the farmer whose land is sullied, and who will be well compensated for the temporary loss of use". It is the result of a well head blow-out and it is very serious.

According to Reuters:

http://www.reuters.com/article/2011/04/22/chesapea...

Chesapeake's "leaking drilling fluids (are)from a natural gas well that suffered a blow-out late on Tuesday in Pennsylvania"

"Immediately after the blowout, the Chesapeake well spewed thousands of gallons of fracking fluid, Bradford County emergency management officials said on Wednesday. The fluid initially flowed into a nearby creek."

Right on, Grym! Gov't and its 'unions' can keep telling us lies until the Federal Reserve Note turns to confetti. I'm battening down the hatches and preparing for the ticker tape parade from hell.

Cheers.

Grym,

"Our city has lost over 10,000 manufacturing jobs in a little over a decade"

That statement is true to a greater or lesser extent throughout the country, except that the loss of jobs has been ongoing since at least the passage of NAFTA, job loss includes categories other than manufacturing, and the number of lost jobs nationwide is in the tens of millions.

The mystery is why people who have the right to vote have allowed this to happen to them. They are angry. They care about good jobs lost to systematic outsourcing. They want political leaders who will represent their interests not the interests of their adversaries. So will they elect such leaders. Probably not.

My opinion is that most Americans are so badly informed and misled that they just do not understand how they have been transformed from comfortable to poor, who is to blame, and how and whether to remedy the wrongs with their votes. Those votes must be a valuable potential remedy otherwise special interests, political parties and politicians wouldn't spend $billions to get those votes cast for their interests instead of the interests of the voters.

Luggie,

" the N.Y. Times is engaged in a campaign of agenda driven eco-terrorism. The benzene and radioactive materials found in effluent of waste water plants are not just restricted to plants that have recieved fracking fluids."

Eco-terrorism doesn't seem to fit. All wastewater treatment plants are authorized under the Federal and State Clean Water Acts to discharge pollutants in their effluents. They have permits under such laws that allow them to discharge various pollutants in various amounts. The plants treat the inflows to reduce the pollutants in the effluents, but they still discharge pollutants.

Hi Grym,

Armstrong's article leaves me confused. He states: "we face a very important change in trend on June 13th, 2011 (2011.45)", but he never explains what those "important trend changes" will be (unless I missed something).

The trend for the past few years has been stocks up, $ down, PM up, etc. A trend reversal "would" mean the opposite would happen and a trend change "could" mean the opposite of this will happen.

Dr. Strangelove,

FUBAR defined as "fucked up beyond all recognition/any repair".

That seems like an accurate description of the country.

Illini,

In response to "wouldn't it have been better to use the alternative 'fouled up' on this site."

The definition you refer to is a verbatim quote from Wikipedia. I think its improper for me to alter verbatim quotes.
http://en.wikipedia.org/wiki/FUBAR

Thanks for the link to the article.

There's just so much "unfair" about it all. How can it be so corrupt? We, the people, have placed much trust in the 545 that run the show. They've let us down and continue to do so, in broad daylight(over the weekend), as if to say, "Yeah, we did that, got away with it, so what? We're untouchable, the elite; you're all peasants. We'll do it again too. Go away son, you bother me."

I really think the S&P shot at the USA was some type of diversion, smoke screen or whatever you want to call it. Of course the USA will never default, however, the USD must be devalued.

Due to the dual mandate, interest rates will be held low for an extended period.

The game continues.

Ratings agencies now serving their political masters along with their Wall. St masters to collude against the taxpayers. The credit rating business doesn't get any fouler than that.

The quicker Europe bans them the better. Not a solution I understand, but a welcome wake up call nonetheless.

Maybe its just me but the tone has been quite dour on this site this week. Many of the subjects are quite depressing. In fact many begin with "De". Lets go over the short list: Default, Debase, Depression, Decouple, Derail, Deplete,destroy, detach. You get the picture. Here is a suggestion just for this weekend: You've got to accentuate the positive. Eliminate the negative.And latch on to the affirmative. Here is what i suggest everyone do. Please list at least one positive thing about the following subjects. I'm serious. You will feel better.

