Cara's Commentary & Community Chat, Fri., May 15, 2009

Reminds me of an old Yardbirds song:

Over under sideways down,
Backwards forwards square and round.
Over under sideways down,
Backwards forwards square and round.
When will it end, when will it end,
When will it end, when will it end.

Europe only or the US as well? Will more money flood to the US as US economists "yipeekiyay" (just finished watching Die hard 4) their outlooks for the US economy in 2009?

May 15 (Bloomberg) -- The euro fell and European government bonds rose after the region’s economy shrank the most in 13 years in the first quarter.

The euro dropped 1.5 percent against the yen, the fourth decline this week and the most in two days, and slid 0.5 percent versus the dollar at 12:15 a.m. in London, while the yield on the 10-year German bund fell three basis points. The MSCI World Index of stocks climbed 0.3 percent, trimming its first weekly drop in two months, as Barclays Plc led a rally in financial shares. Standard & Poor’s 500 Index futures declined 0.7 percent.

“The markets seem to be suggesting a real danger that we are about to see a six- to eight-week period that is very risk- negative,” Citigroup Inc. currency strategists Tom Fitzpatrick in New York and London-based Shyam Devani wrote in a note to clients.

Ah yes the UK in 1973, I remember it well , I was 12 years old then,I remember going shopping with my father to the supermarket, each week we would stock up with as many goods as we could that we knewwould be more expensive the next week(Stagflation),i.e. sugar ,tinned foods,bread, etc. I was just talking to my Uncle last week, he is a sheep farmer, he says he gets 50% more for his stock at market this year compared to last,higher prices than he has seen before,yet he also says he needs more money because it is costing more for him when he shops.deja vu.Of course according to government statistics inflation is low. The people here in the UK have no trust in the government and politicians, the latest debacle being many politicians have been discovered abusing the expenses allowances and have been caught red handed with their fingers in the tax payers till.

"But there is little doubt now the expenses row will have a dramatic impact on the political futures not just of individual MPs but their parties. "
see link
http://tinyurl.com/oytycd

Recent events seem to be following those of the Great Depression...

Ordered by Congress to "buy American" when spending money from the $787 billion stimulus package, the town of Peru, Ind., stunned its Canadian supplier by rejecting sewage pumps made outside of Toronto. After a Navy official spotted Canadian pipe fittings in a construction project at Camp Pendleton, Calif., they were hauled out of the ground and replaced with American versions. In recent weeks, other Canadian manufacturers doing business with U.S. state and local governments say they have been besieged with requests to sign affidavits pledging that they will only supply materials made in the USA.

Outrage spread in Canada, with the Toronto Star last week bemoaning "a plague of protectionist measures in the U.S." and Canadian companies openly fretting about having to shift jobs to the United States to meet made-in-the-USA requirements. This week, the Canadians fired back. A number of Ontario towns, with a collective population of nearly 500,000, retaliated with measures effectively barring U.S. companies from their municipal contracts -- the first shot in a larger campaign that could shut U.S. companies out of billions of dollars worth of Canadian projects.

http://tinyurl.com/pzuhh5

CP- Sold 1/2 after the earnings, .64 I think, which I posted. Other half still under my pillow, but it is starting to keep me up at night. So I might put it on my night stand to keep a better eye on it. No news on my end, but they have enough cash through 2011.

Word is on the street, is it? Buy gold.

A pump and dump?

DRYS going ballistic on news they received a waiver on $600m+ of debt from HSH Nordbank. Looks like they might try to close this one on the $7.50 strike for op-ex.

Bill wrote: Today, the EU announced a fine of $1.45 billion levied against Intel (INTC) for predatory pricing practices that disadvantaged Advanced Micro Devices (AMD). Intel said it would appeal. With advance knowledge, however, some traders sold INTC heavily for the past couple days. Regulators ought to investigate and prosecute.

Reading the basis of the EU's ruling against Intel is a perfect example of rationalization to "legally" tax, punish, and confiscate from the successful elements of society to reward those who do not measure up on their own efforts, and to fatten the coffers of Socialist regimes that are in themselves failures. I do not want to see one penny being paid to assuage these thieves, who sanctimoniously present themselves as protectors, but are actually a taxing and confiscatory arm to keep everyone at one constant mediocre level. These people think with their feelings not with their intellect.

If AMD's products were so wonderful the public would be demanding them over Intel's, and no rebates or other incentives would have had any impact. Furthermore, no retailers would have kept AMD's products off their shelves if their customers demanded them, and there are numerous publications that test these products and rate their performance, on which customers base their buying decisions. I did not hear any complaints from the EU when AMD was taking market share away from Intel a few years ago, stating that the playing field should be changed.

The EU is only the tip of the iceberg. In our own country this cap and trade legislation is an rationalization to significantly increase taxes based on bogus nonsense. All business leaders and citizens concerned with preserving liberty should organize to thwart the socialist group of Pollyannas in Washington. All the representatives in Washington know how to do is to investigate and prosecute. Where are the iniatives on making the United States energy independent (more nuclear power, further oil exploration, hydrogen power etc etc). There should be more emphasis on having the United States achieve its optimum potential as a nation among all the nations of the world, rather than flagellate itself with a laundry list of exaggerated charges that in the light of day are logical and responsible, and I include enhanced interrogation techniques among many other topics that the Pollyannas in Washington try to demonize.

im just saying,

Craig,
I understand and agree 9/11 was an attempt to take out our government (The Pentagon, the White House, the Capital) — plus cause a massive economic disruption (WTC) and panic the population (NYC).

Not sure about the overdone response. Did you mean the protection of Bush and Cheney? Which would happen regardless of who was in office. Or... the invasion of Afghanistan and Iraq?

Afghanistan I could see justified by the Al-Qaeda or Taliban connection. Iraq has always seemed to me to have been the desire for a foothold to preserve our oil access.

Haven't heard much lately, but we have been building an American "Embassy" which is pretty much self-sustaining in case of a long siege.

While there is no question our whole way of life is totally oil dependent it could have been different if the last thirty years we had been energy sensible.

Just one guy's opinion.

"We got squat from 185 waterboardings."

We don't know what we got other than a bad image.

How many have died from Waterboarding? My guess is there have been far more deaths from Snowboarding.

RE:>How many have died from Waterboarding? My guess is there have been far more deaths from Snowboarding.

So you condone the tubing of suspected militants from the pistes of Colorado? Should their hands be in chains or are they permitted freestyle?

Totally agreed Grym. Esp. regarding Afghanistan and Iraq and motivations. Afghanistan was a proper response and that approach was a total winner.
Iraq was pure theft....and was another actual example of what OBL was saying about us and our empire/entitlement/arrogance.

To answer your one question, I think Bush/Cheney were so inexperienced and ideologically driven that they threw away the Constitution and the Geneva Conventions in a naive knee-jerk reaction that ended up resulting in Osama Bin Laden getting us to voluntarily make ourselves an example of what he said we were. That's why I think they might have made better informed choices had they served in the military. they would have already experienced the oath and had it impregnated into their skulls exactly what their duty was.

They forgot their oath. They defend a few pieces of paper with important structures and ideals contained within them. The paper provides for their replacements and how they can act. I know it's hard to not take personal when OBL tries to kill you....but cops experience this almost daily and we expect them to uphold the law and have some self control. They got scared, physically and politically, and lost it.

I LOVE your comment Craig. In SO MANY WAYS the 911 "events" succeeded. Succeeded in bringing new global awareness and acceptance of Arab policy perogatives. Successful in destroying some, not all of the liberties and freedoms for which we stood. Successful in destroying our economy, with the help of Wall Street and Alan Greenspan.

If it was really what our government said it was, it was brilliantly successful. If it was what we all hope it was not, an inside job, then it's the biggest felony crime since the Holocaust.

Sadly Shark, brilliantly successful whatever the cause, which should shock us all awake.

for those that are following this penny stock:

http://finance.yahoo.com/news/SpongeTechR-Delivery...

Highlights: $10 Million in sales in May so far (last quarter was $13 Million); Now in 25,000 stores nationwide vs. 500 at this time last year

Presumably, if a gold breakout was arranged for today, there would probably be some serious volume in the May GDX/ABX/GG etc calls - but so far nothing out of the ordinary.

If you want to bet on one, they are only a nickel each. :)

Bev- I'm tracking your comments, which display in a different color. Thanks for the heads up.

Torture is listening to someone who knows little to nothing about what they are talking about. The people who were waterboarded were the worst of the worst and was done to extract information to prevent mass murder along the lines of 9/11. If you can't connect the dots and only can respond with the Kool Aid response that it is against some treaty, you need to be at ground zero during the next attack so you can get a better perspective.

David,
If the index just bleeds slowly, then also VIX wouldnt jump up. Maybe that is the scenario playing out

Anyhoo, back to the market...

Is it just me or is the S&P cliff diving? any ideas what's driving this?

2nd

"which display in a different color"

Hopefully in ..."shocking pink"!

;-)

BTW...how are you able to do that? [edited...I see...you booked mark me. Well that sure beats being IGNORE... which I only have one of BTW. ;-)]

A must see 6 minute video. Blunt and to the point. Confirms what Meredith Whitney said last week on CNBC.

http://bit.ly/XHbTK

Plan accordingly, and call your local congressperson and state senators. Tell them that this nonsense of tax payer sponsored bailouts and the misappropriation of funds by Geithner & friends must end.

A straight shooter. thanks ToddinFL

NYU,

I am following you into this type trading because of Volume and because Cara remarked about the confirmation of a downtrend with techs (twelve to watch, beta boys,four horseman, 10 big nasdaq non-financials) terrible action and lower highs-lower lows.

I bought SCO and SRS yesterday

Today SDS,SKF,SMN,and QID

Lets see were this goes...doing great so far. All are positive so far.

Let me know if you see any improvement in volume.

Do you have any feelings for how long this short,medium,long term trend will last?

THANKS for the volume work! this spell check rocks!

that stuff has gone through here before

TN,

good luck with your trades. Per your question, "feelings for how long this short,medium,long term trend will last?" I try not to think too far ahead, so I can react fast with minimal emotion. This trend can end today at 2pm if GS and PPT decides to press the "Easy" button.

I am watching S&P, Nasdaq, the four horsemen, gs, xlf, gld to give me the tip as to what cards hb&b are holding.

Good trade Vinod. I believe you bought in the 24's yesterday.

Johnny
Plan was to write June call on it but forgot it. nowit is moving higher

Craig, what a nonsensical response to my comments. The only thing I fear is the number of individuals, who are like you, that are walking around with the garbage they read in the New York Times and the 7 oclock news splashing around in their empty heads. You would think that the events of 9/11 and many others around the world would make some sort of impression, but like most (who are like you) it only hits home when it directly impacts you. As far as people dying from waterboarding, name a few examples that directly died from the procedure. This is not done for jaywalking it is done when lives are at stake.

Must be a slow trading day, seems we are getting bogged down on issues that are distractions at best. Does anyone have a take on the skinny volume? It is basically anemic.

Click on user name, and on the first view you are taken to, click on 'Bookmark this user'.

Thanks for pointing it out 2nd, I'll be using it now as well.

Also, today is first day I'm using the Ignore Thread column, which is working out nicely as well :)

ALOHA !!