1. Obama
2. Bernanke
3. National debt.
4. Unions
5. fiat currency

CORRECTION: 51% not 541% — not so bad after all ;-)

lessmore,

We couldn't agree more. Before NAFTA was passed in 1993 I wrote my congressman it stood for Not-A-Fine-Thing-America. In 2003 he wrote in his monthly newsletter, "I'm beginning to become concerned — we are losing a lot of jobs to cheap foreign labor."

I helped vote him in on his promise to quit after 6 years — he's still there.

It began with manufacturing, but now it has trickled down to my barber and dentist squeezing everyone in retail or services. Now even the gov. unions are feeling it because the rest are earning so little the tax base has evaporated.

As for voting them in — consider the choice of available candidates. The last presidential candidate I voted FOR was Ross Perot. The same holds true at local and state levels, a sorry bunch to pick from and I vote against the one I think is most detrimental.

We need real basic changes in our US Constitution. Congressional power is too great and unbalanced. So far DeMint is the only one calling for term limits on his own job. But I am so sick of glowing promises which disappear after the voting that I need some real convincing.

Grym

Les, jragusa,

I took his comments on the June date and the questions posed to mean he had no hard and fast prediction just a warning of the pending uncertainty.

I am always wary of certainty and as he said, "It is not easy to break down to a single cause and effect."

Bill seems to be in the same mode after his time off from the day to day turmoil. I think it's a time for me to step back too.

I know I'll never leave the US, but I'm not so sure anywhere will ultimately escape this economic epidemic. It is the largest and most international corporations who run nations these days. I remember when I first heard VISA had no national HQ thinking, "This means they have NO LIMITS and are beyond all control."

GE is now free from US taxes, yet receiving protection of our laws and getting $ billions in bailouts. As I mention earlier McDonalds is freed from the Obamacare burden.

If we have finally reached such a condition with a large enough number of independent entities it seems anarchy is inevitable. Our Declaration of Independence foresaw such possibility and gives us the right o demand a new government. "...it is the Right of the People to alter or abolish it and to institute new Government..."

For the immediate future I plan to hold mostly cash and be ready to dump what few holdings I have. Better to wait and see at my age. I've sold a bunch which are still rising, but increasing in volatility each day.

Grym

Interesting comments today in the WSJ on PSLV at http://tinyurl.com/6bwccgh

Hi All - I guess CHK can join NAK as subject to rejuvenated efforts by the progressive media, congressional staffers, regulators etc. etc. to delay/forestall/curtail/increase costs for reasonable resource development endeavors. Happy Trading
http://news.yahoo.com/s/ap/20110421/ap_en_ot/us_pe...

Safety record from Wikipedia:

"The Fukushima Daiichi nuclear power complex was central to a falsified-records scandal that led to the departure of a number of senior executives of TEPCO. It also led to disclosures of previously unreported problems at the plant.[460] In 2002, TEPCO admitted it had falsified safety records at the No. 1 reactor at Fukushima Daiichi. As a result of the scandal and a fuel leak at Fukushima, the company had to shut down all of its 17 nuclear reactors to take responsibility.[461]. A power board distributing electricity to a reactor's temperature control valves was not examined for 11 years. Inspections did not cover devices related to cooling systems, such as water pump motors and diesel generators.[462].
In addition to concerns from within Japan, the International Atomic Energy Agency (IAEA) has also expressed concern about the ability of Japan's nuclear plants to withstand seismic activity. At a meeting of the G8's Nuclear Safety and Security Group, held in Tokyo in 2008, an IAEA expert warned that a strong earthquake with a magnitude above 7.0 could pose a "serious problem" for Japan's nuclear power stations.[463]
In March 2006 the Japanese government opposed a court order to close a nuclear plant in the west part of the country over doubts about its ability to withstand an earthquake. Japan's Nuclear and Industrial Safety Agency believed it was "safe" and that "all safety analyses were appropriately conducted."

My point is that most environmental violations are ignored or minimized by government, industry and a trusting public. Its hard to prove the cause of an increase in cancers, emphysemas, birth defects, etc. So the public is influenced by the propaganda that industry doesn't really need to be regulated because they can be trusted to do the right thing under self regulation, and that those who oppose self regulation are sabotaging the economy and have no evidence that self regulation is harmful.

But then a big fat white swan event occurs in exactly the place where it was predicted it could happen. As a result many thousands lose everything, their lives, their homes, their livelihoods. At that point the impact is too big to ignore and we search for perps.

If Fukushima was unique it could be minimized. But its not. I can name several additional such white swan events that have occurred in recent years, e.g., Chernoble, Three Mile Island, Katrina, and the Gulf of Mexico. The events are so frequent that it is almost predictable. And in each case there is evidence of malfeasance or nonfeasance that should have been but was not addressed by someone with regulatory authority.

The impacts of lax regulation are getting bigger.

Okay, here's what Armstong's Econ Cofidence Model (ECM) shows and when:

Go here and scroll down to the essay entitled 'How & When'

http://tinyurl.com/y8mofag

It's about hot money flows globally with a big trend shift indicated by June. That implies a waterfall collapse of the USD in my book but it could be anything that makes the massive 'hot' money flows shift. From what I understand, his ECM is the ultra macro tech analysis with data imput dating back to the Egyptians using a proprietary computer model that was hijacked by Goldman Sachs and which has the potential to compromise it to some degree if Blanfien really is doing GOD'S WORK. Armstrong's ECM is so good that the CFTC or SEC, I forget which one, accused him of controlling markets. What Armstong did was out maneuver the Wall St cabal over a massive Yen short when consulting with the Japanese gov't that led to his jailing and confiscation of his company through a Goldman Sachs 'arbitrator' by a corrupt NY court system for 'contempt' longer than anyone in the history of the penal system. His prosecutor was later disbarred for ethics problems.

Truth is stranger than fiction.

Cheers.

jragusa, Les, Dr.,

I agree that stocks continuing up in a one year time frame would be no trend change, but Armstrong's horizons are more wide reaching it seems to me. To me a trend is more than a single year. A look at the SPY/TNX comparison over a longer term may offer a clue.

My view remains that he is not predicting what will happen, as he pointed out quite clearly that to do so is "complex". He didn't mention it, but I think what is often disregarded by economists is the human factor. Perhaps it is just my advertising background, but I think human fear and suffering are what makes it potentially very "different this time".

Since WWII we've had smooth sailing because we made things the whole world needed and wanted. This is no longer so. It is the cause, IMO, for the protest against the unions — not as much jealousy as inability of tax=payers to keep paying for their benefits. It has greatly diminished the IRS haul — less profit, less income = fewer tax dollars. The man on the street is much more aware of the gross inequities in incomes between labor and management, reports of no tax on the biggest corporations, bonuses to Wall ST. and bankers is why there is a Tea Party and the name is significant (I hope).

Grym

It's not so much 'the unions' since most private sector unions are in a gradual collapse for decades now. The UAW had 1.5 million members after WWII but now has less than 500k and is dropping fast. It's more about the growing PUBLIC unions which is an oxymoron in my book along with collective bargaining 'rights' which is a euphemism for the contract can only go up. In the end, we all know what goes up up up must come down. Public unions should be abolished and go the way of air traffic controllers on strike. Can't tie collapsing tax dollars to fantasy benefits. Jig is up, baby! This is what Obama meant by change we can believe in.

Cheers.

davefairtex,

That's an excellent post. You correctly interpreted the Court's decision and supported it.

davidfairtex -

"From my reading, it appears that MERS still has standing to execute a judicial foreclosure. Do you dispute this?"

No, I don't dispute that. But consider that a judicial foreclosure will cost the banks I'm guessing a modest $25k for each of the existing 19,642 foreclosures in Michigan at the present time. That will cause $491,050,000 of insolvent bankers' cash to evaporate into the legal piranha pool. Of those homes, more than 9k are in the city of Detroit with an average value below $25k. Add in the 9,642 pre-foreclosures in Michigan and it ramps up to $732,100,000. That just isn't going to happen in the vast majority of cases. The banks will cherry pick only the finest homes and I've seen that already well underway. Using TARP funds to aggressively foreclose 1.9 million foreclosed homes in the U.S. and enrich the legal profession is SUSFU.