Craig ... To see who the ultimate SEC insider trading con artist was that started the SEC go see my post from last night entitled, "SEC DOOMED FROM THE START" ... That was in 1934 ... so what has changed and why is it people think that CHANGE will magically occur voluntarily by these criminals that have been running America for decades now ... ever since 1913.

Like the US FED, the SEC is just as useless ...

We will never get rid of this system so long as we keep voting the same WALL STREET inside traders into power every time. To vote a party that does not start with DEM or REP into power would be the "start" of a "real" revolution and CHANGE in America.

Still ... the system is so corrupt that it needs to collapse! I believe all the elite know this and they are trying to position themselves to be the last bank standing. Otherwise why would there be this HUGE free-for-all "money grab" called BAILOUT?

In terms of the STIMULUS that OBAMA has going ... Come on! I was a contractor in the San Francisco,CA area for 20 years. Is there any doubt where the vast majority of that STIMULUS money will go? HELLO??? When you hear the words "infrastructure", which is where a lot of the STIMULUS is headed, think FAT CAT CONTRACTORS and UNIONS! I have been on so many PUBLIC WORKS jobs for so long and some of the biggest ones out there(prisons and schools)that I know how the GAME is played and it has been rigged since forever! The little guy ... the small business ... where the real innovation and value comes from will be stuffed. I predict after its all over there will be news stories galore of STIMULUS contractor and union fraud/corruption across the USA! Wait and see ... To me it is so "predictable". I guess a person has to be "entrenched" in the SYSTEM to see how it works and how it just feeds off itself and grows to humongous proportions. I was in it ... now I'm not, but I still have my contacts there. NOTHING HAS CHANGED! I could walk you through Corcoran State Prison, Ione State Prison, Vacaville State Prison and Yolo County Prison and show you how and where and how much the US TAXPAYER was screwed on every square foot of those projects.

When you read how the UNION has caused the city of Vallejo, CA to file bankruptcy don't sit there and think, "WOW ... thank God I don't live there in Vallejo and have to deal with all that UNION crap!" Every taxpayer in America is paying the UNION ... Huge exorbitant wages to boot! Some one mentioned a rookie cop getting paid $107,00USD per year starting out. Its not uncommon for ditch diggers(Labor Union)on PUBLIC WORKS to earn over $40,000USD... IBEW electrical union journeymen with just a high school diploma can earn over $110,000USD($55/hr)per year.

PUBLIC WORKS is nothing more than a payoff to well heeled contractors and UNIONS. DAVIS BACON was the law that sealed the UNION's death grip on the US TAXPAYER. DAVIS BACON was the US CONgress politicians paying off the UNIONS for their contributions and their votes. The US GOVERNMENT has been up for sale to the highest bidder for longer than I have been alive.

Go to the Service Workers UNION SEIU website and take a look ... This union paid the DEMS and OBAMA $70mil USD to win. Guess who benefits the most? The least?

SEIU website link: http://www.seiu.org/splash/

Try not to "join" right off the bat once you see the enticing "splash"!

Look at the "attitude" displayed on the splash of those three workers! Reminds me of the IBEW guy who told me, "I ain't puttin' on roller skates to do nuttin' you tell me!" GOODBYE ...

Click past the "splash" and go onto their home page. Somehow BANK AMERICA has been bad(I agree)but somehow the UNION has not. Hummmm????

Here's a quote right off the SEIU home page ... "BIG BANKS LIQUIDATING YOUR COMPANY? TELL US!" Okay, how is it the SEIU union workers "own" anything, much less the company they work for? Are they that powerful that they can save companies? Don't companies usually need something called "profits" and "earnings" to survive? Mine does ...

IT ALL WORKS UNTIL ...

We don't know if we killed any because it's all classified and we don't get the movie without a big fight it seems we may not see, but waterboarding is a form of dunking-water torture used since medieval times. The victims, especially in the Spanish Inquisition are too numerous to list.
to say 9/11 didn't affect every American is short-sighted in my opinion.
I don't get the NY Times and I don't watch the 7 O'clock news.

No, I'm not afraid of the threat from outside. I'm more concerned about those willing to surrender from inside. THEY are a far bigger threat because they think they are the righteous defenders, when really they are motivated by fear and hope to convince others to be afraid and lose sight of the Constitution.

I am wondering how, if a call is exercised, or if you decide to buy back the call before expiry without rolling it, the "net" of the underlying is resolved.

From a net perspective, every time I roll a call, the "old" call is reflected as a realized loss. This is bc the underlying I have been purchasing has been bullish. The thing that I am not grasping is the fact that the basis is not being reflected as reduced in the underlying even though each subsequent call is a "negative" cash flow entry (which means I take it as a credit). I get that there is a realized loss if I buy the call back for more than I sold it for; but if I sell a new further month out call shouldn't that gain be reflected somewhere?

All of these are after commissions, so please bear with me:

For example. I bought on 5 Dec, 100 shares AUY at 4.44 and wrote a Jan $5 call against it for $54.39

I then rolled that call to an Apr $5 call for a net credit of 18.79 and then rolled that to a Jul call for a net credit of 23.8 but all of the outlays are displayed as negatives in my unrealized and realized gains except the gains of the underlying.

But I would see that regardless if the options were present or not; I guess I just need an explanation of the accounting here.

As of now here's what I would be seeing: let's say the Oct call is exercised
I would get $5 / share - commissions on a basis of ~4.50

That's only $50 in "profit" against a loss of $335.42 according to what the realized gains/losses is showing when that's clearly not the case if I am collecting a net credit each time

In actuality, the way I account at home (a total net position in the underlying), its more like this:

My basis is actually more along the lines of 3.52 in the underlying because of a 4.44 initial outlay(* 100 per contract), minus a 54.39 credit, minus an 18.79 credit, minus a 23.80 credit.

Sorry for the long winded explanation; thanks if you take the time to read and/or respond!

looks like its headed to 85. I have some puts. So far OIH, WYNN, SHLD, CMTL, DECK puts have worked good. Gold miners are giving me a tough time. Maybe I will never trade options on gold miners & just buy the common

http://www.bloomberg.com/apps/news?pid=20601087&si...

Your open sold call position should still show as -ve (for the credit received reflecting the current market value of that position) till expiry in the basic screen. But if you have an Account/position P&L page, that should show P&L for that call sold

Out 26.01

Summary: Down!

Nasdaq made an "outside reversal" on increased volume on May 7th plus volume remained above average as the Nasdaq declined further over the following days. A very bearish signal.

Also note the other indicators on the chart. Net Advances, Net Advancing Volume and Net New Highs also shows signs the rally has ended in my opinion.

http://tinyurl.com/qjdgjj

Here is a 5 min chart of QQQQ look how it is nicely contained. I have real time feed hopefully it will display the same to those who want to follow it.

http://tinyurl.com/qwr5bb

Whatever the name, Secret groups having secret meetings making secret decisions and alliances regarding public policy that affects us all should be unacceptable to every citizen.

When it comes to elected officials, we speak with our votes. The majority of the voting public has said that this kind of thing is acceptable. As citizens, we hold the power. We can grant it or take it away from the elected officials and un-elected government administrators as a whole.

The larger the pool of people and more diverse the cultures that make up the society, the harder it is to form a consensus for change or accountability. Historically, the strongest subgroup within the society controls and influences all of the rest.

To effect change in our society, you must make your subgroup dominant. Unfortunately, by doing so, you become the same entity you currently revile. This is the cost of diversity and lack of a identity.

What does it mean to be a US Citizen? Do we all define it the same to the point of being devoted to the same cause? That really is the fundamental question.

http://tinyurl.com/oywfeq

Looking for it to bounce off the 200MA [31.77+/-]which is close to
the 38.2% Fib line.

yeh thanks Bev. Your charts are good as gold for the uninitiated like me.

Will hold to Vad's concept of waiting the trend and taking a bite out of the middle.

So Monday I shall wait with a couple of gold holdings under my belt and naught otherwise.

I figured your basis in the underlying was what really matters, and and that's exactly what I thought, which is why I keep my own records. I suppose you COULD use all those short-term losses against your overall annual net if you had a valid reason. It is hardly worthy on a 1 contract situation, but are we supposed to take commissions out of consideration?

For the record I have been actively trading calls, bullish call spreads, and a few bull put spreads (unconventional, I know) on SLW & AUY, and naked puts on DOW. Boy DOW has really rallied as of late, and has not showed signs of slowing down on the RSI or MACD.

47.52

Recently, I have observed some of the mainstream media discuss the theory of Capitalism as a potential failed experiment. I think this is being put out there as propaganda to influence the minds of the general public in order to soften us to accept more socialized programs.

Anyone who has ever conducted an experiment knows that in order for a theory to be judged it must first be defined and then strictly adhered to and monitored for the duration of the experiment.

According to Dictionary.com (http://dictionary.reference.com/search?q=capitalism): Capitalism is an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, esp. as contrasted to cooperatively or state-owned means of wealth.

In the United States, instead of strict Capitalism, I think one could successfully make the argument we have had a mix of Capitalism and Socialism. In other words, we have had a combination of a private oriented and a state oriented system.

In the context of failure, you might be able to more accurately argue that the combination of the two has failed rather than one or the other.

http://tinyurl.com/pkqhbd

I'm currently holding SRS. Hoping it will soar during the hopefully up coming sell off. The 50MA [not shown here] maybe the next line of resistance.

[Holding SRS from 22.35]

No new positions being made now.

1. if S&P magically goes to 900, i will then close my short positions.
2. if S&P reached 875 and holds I will book my gains on my shorts
3. if s&p breaks below 875, I will add more positions to my existing shorts.

keep it as simple as I can for myself.

I think the same way NYU. Thanks for your little/basic reminders of how to play the major support/resistance levels. It keeps me focused on big picture. You are a great trader.

Bev very nice chart of SRS. Might be worth picking up and keeping back pocket for a bit. I will be watching close.

I agree with your MACD signals. But those nasty folks at Goldman will persist in causing short covering rallies at periodic intervals to give us retail shorts heart trouble.

Just this morning at the open, they managed to take out the high of the previous day on almost every short I had with a spike at the open. Almost all my stops were sufficiently above yesterday's high to avoid being tripped. Almost all.

Sigh.

FD: Short FAS, SSO, XLF, XHB and a few retailers.
(note, I'm short the ultralongs, rather than buying them. Rust never sleeps)

it "MAY" bounce here.

http://tinyurl.com/pv9g4r

Stop trying to connect every effect with a definitive cause. "Why" is meaningless. "What" is all that matters.

And never go long on a Friday afternoon:)!

I'm goin' to the beach.

maybe it's also currency related? AUY is down with silver and silver miners while GSS is up a couple points and GG is down a couple points. SLW down 4%?

Look UUP.... +0.73% is much larger in the mirror than it appears.

880 held [so far]

May short the ETF "IWM" if it tests the upper part of its downward channel today and does not break through.

http://tinyurl.com/qt6n2q

"I'm goin' to the beach."- Better check in with the Lifeguard, otherwise you might get shot.

"I work a farm, wear Wranglers, t-shirts and boots and I have a couple heelers at my feet. Sometimes I wear a hat.
Interesting because I picture you with two big ears on a thick neck, size 50 jacket and a 70 IQ. I doubt either is accurate."

Well, the composite pretty much describes the typical Boer around my parts, except for the (tall) boots and the (low) i.q..

But we're not up to multiple monitors, yet.

Surely they can no longer afford the Hamptons.