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

Cheers.

Edit: "I do think that MERS is losing case after case across the country, and as a result I think their model is dead." - davefairtex

That's guaranteed. MERS is spent solid booster fuel. It's all about how to dispose of the toxic shadow inventory now with CLOUDED TITLE the latest weapon of mass destruction used by the defense while carrying costs run in the billions (property tax and maintenance) for an insolvent banking industry offense. Whoa, time to throw a Hail Mary as the clock ticks down ...

hi jragusa,

right you are in trend continuation. A quick review of "Show me the Money" points out the confidence model and the fact that this private/public shift occurred in 1981. That would be coinciding with Volker's 20% interest rate move if I remember correctly. It is attached for quick perusal.

Change in this new 8.6 year wave will include "separating a fool and his money" (Next Wave p.4). I suspect we the people get cleaned out in a US or multi-nation default and renegotiation of currency and trade. Think Russia 1989. Certainly the PERCEPTION of risk will be paramount in this next wave - Kaimu's "C" word.

I am also guessing that we switch back from a deflationary bent that went with the crash in 2007/8 to a period of inflation. If you look at the confidence model you can see that 1985 corresponds with 2011, being at the bottom of the wave. As Armstrong remarks on pg. 2 of The Next Wave, he "warned there would be a change back to inflation". Pg 15 he warns that "the upturn in interest rates will be devastatingly inflationary accelerating the debt even faster".

Looking at these dates on the attached model I see the recession of 1991 (following the 1989 top), the NASDAQ bubble crash following the 1998 top, the 2007 top speaks for itself. So the 2011 bottom, corresponding with 1985, logically suggests inflationary change. Another change I can think of is the "mind bending" creation of state indebtedness and the cliff we may all fall off in this next 8.6 year wave, simply because govt. refused to let private capital fail in the last wave. As I remarked before, govt. getting taken to the cleaners means the taxpayer gets taken there too.

Armstrong remarks on page 7 that "during the next wave, we will see the relationships evolve between these groups (corporate paper preferred to muni, state and federal paper) once again. On page 10 Armstrong refers to the previous rally in Gold that saw the price doubling in a very short time in 1980, which would correspond to the 1981 peak in the economic confidence model. As he points out in the final paragraph of The Next Wave:

"The big breakout in Gold still does not appear to be now. The PHASE TRANSITION to exceptionally high prices will be in the NEXT WAVE, not the conclusion to this wave."

So one could suggest Gold is behaving normally at this point - we are ahead of the crowd if not necessarily the curve - and the crowd's understanding of it will change in this wave.

That's my understanding of change we can believe in. Hope that helps.

cheers

bobbyo- You got it.

1. Obama. Finally, a good-looking President.
2. Bernanke. Finally, a good-looking Fed Chairman.
3. National debt. I helped to create it, but I don't have to pay it off.
4. Unions. Who says you can't work a lifetime on an assembly line while under the influence?
5. Fiat currency. All I can say is I'm accumulating a ----load of the stuff, and merchants seem to accept it anywhere I go.

Bear E -

That's a good synopsis in my book. His essay entitled 'The Fractal Nature of Markets' discusses how waves resonate as with, for example, the first sovereign debt collapse being Iceland > Ireland > Portugal > Spain? It's growing. Perhaps a similar resonating debt crisis cycle is emerging in the states as conservatiive states like Utah and Texas set up financial safeguards like the option to transact in gold and Wisconsin and Michigan governors challenge the public unions. The cyclic layers are all there.

In another essay, he points out that real estate is so overleveraged that its bubble peak is now in a 20 year decline parallel to, if I recall, the war & peace cycle. That makes perfect sense to me since I've spent most of my 20+ year career in commercial real estate wondering when the big down cycle was coming.