"We do know as we now have those involved speaking and testifying in addition to FBI experts."

But is it the truth, the whole truth and nothing but the truth? Are there witnesses we've not heard? We don't know that.

I heard one psychiatrist who was in on "enhanced interrogation" sessions say that they were able to prevent several further attacks. He also said he did not approve specifically of the technique of waterboarding, but that it had worked in some cases.

The Obama release of some info, but not all, has Cheney calling for the release of everything.

-----------

"You know....morality is not comparative. Treaties, contracts, promises...your WORD, they are not relative. They are absolute or they mean nothing."

Ever read "Situational Ethics"? It deals with your comment, "morality is not comparative". The only example I can think of is one concerning deciding if lies are ever acceptable. ( I read it about thirty years ago, I think.)

If Anna Frank were hiding in your attic and you were asked by the Gestapo if you were hiding any Jews, "What would be your answer?"

I can imagine the fear of someone responsible for the protecting the USA from another 9/11 type attack going beyond what We may consider reasonable or proper.

If someone in my family were in imminent danger and I had access to a person who had information on how to prevent it, I may very well go further than waterboarding. We could debate the morality after they were out of danger.

You may disagree, but just don't ever mess with my family.

Theres been quite a turn round in the dollar index (Rising)since the dow started to tank about 11 am.Thats stalled Gold I think today so far.

http://tinyurl.com/229pya

2nd
not yet, but interested in UNG

All of my players are now back where I'm interested. If this weren't Friday, I'd get back 1/3. Still might anyway.

Edit: All are hovering around the 20DMA.

http://rlcalculators.retracementlevels.com/

2nd only the ES Hourly is free until the 22nd. Then it is back to pay. Not cheap.

Todays quants remind me of the insurance actuarists in the 1920's. Same outcome for the most part.

To paraphrase Charlie Munger, if you can't make an investment case using a Big Chief tablet and a Crayon, you may be guilty of overthinking the process.

Bill, you concluded :

"There are in fact so many problems with capitalism that people will say it is a bad system; however, with a few changes, it would be an excellent system. If it was allowed to work with minimal government in our lives, I think most people would call it a huge success."

I think post colonial Singapore has been a huge econmic and social success, in some ways more startling than the Wirtschaftswunder of postwar Germany. But I generally quip that Singapore is Stalinism done right, others see it as a triumph of Capitalism.

I was lucky to experience living in Sweden during its 44 year Social Democratic heyday, when it was vilified by the U.S. at every opportunity on account of Sweden's iconoclastic anti Vietnam War policy. Was 1970's Sweden or is latter day Finland a blueprint for Capitalism, even though the State played and plays a huge role in the economy?

What might surprise those unfamiliar with the history of the Chinese Malays (as Singaporeans then were), the Swedes and the Finns is that their versions of Nirvana were all begotten by civil war or the threat thereof.

Even though the ruling classes almost always prevail in civil strife, they generally come out chastened and exhausted by internecine fighting, prepared to accommodate the aspirations of the people.

Where they do not, vide Germany in the 1930's.

Bill, this is the unfortunate juncture we are now at in U.S. history. Will our brand of Capitalism be used to promote the people or be used against it?

ALOHA !!

Although I did mention POWERSHARES at the top of my post more towards the bottom I made a mistake by posting this: "So these geek analysts are behind many of the ProShares ETFs. In fact here are all their affiliates ..."

It should have been POWERSHARES not PROSHARES ...

It stopped working at 2:45.

"It should have been POWERSHARES not PROSHARES ..."

Dang kaimu, I just sold all the wrong ETF's... ;)

Looks like TSX data has been down since 2:45, according to my IB and TD accounts.

I was sorry to hear of the death of Bill Seidman this week. As FDIC head in the early 1980s, he did what should have been done with the current bank problems.

Whenever I saw him on TV (one of the few people for whom I turned on the CNBC sound) he was always good natured and had intelligent and meaningful comments.

He was a real gentleman and will be missed.

ALOHA !!

Thanks Bill ... As I watched the protests in the UK(via internet photos)I saw signs that said "DOWN WITH CAPITALISM"! Funny that socialist pig sty like the UK thinks they have CAPITALISM! How is that possible? I think most people assume that BANKS=CAPITALISM. That's like saying DEBT=WEALTH! Oprah?

Most Americans would not know CAPITALISM if it were in their pants! HA!! We have not seen CAPITALISM here in America since 1913 in my opinion. How can there be true CAPITALISM as long as government and the US FED are constantly intervening?

I would add one more to your list of "problems" (iv)money based on DEBT!

GOVERNMENT IS ONLY AS HONEST AS ITS MONEY ...

I noticed the same thing - last index quote is 9,758.27, down -90.93, at 2:54 pm, every site I've checked. No news yet.

"Most Americans would not know CAPITALISM if it were in their pants! HA!!"

You are going to need to copyright this one Kaimu.

It's been a long while since I read it, and it may not have been true then, perhaps you can enlighten me.

I was told the Swedish system had gone beyond supportability and was causing a high rate of suicides.

This was from a person who moved here from Sweden in the early to mid 1970s.

It is quite simple torture doesn't not work, the main motivation behind our torture policy was not to protect the USA, it was to protect Bush=Cheney, they were the ones that got us into Iraq war and they had to prove themselfs correct. Torture was all about finding the link between 911 and Iraq. They never found it so the torture was a dismal failure. You can argue this point until the cows come home, but you can't argue the point that the borders were left wide open, the ports were left wide open, no protection for infrastruture.
Jesse Ventura a navy seal says he could get Cheney to confess to the Tate murders with a water board.

It's back online now...

Kaimu wrote : "socialist pig sty like the UK"

Others, using similar intemperate language as yours, might indeed call the UK
a "capitalist pig sty". And Stephen, very, very few Britons would want to return to that auspicious time in history, the Imperial Britain of 1913 where a tiny privileged class ruled not only ruled over 2/3 of the world but a far greater percentage of their own people, condemned to live in slums.

Really, was 1913 America all that great for the people?

Kaimu -

Those RAFI results are bloody pathetic. Give a geek a computer to model a spread sheet with a billion variables and he/she/it will always overlook a business cycle or two or three or 50. I recall developers and bankers pushing 10-year duration DCFs models in commercial real estate developments in the 1980s dependent upon constant growth for debt servicing success and I tirelessly argued that without a random downturn in there somewhere it would be doomed in, on average, five years ;) DCF models eventually fell out of favor because so many commercial loans failed even in the good times based on 100+ overly optimistic models. Banks then used cap rate suppression (easier credit) to make the numbers on up through the '90s up until Q4 '07 when the music stopped.

I guess with computer modeling (quants) and Fed bubble blowing, anyone who entered the business world after 1982 never saw a business cycle or knew what the hell it meant ... until now.

Required for an MBA: Business Cycles 101 or How I Learned to Love the Bomb.

http://www.youtube.com/watch?v=-gb0mxcpPOU

arguing if capitalism failed is as pointless as arguing if communism failed.

both "isms" only existed on paper, in the minds of men, in practice neither system was ever truly followed, both suffering from the pitfalls of humanity.

so whatever failed in america, and whatever failed in russia tells us that both isms may in fact be the exact same sheep in wolfs clothing.

everyone loves the idea of free markets w/ various controls, accept that such controls are by their nature virtually impossible. they exist in small states or only for temporary periods, during great upheavals and crisis they become unearthed, never to be revived as the state over arches and begins spending beyond its means.

GUY's staff at PDAC was impressive, and had finished a pre-feasibility study for a mine. GUY has now announced $12M financing to produce a full feasibility study, with participation by the IFC, the World Bank affiliate which does wonders to reduce country risk. I suspect IFC wouldn't have signed on without a judgment that the project is for real.

As reported by IncaKola, which covers Latin American juniors:

http://incakolanews.blogspot.com/2009/05/guyana-go...

Thanks to Bill for introducing me to GUY's major owner, whose track record has earned him the nickname "Mr. Platinum", another positive aspect of GUY.

No position, DYODD

This gentleman from Pravda dresses it up to make it sound intellectual, but really, his whole piece is just expressing delight in seeing an old (and arrogant) enemy about to experience some serious difficulty.

I think there was a fair amount of that here, when the Soviet Union fell. If I recall correctly.

And his son is probably gay too. :)

• It is quite simple torture doesn't not work,
• the main motivation behind our torture policy was not to protect the USA,
• it was to protect Bush=Cheney
• Torture was all about finding the link between 911 and Iraq.

You seem pretty confident, but it is still unconvincing to me.

This is all supposition on either your part or someone who you've heard or read.

We have no way of knowing any of this to be true.

I think going into Iraq was a colossally bad move, but there are too many conflicting possibilities and it is likely to be debated forever like the Pearl Harbor issue.

The borders, ports and a good many other points are still matters which bother me.

Seems to me the viability of torture would be as varied as the number of people involved and the degree and type applied. As to the quaity of info — that would also be of varied value.

Saying it never works is impossible to prove, but if we could get examples of attacks aborted by it — would you believe them?

Sounds doubtful.

I can only speak for myself. I certainly would not want to be in a situation where I was ordered to torture someone, nor would I want to give that order myself. That kind of stuff is corrupting. To have this as a matter of national policy complete with guidelines - well, its definitely at its bureaucratic best here, but I'm definitely not in favor.

Yet we live in a world where, routinely, people give orders to kill one another. "Shoot that guy in the raft if he points a gun at his hostage." Which is worse - torture, or killing? One would expect the answer to be killing, since its much more permanent. Yet we have a police force. And a military. And a CIA with missiles on predator drones that are used to blow up houses in Pakistan that we are pretty sure have bad guys in them. And these are all potentially quite useful things, if employed properly.

I'm glad I'm just a trader and I don't have to deal with these sorts of things for real.

Got it. I did make some coin today, thanks to you. Great contributions!

Mark,
Here is some info. Heavy call buying

http://www.optionmonster.com/news/article.jsp?page...
======
More than 31,700 calls traded at the October 20 strike yesterday, dwarfing the average volume of 523 contracts, according to optionMONSTER's Heat Seeker tracking program. The calls included two large blocks--one of 4,000 contracts and the other of 22,000--trading at $1.45 within seconds of one another yesterday.

The vast majority of the calls, which were nearly five times the open interest at that strike, were bought at or near the ask price. The activity indicates that buyers anticipate the UNG exchange traded fund to reach $20 by the time the contracts expire in mid-October.

The ETF has been rising in recent weeks but is still not far from its 52-week low of $12.69 hit just April 30 and only about one-fourth of its $63.89 high from last July. The shares closed yesterday up 1.5 percent to $16.68.

Big volumes of july calls for AUY today & Aug call volumes for KGC. But almost all the goldminers look like they are about to roll-over??? Last week, agri names were selling off (POT, MOS) but there was big call volumes & then the upgrades came....

http://tinyurl.com/295zzz

Call buying near asking price is a good indicator of a real demand for UNG. Is there a place where I can regularly see this information for various types of options?

I am planning to start buying UNG again, but I just want to wait for S&P to hit 850. There has been a noticeable correlation between UNG and FCX recently (which are doing completely different things), which means that UNG is no longer perceived as a "dog" and became a valid commodity player now, moving together with the other commodity stocks. The recent rally in commodities might have been a late stage rally, where those who were late to the rally decided to pile into the "forgotten" sector instead of the "overhyped" banking sector. But if the general market continues going south now, I think the industrial commodity stocks will continue south as well, since the hopes of a global recovery will dim temporarily.

ALOHA !!

Vadym ... Yes, its just one mans view that got published in PRAVDA. What? Should I always prefer just FOX NEWS and CNN all the time? HA!!

In Russia there are the oligarchs and in America they exist as well. You may call them what you will but to me they are not much different than the MAFIA. The only difference is that the American oligarchs do control a much more vast sum of dollars than the Russians ones do ...

Then there is the coup in 1991 ...

Russian coup link: http://en.wikipedia.org/wiki/Soviet_coup_attempt_o...

When this was happening I was working for a Russian company based in California with ties to the Ukraine(Kiev). The Russians I knew saw this as a liberation and in fact they all made plans to go back to the Ukraine to either stay or visit. At that time I was working for them from 1988 to 1992 doing electrical estimation and project management. They had a huge family and many ties to a lot of Russians who lived in San Francisco. Russians are a lot like the Hawaiians in that they have large extended families and they love to get together every weekend and "talk story"(socialize) and EAT! I had to study up on my Russian ... net English! Forget the congealed chicken fat ... Yeck! I don't even recall what the Russians called that. It was so awful and I did not want to know ... but they loved it! Leonid called it a "Russian delicacy"! Okay ... hummmm???

At any rate I did not live in Russia then so I do not know how much of a grassroots revolt it was. Russia is certainly a lot larger than just Moscow. Yes, I'd love to blab about Russian people, especially during the Communist regime's zenith. Da, spasibo ...

I am always critical of America and especially its government because of the huge sacrifice that our Founding Fathers made to make this Nation something more than just another elite aristocratic dictatorship! America is on a very slippery slope now and things are changing at a rapid rate. I do not trust the leadership that has resided in the US CONgress for many decades now. All they do is pocket bribes and pass the buck! I would hate to see America end up with an 'elected dictator" like Putin.

Poka en Freeport ... Da? Dobry vecher ...

ZadII ... Come on mate ... please ... can't you stand to read some tiny article that is critical of America? Are you that insecure that you cannot read news from a source outside the USA? Its not all just the SITUATION ROOM! I guarantee you there are a large number of people in the World now who do not really like what America has become. There's a lot of them here in America.

I agree some parts of this guys rant is just plain BS and bigotry, but this is what is in PRAVDA. I am sure the rants are worse than that in some of the news papers in the Middle East.

Do I love Russian government? NO ... but I'm not liking my own either!

PUNA? Look at a map ... that's where I live.

TOF- Is it not time to become SBSP?? I followed and added on the way up for what is now "real" money +58%. I've been down this road before with micro-micro stocks, and took profits at the end of the day. It might be a real winner, but what's the harm in taking some profits now? Just want to see you make some money on this.

The ancient Greek philosopher, Plato, constructed a political theory based on the royal lie or myth. As described in Plato's Republic, the ruling elites of a political entity have the right to lie to their citizens-but not vice versa. The rationalization is that a royal lie and deception maintains social cohesion and prevents the collapse of the state. Thus platonic logic gives rise to the so-called stress test for American banks, the royal myth conceived by Treasury Secretary Timothy Geithner and Fed Chairman Ben Bernanke, in order to deceive investors, market sentiment and the American people as to the true state of the nation's financial institutions.

Craig, when the torture started the FBI pull out, it was the FBI that got the creditable information before the CIA and torture. When the CIA and outside contractors came in is when they got junk information. I really think FBI director Mueller was very clear on this, he pulled out his FBI team immediately when torture was introduced by the CIA. This to me is not an discussion on whether torture works or not, it is an discussion on the integrity of government. I think it is fairly established that torture is illegal, if our government will do illegal acts, where do they stop. I also feel that this torture was done for political purposes which makes it even more of a crime.

Kaimu - Vadym ... Yes, its just one mans view that got published in PRAVDA. What? Should I always prefer just FOX NEWS and CNN all the time? HA!!

Sources matter. All sources have biases, but some are more so than others.

As I understand it, Vad was saying this source of yours is extremely biased. As a result, using such a source to support your argument is a "false attribution" fallacy, which occurs when an advocate appeals to an irrelevant, unqualified, unidentified, biased or fabricated source in support of an argument.

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

Or put more simply, it is tantamount to using a stopped clock to support your claim as to what time it is. You might be right about the time, but selecting a functioning clock is more likely to be convincing to others.

sorry, repeat post.

An interactive map of vanishing employment across the country, updated with the latest figures.

http://www.slate.com/id/2216238/

Very dynamic colour change, as one fast forwards from 2006 to 2009.

sorry the posts are long, but interesting weekend reading:

Why does government data need to be revised so often? Is it conspiracy, as some claim, or is it methodology? And if it is methodology that leads to faulty data, then why not change the methodology?

Can I Have Some More of that Data, Please?

One of my regular reads is the blog The Big Picture. They featured a short piece by Michael Panzner this week. He put together some rather interesting data and then asked a question, which gives me an opportunity for discussing government data. Let's see what he had to say, and then I will make my comments.

"Many market-watchers claim that U.S. economic statistics are increasingly being revised downward in subsequent periods, suggesting that the figures initially being reported by Washington are "puffed up," so to speak, most likely for political purposes.

"Well, I went back and had a look at the differences between the reported and revised data for various series, including monthly retail sales, nonfarm payrolls, industrial production, and durable goods orders, to try and figure out if the cynics are right.

"Using data from Bloomberg, I calculated whether the revised data for each month was lower than the first-cut estimate. Then I tabulated 12-month running totals for each series to see if there has been some sort of systematic bias (in other words, whether the pattern of monthly downward revisions was trending higher instead of undulating up and down).

"To make the comparisons easier, I subtracted the 12-month tally as of May 2002 (an arbitrarily chosen date) from the monthly totals for all four economic series so that the starting point for each would be the same — zero.

"Based on a quick read of a graph of the data (see below), it does seem as though the pattern of negative revisions has been trending higher lately, especially during the past year or so, suggesting that the cynics may be on to something.

(graph location):

www.ritholtz.com/blog/2009/05/is-us-government-dat...

12-Month Running Totoal of the Number of Downward Revisions to Originally Report Data

"That said, I am not a statistician, and the results may be nothing more than "noise." There is also the possibility that my methodology is lacking (because, for example, the margins-of-error for each month's data are relatively large, or because of certain quirks that crop up when an economy is in transition). Still, you gotta wonder..."

Actually, Mike (can I call you Mike?) your last thought is the correct one: "or because of certain quirks that crop up when an economy is in transition."

Go back to 2003-04. Notice that the numbers of downward revisions in non-farm payrolls are negative in your graph? Remember all the talk back then about the "jobless recovery"? We can now look back and see there were a lot of jobs being created. They just did not show up in the early statistics. And look at the opposite reaction in industrial production: here they revised strongly downward for a the better part of two years, yet it turned out there was a production boom going on.

Was all this a conspiracy on the part of the Bush administration to make things look worse than they actually were? Hardly seems like rational political behavior.

The "problem" comes from the methodology. There is no exact data for any of those statistics. They have to get as much data as they can and then make estimates. Part of the process of estimation uses previous trends. It is as if we were using past performance of a mutual fund or stock to project future returns. Even though we look at the past performance, we should know that past performance is not indicative of future results. Just look at some of the top-performing value-oriented mutual funds in the recent bear market, like superstar Bill Miller's Legg Mason Value Trust fund (LMVTX), the after-fee returns of which had beaten the S&P 500 index for 15 consecutive years, from 1991 through 2005. It did rather poorly last year, even in comparison with the S&P, which was horrid. Past performance is interesting, but it can disappoint. And sometimes rather viciously.

Now, just as saying that a fund on average will produce a 10% return does not mean that it will yield 10% every year, neither do government statistics work that way. While the methodology for each series of data is different, they all are more or less trend-following. They take past relationships in the data they can gather and use them to estimate current numbers. And -- this is important -- on average and over longer periods of time, they are pretty accurate.

They will revise the data many times over the coming years, getting closer and closer to the actual numbers. For instance, I can't remember exactly when, but it was several years later that we learned that we were already in a recession in the third quarter of 2000, at the very time most economists were calling for a robust economic future! (Except for your humble analyst, who was predicting a recession, and had been for some time because of the inverted yield curve, but that's another story.)

But in the short run, at economic transitions they are going to get it wrong, because the backward-looking data is mean-reverting. But how else would you do it? One of the keys to economic transitions is to look at the direction of the revisions. Recently, the revisions have all been negative. Things are actually getting worse than the initial data suggested. And during the last recovery the data kept getting revised upward, especially six months and one year later.
The Fault, Dear Brutus, is Not in Our Stars

Look again at the very useful chart above (great work, wish I had thought of it!). Non-farm payrolls, which for some odd reason everyone pays attention to, is especially wrong at the turns. Anyone trading on non-farm payroll data deserves the losses they will get.

One of the reasons that non-farm payrolls are so often revised is that the Bureau of Labor Statistics (BLS) is forced to estimate the number of new businesses being created each month that are simply under the radar screen of government statisticians. This number is called the birth/death ratio. You could not create a useful payroll number without this estimate, yet it is simply a wild-eyed guess based on past trends, which by definition we know will change at economic turning points.

Further, almost no one pays attention to the fine print in the data, which talks about margin of error. The statisticians clearly understand the limits of their data, even if the public does not. Often, the margin of error is larger than the number being given, so that a positive number may actually turn out to be negative, and vice versa, when viewed from a few years out.

As Cassius said in Julius Caesar, "The fault, dear Brutus, is not in our stars, But in ourselves, that we are underlings."
Faith-Based Economics

Should we cast aspersions on the data creators? I rather think not. The various government statistics creators are doing their best to give us information that, over time, will be useful. Some is more useful than others in real time. Some has large time lags before it is accurate. To expect the BLS or the Commerce Department to have accurate current data is expecting them to know the future. The very people who are the most critical would never presume to be accurate about the prices of stocks six months out (or even one month), on a consistent basis. Yet that is the kind of prescience they want from government statisticians.

Do you really want data from government sources that makes assumptions about economic recoveries and recessions? That is the job of independent economists, and they generally do it pretty badly. There is no need for the government to compound the errors.

Again, repeating myself, anyone who trades on government statistics as being anywhere close to accurate in real time deserves any losses they get. They are at best a foggy window through which we peer into the future. Taken together, and with some seasoning of time, they can be rather useful; but to pin hopes of a recovery or a bull-market run on one week's data is hazardous to one's wealth.

Reading and watching all the analysts and economists who "see" recovery in one set of data or another makes me wonder what sort of faith-based economics they actually practice. Just as it requires faith to believe in God, it also requires a lot of faith to believe in forecasts made on a single month's set of data, or based on past performance.

Are you interested in finding a real green shoot? Let's look for a quarter when the economic data keeps getting revised upward, two and three months out. That will signal a real recovery. As long as the data is being revised downward, the economy is "having issues," as my kids would say.

Quick sidebar to those who keep asking: Yes, I think we have seen the worst of the economic data, as far as GDP goes. But that does not mean we don't have further negative quarters in our future. I just don't think they will be a negative 6 like they have been the last two quarters. And we may even see a quarter this year with a positive number. But take it with a grain of salt when the usual suspects declare the end of the recession. Look into the data that produces the numbers. As Gary Shilling points out, eight of the last eleven recessions have had a positive quarter, only to see more negative quarters follow. GDP numbers are quirky. But here's to hoping for a real recovery when we do see the next positive number.