Anyway, this is Bill Cara's blog and so I don't want to get too caught up in Martin Armstrong here. Suffice to say that Armstrong is worth reading.

Taking a break and looking forward to Bill's WIR.

Cheers.

Now my turn
1. Obama. He even likes Republicans. Heck, he has some in his cabinet.
2. Bernanke. Ben likes helicopters.
3. National debt. If Dick Cheney said "deficits don't matter"....how can they?
4. Unions. Thanks for the 40 hour week. We all enjoy it.
5. Fiat currency: It spends and won't wear a hole in your pocket.

Dr S. - "But consider that a judicial foreclosure will cost the banks I'm guessing a modest $25k for each of the existing 19,642 foreclosures in Michigan at the present time. That will cause $491,050,000 of insolvent bankers' cash to evaporate into the legal piranha pool."

Sure, it will be costly for the bankers. But, unless the bankers are absolute idiots, they'll eventually offer a settlement rather than run each property through the system. Plea-bargaining for houses, we can call it. One possibility: defaulted homeowners can choose to sign a document quit-claiming the house to the bank and in exchange receive a nice fat check for $10,000, or the bank will execute a judicial foreclosure on their house and they'll receive squat. Another possibility: more short sales. With their backs to the wall, bankers will choose to deal. How many defaulted homeowners would jump at the thought of $10k - or more?

The houses that are worth almost nothing - I think you're right about them. If your house is worth less than perhaps $75k you can live in it for the rest of your natural life rent free. It is just not worth foreclosing on. Banks are already doing this today. Strategic non-foreclosure, I think its called.

Hmm, that brings to mind a possible cottage industry. Like the debt-collectors that buy old debt for a few pennies on the dollar, there will probably be bottom feeder lawyers who buy these mortgages from banks 5 years from now in bulk, and will investigate to find out which homes are worth something, and they'll attempt to execute these cases against those homes on the cheap.

Dr.,

"It's more about the growing PUBLIC unions..."

Yes, I should have been more specific. Locally, we had a 13 year discrimination lawsuit in our schools. While much of it was due to the low income of neighborhoods (We've had busing for nearly 40 years as a result.) the unions prevented assigning teachers to those locations and they got only the newest, least experienced teachers.

Only recently (Tea Party time) did we see published the outrageous public unions' benefits come to light.

Collective bargaining demanded $500,000 in Viagra to Milwaukee, WI teachers.

I, for one, cannot afford to pay for such "bargains". Many feel the same.

Grym

P.S. The cost of the lawsuit was $250 million and education quality has never recovered.

http://www.dailyherald.com/article/20110225/news/7...

A bit of light-hearted banter overcomes the gloom. Looks like we can have fun with even the stupidest problems we face.

I enjoyed it ;-)

Grym

One Question: What's a 40 hour week? I always worked 50 to 60 in my business. My son (same job) is now at 32. Never heard of a union artist ;-(

ALOHA!!

As if tax revenues are relevant any more when four to eight times revenues are spent or debted away. Still sometimes the IRS can be used for other purposes than "collecting" revenue. Who needs the DEA when you have the IRS?

Here we go again ... It pays to have a gigantic lobby in Washington DC!!
Yep, it trades under the symbol GWP:LSE ... Once again it isn't even a US based Big Pharma. They probably have a 500,000 acre pot nursery in Brazil! Don't forget the US Military is not the only weapon our government has against us.

Big Pharma set to take over medical marijuana market
By David Edwards
Wednesday, April 20th, 2011 -- 12:05 pm

Just as the federal government is clamping down on medical marijuana dispensaries, the Federal Drug Administration (FDA) may be set to give Big Pharma the clearance to take over the market.

In 2007, GW Pharmaceuticals announced that it partnered with Otsuka to bring "Sativex" -- or liquefied marijuana -- to the U.S. The companies recently completed Phase II efficacy and safety trials testing and began discussion with the FDA for Phase III testing. Phase III is generally thought to be the final step before the drug can be marketed in the U.S.