Vadym,

Thanks for the clarification. Something we all need to remember — it is quite easy to take at face value a commentary which sounds plausible, especially if it conforms to or confirms something we've already believed or suspected to be true.

[BTW, this is one of the more important points in Taleb's "Black Swan". His market views get much more coverage, but his observations about human tendencies seem to me much more universal.]

This applies to any topic — history, politics or the markets.

The internet is a two-edged sword, able to inform or misinform. As we may remember in the announce of votes tallied in Florida a few years ago — the media at times seems to think speed is more important than accuracy. We need to constantly seek verification from other sources.

Note: Internet commentaries often stem from the same original source, thus rather than confirming are simple duplications. (A bit like saying 100 people who worked for the same company for 10 years have 1000 years of experience. No, the are 100 people with the same, or at best, similar experience.)

NEW DELHI — The ruling Indian National Congress was poised Saturday to soar to a surprisingly decisive victory in India’s parliamentary elections, sidelining small, regional party bosses and potentially diminishing the power of communists who had been largely responsible for blocking economic reforms over the last five years
The apparent margin of victory surprised even party officials.
The projected victory margin, which exceeds exit polls, may help extend the country’s longest stock rally in three years. India’s benchmark Sensex climbed 23 percent this year.

“The Nifty can cross 4,000 within a week and the Sensex can touch 14,000 by June-end,” said Devesh Kumar, managing director of Mumbai-based Centrum Broking Pvt. “Foreign institutional investor participation may go up.”

expect Indian stock market to soar and ADR holder will be benefit

davefairtex it is certainly true that during the heyday of Communism Pravda was the official propaganda machine for the Communist Party, laughably so. There are certainly biases on their reporting today I am sure BUT I wouldn't be so smug to think your sources of media Stateside are any better. What I think many of you who are fed a steady diet of US media should realize is there is a very real 'agenda' at play in the US as well, the 5th estate has been violated. I think the stopped clock comment is very appropriate as it probably better applies to US media.

"Take the two basic possibilities of getting someone to do or not to do something — the carrot and the stick.
We can probably agree that some people will accept a bribe to give info.
We can also probably agree there are people who would not give out info at any price.
There is probably also be a middle ground (think bell curve) of people who would give out certain info for enough of a bribe, but not other kinds of info regardless of price.
All these variables, it seems to me would apply regarding torture. Both its use and its value."

This might be true if all things were equal, but we know for a FACT they are not.

The carrot and stick are not equal. This is my line of work so I can tell you for a fact that the carrot alone is 60% more effective than the stick.
Combined with absolute minimal use of a negative reinforcer (some form of stick in a large escalating range) it is even more effective. This is because we can then repel from the negative and entice with the positive, a two way tool. Much faster and more effective. When the negative reaches physical pain it no longer functions as an impetus because the subject will now do anything to stop it, the positive is lost, and the subject panics (fight/flight) or shuts down (gives up to die). A perfect example for our discussions: Dog shock (training) collars. These can be set from a very mild sensation that is a negative the dog tries to avoid, to all out shocking like a fence charger that will shut a dog down to the point they literally lie there and give up. I don't use them and I don't recommend them because people are sadistic little btards and some people have no conscience or self control. If it weren't for the fact that I see people that profess to love their dogs inadvertently abuse them without really paying much attention to it I might be less worried about waterboarding, but we treat each other exactly the same way. AAMOF, I think I just saw some news story about some idiot using one his kids. You can see what happens when we open this door.

People keep coming up with this false doomsday scenario to justify something that doesn't work, dehumanizes the society doing it and endangers it's own people subjecting them to torture. I read some testimony yesterday that says this scenario is so rare as to not happen and that it didn't happen with 9/11. If this were such a strong concern, then why do we still fly U.S. mail in the belly of commercial flights that hasn't been screened while we screen every passenger and their luggage down to their shoes and shaving cream? Why do we not screen every container of cargo at the source before it arrives in NY, LA, Seattle, Long Beach, etc.? We have the tools to do so quickly, yet we have gaping holes in our DEEP CONCERN. If a nuke is a concern then someone is either asleep, it's total BS, or there is another motive. My BS meter is fricking pegged....and another motive is suspected but unproven with our current info.

In light of those facts, I would use the PROVEN methods and get better information sooner. The opposite choice gets false admissions to stop the pain and turns the subject to pure animal survival mode (they fight), shuts them down entirely (they decide they will die), or worse yet, KILLS them precluding getting any information. Some of these guys are suicidal already, so the hard line is even LESS useful as they go right to the last square right away. They'll be martyrs. The logic for torture is lost with suicidal nut jobs. Ah but meds....sodium pentothal, and some others, seem to work.
http://en.wikipedia.org/wiki/Truth_drug

Some risk... but the negatives, like killing your informant, are much lower and in some cases, he/she won't even remember it so you can strike up a conversation later.... Still considered torture though. I'd say that would be gray area, but I would eliminate as much of it as possible.

On an escalating scale I would exhaust all proven productive methods first.
183 times? Undebatable total failure.

posted don coxe's weekly conference call and an updated GLD chart on the blog,
the position of gold right now is to say the least...interesting,

http://jglobal.blogspot.com/

yvrapx - I wouldn't be so smug to think your sources of media Stateside are any better...

I didn't grow up in the Soviet Union so I cannot speak to any comparison of virtue between the two media. For that, ask someone like Vad, who lived under both systems. He has a basis to compare, not me. That's why I didn't try and make such a comparison!

I just wanted to comment that bias in sources does matter, and the stronger the bias, the more it matters, because using strongly biased sources actually hurts your argument. And I am usually inclined to agree with much of what Kaimu says. As a result, I want his sources to be good ones.

Usually Kaimu uses published treasury balance sheets as his sources which are, shall we say, more difficult to refute. :)

Then again, unless you lived in Russia, how would you know some Pravda writer had such a history? That's the fun thing about this place. There's often someone here who will pop out of nowhere and say "Hey, I work in the XYZ industry, and here's the real story as I see it."

It seems to me that some of the proposed scenarios coming from the Russian propaganda machine are often just a bit outside of credible. The same phenomenon occurs to me in consideration of the feed from the American propaganda machine. It's pretty obvious these feeds are spreading a slurry of political agenda.

Fortunately, we are able to verify through fact checking and beehive mentality. For instance, I'm still waiting for evidence supporting claims of saving or creation of 4 Million jobs... And why such concern over the situation in Pakistan? It seems to me, the "enemy" there could be "killed" with kindness, assuming it's any of our business in the first place. There's something else going on here, we need disclosure. Where's the beef, man?

Now for an interesting thought from Bill Moyers' program:

Have you ever wondered how those items in your shopping cart compare in terms of environmental impact during their entire product life cycle? I recommend the following website for ecologically conscientious consumers:

http://www.goodguide.com/

"Torture doesn't work and that is why it isn't supposed to be used."

I agree fully with the last part of your statement, but, sadly, evidence does exist regarding the successful use of torture to illicit a desired act. Take the case of the 83 crewmembers of the naval intelligence ship USS Pueblo held captive for 11 months by North Korea in 1968. Although there was resistance and even notable heroic acts of defiance to the brutal coercion, in the end, a letter of confession was signed by all the men.

“The crew cooperated with their captors, appearing in press conferences and public appearances criticizing the US government. North Korea gave the US representative of the armistice commission a letter, signed by the entire Pueblo crew, admitting the ship had violated the communist country's waters and committed "hostile acts." According to the letter, the crew expressed no anger at their captors, but rather guilt for their own actions.

To understand these confessions, we need to look at North Korean brutality. The North Koreans beat Charles Law for six hours with a hammer handle while a communications technician was struck 250 times with a two-by-four block of wood and left, semi-conscious, in a pool of his blood. The technician confessed to everything, including escape plans from a James Bond movie.

It also must be said that the men did resist with subtle language and hints, indicating that their confessions were not of their free will. Commander Bucher, after being beaten and tortured, signed the confession with a false serial number and date of birth. One letter had at the bottom in tiny Morse code "this is a lie."

Dr.cosa: The TBT failed support 5/11 at $51.18 but is up for re-election starting Monday. I'm expecting it will find support, but the FED can buy Treasuries at any time, so it's essentially a bet against the FEDERALES and for the people, right?

I'm staying out of their way if possible, look what happened to Chrysler bond holders. Supposedly the second best bond is an MCD bond?

http://tinyurl.com/r3eo8s

"It has been assumed that China will have to move towards the Western model. But why not the other way round? Western countries adopted free capital markets, as the British adopted free trade in the 19th century, because it suited them. Will China now be able to call the shots? Uncomfortable as it might be for the West, the next monetary order is more likely to be made in Beijing than in New Hampshire."

Moving to china or india model is not going to work (capital flow restrictions, managed FX rates, zero transparency). That would contract the capital flows to such levels where we might all start off again as developing countries and erect tall barriers around the country. I am not saying that is impossible or will not happen but would be such a painful transition (something like going from www to local networks for good). What we need is a strong counterbalance to bring the bully (US & all other borrowers) to rein in their drunken charade of excessive spending....

Oh, absolutely. Educated class, or Intelligentsia, of course understood a lot. Some of them accepted the rules of the game and cynically made their careers. Some simply kept silent and quietly hated the Soviet reality, discussing it in the kitchens amongst closest friends. It's thanks to them this phenomenon of Samizdat appeared and blossomed (as much as something so illegal and dangerous could blossom anyway). Samizdat saved hundreds banned books and allowed them to move under the radar from one night reader to another. And you are totally right, these circles were the first to leave the country as soon as doors started opening.

Bill,

Since the JCP Credit Spread has been morphed into a Synthetic Short Call (Short Stock + Short Put) what is your exit strategy if JCP does not fall below $25?

I see Fibonacci support above $25 going back to 2001.
http://tinyurl.com/pptttv

ALOHA !!

DA COMRADES ... to all!

Propaganda is rampant in the USA! It comes in many insidious forms.

I'll start off light ...

One I mention a lot is OPRAH! She disseminates tons of propaganda that tends to only support one viewpoint ... CELEBRITY views which tend to be HER VIEWS! The one major bit of monetary propaganda she puts out is WEALTH=DEBT! Now she has had a show on DEBT, but it was purely from a credit card aspect where consumers spend too much, where she goes into people's homes and asks a lady why she has 60 bras. Then she turns around to promote OPRAH'S FAVORITE STUFF! Hey SPEND MORE! She does not go any further on the subject of DEBT than the surface stuff ... the entertaining DUH stuff!

Then there is the heavyweight we in America know as "FEDVA" ... the US FED ... MY GOD ... according to the US FED there is only ONE VIEW ... theirs! The US FED has about as much transparency as the KREMLIN in 1965! The FOMC meeting minutes are just pure canned double FED speak! Can we even remotely get a third party audit of US gold reserves in this century?

Then there is the BLS ... could you put out any more biased propaganda than the jobs numbers and the CPI? Yet it is GOSPEL!

There's the IRS Gestapo ... CID ... Google it!

The US TREASURY and its math deficiencies where MORE DEBT is the answer to MORE DEBT. Where they play hide the line item and that really productive fun game they call "ON BUDGET-OFF BUDGET"!

Then we get to the biggest US propaganda machine known as the US CONgress! These guys "LIE" for a living! Can there be a more useless committee than the ETHICS COMMITTEE?

Then we trickle on down to all the State and County and even School Board levels. Its just endless spiraling special interests and hidden agendas where we hear one thing and then we get another ...

Yet the ultimate pyramid con game propaganda ... the GRAND DADDY ... is yet to be even "officially" exposed or even remotely hinted at on US GOVERNMENT levels or even BIS levels is the ... REGIME DE LE FIAT! That's been one BIG major brainwashing and Soviet style Stalinist propaganda with a capital P since 1913!

TRUTH ... "T-R-U-T-H" ... where is that ultra-rare commodity reside? What government has a patent on that?

I have an old fashioned bookmarker I use that I got from Mises.org and on it is a quote from Ludwig Von Mises that sums it all up in my opinion ...

"Government is essentially the negation of liberty."

Think on it ...

Hi Shannon,

not much of a retreat here... there was some but nothing even close to what you'd expect during global crisis. Victoria is a somewhat unusual place in this regard. You can look at charts to get better idea of average prices and dynamics of offers and actual sales at http://www.vreb.ca/mls_statistics/index.html for current month and http://www.vreb.ca/mls_statistics/historical_stati... for the previous months.

Tofino's nice place to drop by for a few days but it's way too small for anything over a week, IMO. Matter of taste of course :)

http://zerohedge.blogspot.com/2009/05/exuberance-g...

Kaimu,

Unfortunately, far too many people seem content to simply accept pop news from Oprah or MSM reports which are simply thoughtless parroting. And most stock sales people take their lead from the home office or others who all read the same BS and pass it on as gospel.

I know several friends and relatives who still believe what they are being fed though "official" sources — Buy & Hold, Diversification, Stocks always outperform, Nobody could have seen this coming, It's beginning to get better — BUY NOW!

However, for anyone who really wants to check it out, BLS, US Census, etc. websites do explain the how the data are collected and measured.

I guess they can feel safe that few will do so and even if they do (as I have done) nobody will believe it to be that obviously skewed to the upside.

It is boring enough to put off most people, AND as long as it was working in their favor (on paper), who cared?

I have done my best to instill in my two sons — Question everything!

Craig,

"I know you don't mean Obama when you say this....LOL!!!!!
So does this mean you're going to forgive Nancy Pelosi? :>)"

LOL2

Well, I am giving Obama the benefit of the doubt re: his changed positions on Gitmo Detainees and tribunals. I think most of us would moderate our strongest opinions if in the President's chair. The speed of info transfer and gathering has far exceeded the capacity of any individual's capability to process it — separating truth from fiction, rumor, "disinformation" (formerly known as lies).

However, I have watched and listened to him for too long to believe his promises. He is a pure product of Chicago politics and got his crowd pleasing skills working the system as a neighborhood organizer. IMO he is the epitome of the professional opportunistic politician.

There are still only 24 hours per day, but just think what each President must face every day!

----------

I gave Bush the same consideration when he was in the office. IMO he was not qualified for the job and his personality is such that he was easily manipulated by people like Rumsfeld and Cheney. His fundamentalist religious views, his reluctance to fire people — all show a person who can be convinced of something and lock onto it. Then, he can be made to think of this as a strength.

His limited speaking ability reminded me of the doll, Chatty Cathy" — pull the string and get the same few phrases — over and over.

----------

As for Pelosi — I trust her about as far as any professional politician. I heard her in an interview happily confirm a story...

Q: "Is it true you refuse to iron your husband's shirts?"

A: "When we were newly married he asked if I would iron his shirt and I said I would. But I threw it in the trash — I was not going to start off married life doing any such thing."

She seemed to think it was a plus to show she is an independent person, or a truly liberated woman, can be tough...

To me it showed she would rather lie than simply say, "No honey, not something you can count on from me."

I could forgive her for her denial of knowledge concerning water boarding, but first she would need to say, "I was mistaken, I didn't fully understand the process, or I made that decision in the heat of a national crisis"...

There is no better answer than the truth. (My wife and I have been married 48 years and not because she irons my shirts. We have always been able to trust each other.)

------------

I'm not arguing so much for using "enhanced interrogation" as I am cautioning against making firm "facts" without the real ability to confirm them.

Also, I can understand resorting to their use under the pressure of certain conditions.

I am a target shooter and pretty good with either a rifle or handgun, but could not kill an animal for sport, only for food. My wife knows I often put insects out of the house rather than simply squash them. They are just being what they are.

I am quite sure that under certain circumstances I could not just use such interrogation techniques, but quite readily kill people if I or my family were threatened.

My younger son and I were at the scene of an armed robbery when he was about age four. The guy pointed his gun right at us and then swung around toward the security man who was pursuing him. If I had had a gun I'd have killed him — no question about it.

This has been a very interesting and informative thread.
Thank you.

One of my sons visited the Soviet Union with his high school class in 1984. So good to hear from people with first hand experiences to relate.

The kids were very much more appreciative of the US when they got home. They felt those people about their same age were much like they were, but had a very tough time. The "currency" of exchange included Levis, American news magazines, Elvis Presley records. We may soon be using alternatives to the dollar if our "leaders" don't shape up.

You're right...but I've just focused on the more preventable ones, the alcohol-related fatalities.

Vad,

I do not in any way dispute the veracity of your housing comments vis a vis your geographic area. I do add however that although the town I live in also has not seen the dramatic, historic price-drops one would imagine to be concomitant with such a credit morass, that does not mean that they will not. Prices are down approximately 20 percent. They should, and probably will go lower, adjusted for inflation, as a dirth of qualified interested buyers will, I am guessing, hobble the housing market here for quite somne time to come. But hey. You're in a different country, I don't doubt that it's different there.

Friend of mine real estate agent sold 2 outhouses recently, both under a million which is zip here in Westport and she got all excited. I told her to keep her composure, that a LITTLE natural demand is inevitable (parents with school-aged kids blah blah blah). That is not the same as the great, historic sweeping bull market in housing that characterized almost the entirety of the post-war period.

BTW Vad I did my honors thesis on 3 books, one of which was "Darkness At Noon." I know a little bit about the Soviet Union.

Also why did you decide to hold VNDA overnight, an unusual move for you?
Just a hunch or something more solid?

Shark,

I haven't implied in any way that I have any kind of forecasts for housing prices in my area. I merely told what they did so far, and provided source for more information.

As for VNDA, on the day when I decided to take it overnight it exhibited all the signs of "surprise move" coming. Enormous gap a few days earlier, then instead of fading into the night it consolidated and started retesting highs and even piercing into new highs territory on increasing volume. Each pullback was followed by return to the high. Huge offers got eaten throughout the day, and finally VNDA staged sharp spike on last minutes of trading day and finished at the high. That's quite familiar scenario, so I went with it. Worked like charm.

Kaimu, just looking back to Friday for a "Bev" post, and saw your reply to my mild reprimand re: the Russian rightwinger.
Well, I'm amazed you can divine so much from a simple two sentences. Wrong deductions however.
I'm not offended by criticism of America, gawd knows we earned it especially the last eight years. I prefer the constructive variety, and I scrutinize the source.
I don't get my world view from the "Situation Room" which I assume is one of the corporate propaganda organs that pass for news on TV these days. I am aware of its existense mainly thanks to Jon Stewart.
If I watch TV news it will be BBC, PBS, or DWTV...with a grain of salt.
I enjoy your posts, I get a little nervous when a LOT OF CAPITALS are used, but color and passion is fine. Your casual stance on Nukes a while back was bothersome, and then the reactionary Russian.
That's it, no offence meant.
Ciao, Z.
Now let's see...what was I looking for....

2nd_ave,

"The human conscience is a very effective moral compass. It will tell you whether a certain action is advisable, and whether you can live with it."

You must be very young or incurably optimistic.

Just look no further than the mortgage fraud and continuing cover-up. You are not alone, however, I have a very good friend who says of the big drop in his net worth, "Stocks were actually far to high overpriced. Now they are probably about where they should be."

He is 85 and has always been quite wealthy. I'm sure he and his wife will not need to alter their lifestyle one bit. Others who I know are already needing to make difficult choices.

Another indication that the "moral compass" is inadequate — a whole host of laws with punishment to encourage advisable actions.

I'd suggest you watch out for con men if they hear your views on this.

P.S. I can put you in touch with some excellent deals on Florida property ;-)

"You must be very young or incurably optimistic."

Well, I'm younger than you are, and don't consider optimism a disorder ;)

Apart from the sociopaths in our society, the human conscience seems to work well. The media (reporters, script writers) like to focus on those who either lack/have turned off their consciences for a good story.

Neither does a belief that most people use their consciences make one more susceptible to predators. Anymore than a priest's belief in the existence of good makes him an easy target for evil. An understanding of human nature and/or evil does not necessarily lead to pessimism- often it simply reinforces the need for/power of the opposite.

Les - yes its the hindu god's name.

Les, Vinod; interesting, even though the article was about USD, i focused more on the electronic money aspect (Derivatives & securitization). We know that is not coming back in size like it was in the hey days. So, what is the effect?, can govts become the guarantor of all securitization/derivative debts. I doubt if they can scale up to this level. Bottomline, overall money supply is going to contract. Then I started wondering if deflation & inflation can co-exist. Googled a bit & here are some articles. I am not a gold bug and dont know how biased these articles are but they are interesting read

http://www.drschoon.com/articles%5CAEFCanWeHaveInf...

http://www.financialsense.com/editorials/fekete/20...

http://www.professorfekete.com/articles%5CAEFDaily...

Negative does often bring out positive, if we look for it. That's the secret behind contrary investing, isn't it? When my 401 k took a 50% dump and set me back 20 years with only 8 to go until retirement age, I was in the dumps. However, it led me to brush off some rhyming children's stories that I'd written when times were good, too good to bother with the frustrations of agents and publishers. Thanks to advice from my editor, "The Goopy Ghost of Halloween" will be completed shortly (self-published). Once again, I am optimistic, until the next tumbleweed of frustration crosses my path. That may mean another change in direction. Gotta keep trying!

The Soloist. It's got heart stays real.

ALOHA !!

This syndrome that I see a lot of regarding "repeating the 1930s" is not totally accurate. It may rhyme in a few areas but there are some major differences.

As you know I follow the US TREASURY DAILY STATEMENT. So far the current US government has spent close to $7.5TRIL USD... with a "T" over a seven and a half month period. Every day is a constant increase in the fiscal deficits and every day we finance that deficit in spending with MORE DEBT. So far this year FY 2009 we have financed around $5.5TRIL USD. How it was financed was in part through US Treasuries and "borrowing" from the various entitlement "trust funds". In other words the current generation will "owe" the future generations for their retirement. So do not punish you kids too badly because they just may renege on you if they knew this ...

Lets look back at the 1930s and see where the spending was then ...

During 1929, the worst year ever known for the stock markets, the US government then, based on US TREASURY data back then, had receipts of $3.862BIL USD and outlays of $3.127BIL USD, for a surplus of $745MIL USD. That surplus also continued on in 1930 as well. This current "crisis" has started with the US TREASURY in the RED so deep that we can never get out unless we totally devalue our money to practically zero! Of course if we did that nobody in CHINA or anywhere else in the World would touch a US Dollar, except perhaps as toilet paper.