"GW Pharmaceuticals plc (AIM: GWP) today announces the initiation of the Phase III clinical trials programme of Sativex in the treatment of pain in patients with advanced cancer, who experience inadequate analgesia during optimized chronic opioid therapy," GW said in a statement. "This indication represents the initial target indication for Sativex in the United States."

Sativex is the brand name for a drug derived from cannabis sativa. It's an extract from the whole plant cannabis, not a synthetic compound. Even GW defines the drug (.pdf) as marijuana.

Yet as the FDA is poised to approve the drug for Big Pharma, state-licensed medical marijuana dispensaries that provide relief for thousands of Americans are under attack by other federal agencies.

Lynette Shaw, the owner and founder of Marin Alliance for Medical Marijuana (MAMM) in Fairfax, California, was stunned when the IRS audited her 2008 and 2009 tax returns and disallowed the foundation's business deductions, then demanded millions of dollars in back taxes.

The IRS pursued her under § 280E of the federal tax code, which states that no business deductions will be allowed for companies "trafficking in controlled substances".

I included a link to the article about the 13 year desegregation suit here in Rockford and would like to clarify one statement in the story.

"After decades of segregation, Rockford schools integrated in a few short years."
http://www.dailyherald.com/article/20110225/news/7...

Neglected is the fact that said "segregation" was primarily a factor of the traditional neighborhood schools concept.

My wife and I built our home where our boys would be within walking distance of a grade school, a middle school and a high school. By middle school age they were on a 45 minute bus ride (even before the suit).

The surrounding area was all white and those schools which had complaints were in all black neighborhoods. Granted the schools had differing degrees of equipment. For example, we were able to raise funds for audio-visual equipment due to being more affluent. The teachers with union seniority chose not to work in schools which had less modern equipment, were in higher crime areas and were far less comfortable in extreme weather. These were things which needed to be addressed.

The "fix" is still in effect and $ millions have been spent busing to achieve racial balance. The numbers of kids dropping out is high, there have been several schools "on watch" due to low test scores (Test scores are now a prime consideration and manipulated at a cost to actual learning — honors classes are no more.)

The amount spent has been about as effective as the TARP is to our economic and job situation. A typical government solution.

At least we were not forced to sell houses based on an equalizing of racial balance. The fact is, for whatever reason, our neighborhood is very much integrated and it happened without "blockbusting" or attempts at "redlining".

On our cul-de-sac of nine house we have one Hispanic family, one Pakistani and one black. Prior to the suit it was all white.

Grym

Note: After being forced to build several new schools — we are now closing six due to non-support from the state portion of funding ($51 million and rising).

Great pictures. I hope you'll are having a great time. Happy Easter! Take care.
Earl

Open in Asia. No paper tiger at the Comex to mess with this evening's fun.

http://tinyurl.com/3pdev9

Any more top callers tonight?

http://www.kitco.com/charts/livesilver.html

Cheers.

COT charts show an extremely bearish posture of small speculators while yen is bouncing. I'm thinking long FXY could work.

According to my sources, most shorts were stopped out Wednesday-Thursday.

If markets gap higher indeed, I would credit a massive sellout in dollar.

Dollar is easing some as I write this but Sunday trading is not very reliable.

Bill,

Wonderful intro to your Week in Review. I suspect that the time spent on R and R will benefit us all.

Unbelievable is right. In my endeavours to stick with gold and iron ore plays I have totally overlooked silver.

The result? A company I recently looked at has doubled in little more than 2 months.

No, covered that before it popped back through 1.18 resistance. Not interested as I want to be fully invested in precious metal juniors following this period of weakness. Better risk/reward IMO. Any market liquidation here could be nasty for Yen shorts.

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Thank you Bill, I have yet to digest your WIR but the conclusion rhymes with my own interests.

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Another technical trader I respect points out the awesome resistance SPY poses at these levels the index has gapped up to this morning. Looking for the bounce to short into as the market stays within this range. Something to think about.

http://blog.alphascanner.com/?p=516

I remain focused on the miners in a big picture time frame as I have not the time for anything else.

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$ZSL is the ultra silver short. Not yet, but getting closer to the day. I'll be waiting for a lower high bounce to short into, if I take the trade at all.