Further ... the USA in 1929 and throughout the 1930s was not engaged in any warfare. We have been at war here in the USA now for six years. So this current disaster is being played out in wartime. It may not seem like a real WAR, which it is not, but the spending our government is doing to execute it has eclipsed the cost of the Vietnam War. The Vietnam War caused Nixon to default on the US Dollar and close the gold standard(what was left of it) forever.

We did not incur fiscal deficits brought on by spending until FDR started up all his STIMULUS. Even once FDR got to cranking up spending on work programs(Stimulus)in order to turn the tide on unemployment the deficits he created were only running at 2.4 times receipts. In other words for every $1 the US government took in from tax revenues it was spending $2.40. Currently we are spending at a rate of 6.2 times receipts. In other words for every $1 our government gets in tax revenues we are spending $6.20. That is a HUGE difference that, in my opinion, cannot be sustained without serious consequences to our freedom and our way of life.

Let me add in some other "spending" reference points. At the height of spending during the height of WW2 in 1945, the deficit dropped. In other words for every $1 our government got in tax revenues it spent only $2.05. Why? Well the US tax rates jumped into the 94% brackets and the common folk were supporting the war efforts by buying war bonds. Suffice to say WW2 was a very "popular" war for Americans and Europeans as they knew for a fact they did not want to live in a World where Adolf Hitler was king ... Try doing that today to support the WAR ON TERROR, which was never officially declared a WAR like WW2 was. The same goes for the Vietnam War as it was never officially declared a war by the US CONgress either. So all these "unofficial wars" are just that ... Yet some 58,000 American kids died "unofficially"! Okay ... I won't go there!

Also ... none of the banks back in the 1930s got saved. No FDIC ... Technically, JP MORGAN was saved. Now they're all saved!

In fact the US PUBLIC DEBT shrunk in 1929 by almost 4% to $16BIL USD. The height of the 1930s spending the US NATIONAL DEBT grew 20% to $27BIL USD. The very next year, 1935, the US NATIONAL started shrinking not rising and in fact by 1940 had shrunk to only 2% increases. We have not seen annual debt increases of 2% since 1999, the height of the NASDAQ BUBBLE. Now our US NATIONAL DEBT is at $11.2TRIL USD and rising all the time. There is no shrinking.

Lets look at Year-Over-Year(Y/Y) DEBT changes. Over the ten years from 1930 to 1940 the US DEBT changed from a surplus of $745MIL to a deficit of $2.527BIL USD, an increase of $3.272BIL USD. From 1998 to 2008 the Y/Y change has been excess of $500BIL USD, from $113.1BIL in 1999 to $638.1BIL in 2008. That is a 564% increase from 1998 to 2008 versus a 440% in the 1930s. Once FY2009 data comes out a 564% increase will look low! Modern day Americans have elected a much more SPENDY and DEBT friendly government compared to the old days of the 1930s.

These are all red flags to me and anyone else who studies the "MONEY SIDE" of our current fiscal quagmire that is all too often dismissed by those who do not have any MONEY knowledge, which is most of the US CONgress. Yet all the US CONgress and the current President talk about is SPENDING MORE and MORE, which means as I have pointed out MORE DEBT on top of MORE DEBT!

I get confused when I hear of a $3.6TRIl FY 2010 "record breaking" Budget and then look at the US TREASURY DAILY STATEMENT every day and see in excess of $7.5TRIL spent already in FY 2009, over double $3.6TRIL headlines. I always thought that spending was a major part of any budget, whether my own or IBM or the USA. What good is a budget if you are always overspending?

These are all red flags of unwinding EMPIRE and monetary collapse. There are plenty more red flags on monetary collapse but I am only looking at spending right now. I have not even looked at "saving rates" and consumer debt and all fraud that resides in derivatives(which did not even exist in the 1930s), nor do I even consider GDP which is now 70% DEBT based. Let me add that the USA in the 1930s was exporting oil. I also have not considered the fact that there is no gold standard now, as there was in the 1930s. In my mind these red flags are unmistakable.

I do not regard the 1930s the same as now. Its apples and oranges in many regards, too many.

One thing that was the same as back in the 1930s ... the US FED existed!

ALL OUR BEST THINKING GOT US HERE ...

PMA. No, not a stock. Positive Mental Attitude.

I’ve always have found it easier to tackle problems if you have a positive attitude. If you’re negative, it gives you reasons why you may not or can’t succeed.

Same goes for forming a team. Mental attitude is half the battle. All thinks considered, give me someone with PMA every time. And it catches on with other team members!

Come to think of it, the psychology of PMA can also affect your ability to trade markets ;)

jaycrescent - Thanks for highlighting another mind-bender from the Economist.

In fact, I think the new financial order is working its way in from the fringes of the global economy.

I know of huge, long-term, bi-lateral gov't-to-gov't deals between China and Angola, Algeria, Congo, Mozambique, Zambia, and Venezuela involving resources for infrastructure. There are no doubt more which haven't been reported in US media.

Usually resources are to be develop by Chinese investors working with the other country's state oil or mining company, and delivered to China over decades. In return, roads, bridges, gov't buildings are being built by work crews imported from China. The financing is from Chinese holdings of US dollars.

The other gov't gets productivity they can't muster internally, a chance to skim off funds without the scrutiny Western deals would involve, and show projects like roads and bridges to placate the local population.

Then, there was that proposal from a Chinese policy academic for Chinese (minority) investments in US companies if they were US-gov't guaranteed. These would be "bailouts", the proponent argued, which would not require further US indebtedness.

Not to mention the broad campaign by the BRIC's (Brazil, Russia, India, and China) for more influence over the western-dominated IMF and World Bank in return for their funding.

I believe it was the Congo deal, with which the IMF took exception. IMF didn't want to see the Congo gov't assuming the US dollar currency risk on their deal. IMF said it posed too much risk to the Congo's international finances ....

There seems one thing the IMF and China can agree on: You can't trust those US politicians to maintain the value of the dollar!

Indeed, the times they are a'changin' ....

Of course it is not a disorder, but even though most people may be quite honest it only takes one to cause a lot of pain — economic, social, social or whatever.

I first went into business for myself at age 19 and during more than forty years of dealing with people have a lot of stories of people whose consciences were not adequate.

One of my friends in the printing business was left holding the bag for $50,000 by an ad agency that I had refused to do any work for except C.O.D. Several others required threats of legal action if simply a noisy presence at the front desk demanding payment didn't work.

I was very careful and checked out new clients before doing any work. The biggest single uncollected bill I ever had was $343 by a very well mannered ladylike woman who could have been my grandmother. Mrs. McDonald and her husband reputed to be a retired WWII Naval officer, skipped for Hawaii and even thirty years ago it was just too costly or I would have tracked them down.

I beg to differ with your view that, "...a belief that most people use their consciences make one more susceptible to predators." It isn't most people — it only takes a few good con jobs to break you.

The really slick ones, even little old ladies, can spot a sucker in an instant.

Edit: A $50,000 hit plays hob with a PMA for most people.

Kaimu, when you don't hear me say anything about one of your posts, it's usually because I'm saying "hmm" or "wow" or "oh that's not good" - or something like that. This time, however, I want to say something.

I agree, this really isn't 1929. Its - different. Worse? Probably. But at least we aren't an exporter whose market has vanished. Like Germany, or Japan, or China. That's a positive, I suppose. Possibly the only one.

And we're dreadfully in debt. And we're increasing spending, in a deflationary world where money is suddenly much harder to come by. It's not a recipe for success.

"One thing that was the same as back in the 1930s ... the US FED existed!"

And today is different from the 60's, the president rides in a car with a roof!

The OpEx results were reflected in my portfolio today, and it became significantly "lighter" as a result. :)

A few weeks ago, when ERX was trading at $27, I sold May $25 ERX calls for $4.30, and this weekend all my ERX shares were taken away at the effective price of $29.30, which is reasonably fair given that ERX closed at $29.61 on Friday. My cost basis was $17, and as I checked, all my ERX *stock* trades have completely compensated my loss on ERY shorting a few months ago. In addition to ERX *stock* trades, I was also active in selling ERX puts, and the total profit I made on those covered about 1/4 of the loss I took when I closed my FAZ short.

A few weeks ago, when ACI was trading at $15, I sold May $16 ACI calls for 0.70, and this weekend all my ACI shares were taken away at the effective price of $16.70, which is good given that ACI closed at $16.12 on Friday.

Now almost half of my portfolio is in cash, and it lost its long bias. As a result, I decided to reduce the size of my short positions, since I don't need them as a hedge anymore.

So instead of waiting for the SKF shares I purchased on Thursday at $46.18 to hit my limit at $51.18, I placed a sell stop limit (stop 47.42, limit 47.18) on 1/2 of those SKF shares, and kept the limit at $51.18 for the other 1/2.

Also, I placed a small buy stop limit order on UNG (for about 2% of my portfolio), stop $16.12 and limit $16.15. Finally, I placed a small buy stop limit order on ACI, stop at $16.22 and limit at $16.25 for 1.5% of my portfolio. If ACI falls on Monday, I'll sell puts on it covering a much large number of shares.

I have just tallied the result of my FAS/FAZ trades, including the FAS option sales, and found that all my winning trades covered about 3/4 of the HUGE loss I took while closing the FAZ short at $114 in early March. Taking into account the ERX put sales, which covered about 1/4 of the loss I took on the FAZ short, it turns out that I am FLAT on all my 3X ultra ETF trades. So, as 2nd_ave wished that I "will take my plane out of this nosedive," I actually did it. :)

But I am not done with shorting 3X ETFs! I am now much "stronger" and more experienced, and during the next market dive I am planning to sell naked calls on FAZ, which is a "safer" alternative to shorting FAZ outright (providing, of course, that the number of FAZ calls I sell will be the same as the size of the FAZ short I would take).

http://tinyurl.com/o8mr8n

GM doesn't plan on making their list public. but a news outlet has begun compiling and sharing their own list.

Let's see if other areas of Asia Pac follow.

http://tinyurl.com/a8qvjq

http://www.liveleak.com/view?i=bcc_1242396416

This was publicly released in the first week of May, shown on CNN a lot and was responsible (along with the stress test leaks and bulishness of Buffet, Faber, and many other popular investors) for the buying panic we had recently.

I think they may be correct, but the recovery will not be V shaped and things will get worse before getting better (ie retest of SP 666).

Last time ECRI news were released (march 2008), they predicted recession started already and they were correct, the markets reacted with a sell off, placed march low and proceded to produce a strong bear rally.

I expect the same thing but in the opposite direction.

Lots of post about this topic this weekend. Here is my view, America is more than a country; it is the ideal of liberty. In economic terms, liberty translates into the entrepreneurial spirit of hard work, risk taking and self-reliance. And this spirit has made America rich beyond compare

2nd
Game plan for Monday is to play SPY; it might pull back to the 50 day moving average. Expect
Banks, real estate and auto related fields lead to the downside.

ALOHA !!

Seems the petition to audit the US FED is getting publicity from FORBES ...

Here is Ron Paul commentary in FORBES, dated 5/15/2009.

"One of the fallacies of modern economics is the idea that a central bank is required in order to keep inflation low and promote economic growth. In reality, it is the central bank's monetary policy that causes inflation and depresses economic growth. Inflation is an increase in the supply of money, which in our day and age is directly caused or initiated by central banks. All other things being equal, inflation results in a rise in prices. A so-called "mild" rate of inflation of 3% per year leads to a 56% rise in prices over a 15-year period. Even a "low" rate of inflation of 2% per year leads to a 35% rise over that same period. How is that conducive to long-term growth?

A common misconception is that the Fed is completely independent of political pressures. While the Fed has far too much authority to make agreements with foreign governments and central banks, or create temporary liquidity facilities, the governors and--more important--the chairman, are appointed by the president." END

You cannot think of "inflation" in the same day trading mindset of short term. It is not. In fact all the real estate market has done is to "deflate" the BUBBLE PRICE from the 2007 highs to the 2005 early BUBBLE highs. Its all still high ... Same goes for oil speculation in 2008. That is why in my presentation I use the actual visual aids of the US SENATE RESTAURANT menus from the 1930s, when a LOBSTER DINNER in Washington DC was 85 cents! Has the current deflation unwound a LOBSTER DINNER back to 85 cents yet? Why not? This HUGE deflation has been touted at over $12TRIL USD, the value of real estate and 401ks lost, yet a LOBSTER DINNER is still $35! In fact this week here in Hilo, Hawaii regular gas prices went up from $2.54 per gallon to $2.69 per gallon. The inflation is embedded, the BUBBLES are not ... Do I care what my neighbors 401k is at or what he paid for his house? No I care a lot more about what I pay for food, gas, electricity and health insurance. Every time I write a check to pay my electric bill or go to HFN to buy gas, I care. I do not shop for houses every day and I do not even have a 401k. What's more none of that is MONEY SUPPLY.

To read more of this article go to the link below ... Ron Paul, the only Presidential candidate who wanted to eliminate the US FED and not embrace it.

Link: http://tinyurl.com/p67f5m

Hey Bill - I read your WIR...was this in relation to the post I made about SPNG? Not sure if you recall, but I did ask about whether or not we could discuss penny stocks and you said you're ok with them. I found out about them when I was watching a New York Mets baseball game...they're one of the advertisers...

Anyway, I'll make sure not to mention it again...

http://tinyurl.com/5663jg

http://tinyurl.com/qfbtpu

Casualty
http://tinyurl.com/qj8uwl

5 Schools in Queens NY
http://tinyurl.com/o67jsk

What is going on? mysterious flu, terror preparedness drill this weekend at NJ Path train station, 5.0 earthquake in california, global recession etc.

ALOHA!!

Penny stocks were defined by my Morgan Stanley broker back in the 1990s as any stock with a price less than $1USD over a three month period. Then in the 2000s my Merrill Lynch broker defined penny stocks as priced less than $2USD. Since I no longer have those brokers any more I wonder if they have lowered it to 50 cents given the FNM, FRE, AIG, GM, etc stuff ...

The penny stocks I buy are in the resource sector only. I would not even be in them if I did not have my bread and butter stocks like XOM and CVX. I would not be in them if I had a mortgage. I would not be in them if I lost my job. I would not be in them if I had kids. That these stocks are highly risky is a given, yet they have been overall highly profitable for me in the past. That is not to say I have not lost money ... I have. I wonder what the Bear Stearns(thanks Cramer)and Lehman stock holders think? All I know is there will be some fierce competition for WalMart greeter jobs ...

Then I was speaking with my long time friend who lives in Maine. He just got back from an extended stay in London, UK with his older sister. We were discussing the TSX versus the ASX. Then I mentioned that about 95% of the known major US Banks would be penny stocks or BKed if the US TAXPAYER(think TARP and FDIC)was not there to backstop them. Then I asked when was the last time GoldCorp asked for BAILOUT? Or even US Gold? The banks have a history of always going broke and needing government(US taxpayer)assistance. When was the last time XOM got a BAILOUT? How about BHP or NEM?

In essence the entire banking system of the USA would be at best penny stocks. So where was the risk analysis there? Or was it all thrown out the window because of their bought partners at the US CONgress? What story did Temasek really buy?

"Why are Russians refered to as Reds?"

In Russian, the word krasnia means both red and beautiful. Red Square is Krasnia Ploshad or beautiful square. Russia has a history of close contact with China and the East where red is a revered lacquer. St. Pete is instructive of the Russian colour motif. The buildings are mimics of Western architecture but to a Western eye, the colours are hideous greens and faded yellows. St. Pete is a polyglot of Western architecture spanning centuries but is more like a Disneyland. It was Peter the Great's window to the West and as such is despised by many.

The term Red was coined as a term of derisiveness as in "better dead than Red"," the Reds are coming" etc. The term "Yankee" began the same way to deride the Dutch on Manhatten as in Jan Queese. Seems old Jan used to sell cheese to the Brits when the island was divided.

Terms of derisiveness have a way of becoming badges of honour after a century or so. Or so it seems to me.

ALOHA !!

Les posted ... "Default doesn't sound so exaggerated a possibility anymore. Talk of debasing currency and repegging to a gold (or silver?) standard have disappeared quickly enough, but I wonder if such a possibility remains on the cards."

The only way FDR and Nixon could restart the economy was to default the US Dollar and devalue to gold. If you look at current POG levels these are tied to a US TREASURY gold price peg of $42USD. Imagine if they repegged the US gold reserves to $900USD from $42, an increase of over 2,100%? What message would that send to US DEBT holders(aka USDX)? I believe a lot of people here see a US Dollar or a Swiss Franc or whatever your currency as "money". I do not ... I see currency as DEBT. I see GDP as DEBT ... I see spending as DEBT. Like Jack Nicholson said in the movie "As Good As It Gets" ... "Is there any other way to look at it?" He also said, "Go sell "crazy" somewhere else, we're all stocked up here!" A great line to use on Ben and Timmy at the next FOMC ...

Its only a matter of time ... Only the US TAXPAYER is paying for the current strategy of "buying time"!

The MOUSE MONEY will deflate and the folding stuff will inflate. Yet in a monetary collapse your money won't be worth anything so "deflation and inflation" debating becomes only academic theory for economists at that point and not "real world". That is the point I argue in the BIG PICTURE ... that is the C WORD. You can argue about the Weimar Republic or the Great Depression but in the end the common man, whether living in a inflationary world or a deflationary world, just wanted his money to buy something so he could eat another day.

In an inflationary world like Weimar the stock market was the GO TO place for making a lot of money in a short amount of time as anyone who studies stock markets will attest the markets do a lot better when there is inflation. That is why a 100 year DOW CHART looks like it does. Problem was during the Weimar your BIG winnings in the stock market only bought you a loaf of bread!

You can circumvented that issue and buy year round producing farmland. I did that here in Hawaii. Its a "real world" hedge against starvation! I do not have to win in the markets to eat. In fact those who had the best lifestyle during the Great Depression and the Weimar Republic lived on farms. That is the great SUBURBIA disconnect in America now and that is why the US GOVERNMENT must ... MUST ... HAS NO CHOICE ... but to keep the PROMISES going at whatever the cost, because there has been this dissolution of the past real world hedge(farms). How many American families do you know own food producing farms? How many of you here know someone who earns a living from agriculture? In the 1920s and 1930s many families had farms. You cannot eat your mortgage or your car payment.

DEBT is an illusion meant to profit only the bankers. If you do not believe me then just quit paying. Your bankers will not be happy, but then what can they do? Oh yeah, they can ruin your credit record. HA!! I laugh about that! I mean here is an insolvent bank with taxpayer bailouts reporting that you are a credit risk! What hypocrites! The world continues on whether you pay your mortgage or not. Whether you pay your credit cards or not. A lot of Americans have done just that. I suspect a lot more will in the future. When you are laying on your death bed are you even going to be thinking about your credit rating? HA!!

You have to have a plan that goes beyond the daily 9 to 5 ... Whats yours?

The great Arthur Burns, former US FED Chairman prior to Volcker, that is the mentor of the ERCI laid it all out for you at the Jan 17, 1978 FOMC meeting ... "Gold, paintings and farmland" (see my post this week on Arthur Burns and 1978, which was also published at GATA this week)!

Alice In Wonderland!

IT IS WHAT IT IS ...

(not intended as a misogynist remark, applies purely to the article at hand ;)

May 15 (Bloomberg) -- Temasek Holdings Pte sold its 3.8 percent stake in Bank of America Corp. at a loss that may total $4.6 billion, as the Singapore state-owned fund shifts bets from Wall Street to emerging markets.

The sale may have raised about $1.27 billion, based on the average price of Bank of America stock in the first quarter. The divestment was completed by March 31, according to a U.S. filing. Temasek declined to comment on the price.

Temasek, whose investments shrank 31 percent in the eight months through Nov. 30, raised its stake in China Construction Bank Corp. this week, and Chief Executive Officer Ho Ching said yesterday the fund would reduce exposure to developed economies. Temasek had spent about $5.9 billion since 2007 buying shares in Merrill Lynch & Co., acquired by Bank of America on Jan. 1 after the stock slid 78 percent last year.

“The belief now is that the world is not so American- centric anymore,” said Melvyn Teo, associate professor of finance at the Singapore Management University. “It’s going to be driven more and more by the Chinese economy and consumer so might as well load up more on Chinese banks than American banks.”

The value of Temasek’s assets fell to S$127 billion ($87 billion) in the eight months to Nov. 30 as the credit crisis drove down the value of stakes in Merrill Lynch, Barclays Plc and Standard Chartered Plc. The drop in the portfolio tracked a 38 percent retreat in the MSCI World Index.

Bank of America Stake

Ho, wife of Singapore Prime Minister Lee Hsien Loong, drove an expansion outside Singapore and increased financial assets to 40 percent of the company’s portfolio. Charles ‘Chip’ Goodyear, the 51-year-old former head of BHP Billiton Ltd. who oversaw a fourfold increase in the company’s stock during his almost five- year tenure as CEO, will replace Ho in October."

The fools appear to be repeating the same mistake they made with BAC. Bank of China might seem a good deal now, but if they wait three to six months...

edit: just listening to Tom Keene on Bloomberg Economy. China has gone from restricting credit prior to the crash to forcing banks to lend again, which apparently they are doing healthily. So maybe madame Ho gets it right second time round.

ALOHA !!

Thanks nemo!

No ... Google would buy them out first! Then GOOG would go up!

I cannot seem to get ASX codes though.

Sensex, Nifty up 17% today, 48% year to date.

Les, Vinod Shiva,

Thanks for the link to the article by Professor Fekete. Without knowing any technical explanation such as he makes, I have always felt eventually the dollar can only suffer due to the Bernanke actions.

I also seems impossible to create inflation (Bernanke's avoid intention since before taking office) unless people return to extreme credit positions.

From seeing the effects of job loss where I live for the past decade, I can't believe people are going to spend much less borrow more. They are paying down debt or worse, struggling to keep from going deeper.

House sales are averaging 13 to 15 months and going at a much reduced price. The auto dealership closings and low production have been a double hit to jobs here. Many parts suppliers and so far three dealers have been affected.

I have been holding LT Treasuries and GNMAs (with a figure on the exit button) in the belief that deflation will increase at least on most items. He spells it out pretty clearly that is his view.

Cara's Commentary & Community Chat, Mon., May 18, 2009
May 18, 2009 by Bill Cara 7:15am ET