November 19, 2009

The following posting in ITALICS to represent the fictional perspective I see possible during a week long currency crisis created by the United States government and how it might well be viewed from the eyes of a blogger, a truck driver and a warehouse section manager. The premise might seem like a crisis that could not happen here, but does it really take much of a reach to come to these conclusions? Each individual might react differently, each aspect of the story questionable to some degree but the question has been asked of yours truly as to why and how the series of events could occur in such rapidity and without warning. For those that have been reading my pages and works since late 2005 when some friends in the real estate and financial industry made me aware and gave me the red pill so I could understand the depths of the financial fraud being perpetuated on our nation and much of the Western world married to our foolishness.

To provide an alternative to just the story telling aspects as how I envision such a time line let me start with another opening salvo and commentary on today’s markets to give you a perspective. The regular readers of these pages understand that I have been preaching the 1-3-6 Rule for some time and as such a quick rehash for my new guests is in order. During the peak of the financial and credit crisis in 2008 and 2009, the 1, 3 and 6 month United State Treasuries had their yields crater to 0.00% or into negative territory in some cases and just above that during other periods.  Let us start this brief trip in time with a story from Reuters on April 20, 2009 titled:

US Treasury bill rates fall on bank concerns

Today those rates per CNBC are:

1 Month: 0.01%

3 Month: 0.01%

6 Month: 0.11%

Those are absurd yields by any stretch but when measured against the last “official” inflation report you are actually paying the government ten cents on the dollar to hold your money.  To get a better perspective, here is the report from Bondsonline at 1626 ET on November 19, 2009:

Thus you do not have to take my word on it. We have billions of dollars pouring into short term Treasury Bills to essentially pay the government to “store” or hold their money for the next 30 days to 91 days and it begs the question as to why. The answers I propose are simple and have been stated many times before, that our financial system is no much more repaired or functional than an airplane is airworthy after it flies into the side of a mountain at 500 knots.  Credit is limited if not totally frozen at many levels and the government’s role as banker of last resort is being tested by foreign powers sick and tired of funding America’s house party. And the timing of the sudden move in short term Treasury yields which began in August of this year and has been accelerating ties in nicely with the timing of the fictional death of our dollar I have been outlining.  I shall continue to add to the story and highlight the news stories and related articles in a later thread with the appropriate links to give my readers some idea as to how these theoretical conclusions were reached.

The party is about to end. Let’s take another look to see what the hangover from the party might just look like……..

“Ah, Lincoln Avenue exit, Thank You Lord for getting me home!” an exhausted driver named Mike exhaled as he saw the ramp approach.  Had had just over a half tank of fuel and could keep the rig running during the icy nights in Minnesota but was more aggravated after today’s events that no one in his office would answer the phone or the Qualcomm communications he had sent.  Mike spent seven hours to get fuel in Fargo as the tanks were empty and the last tanker truck the Petro would send did not arrive until three hours ago. As a result, Mike sent a nasty message to his dispatcher about ice, cold and where it needed to be located up his dispatcher’s torso in Atlanta.  Here it was six o’clock in the morning on I-94 and the roads were packed with truckers as usual but the CB radio screeching with chattering rumors about bank failures and economic collapse. “Good thing I have The Highway channel on my Sirius” he thought to himself as he cruised home to some classic Johnny Cash.

As he started down shifting on to the ramp he noticed that at just after 6 a.m. one of his neighbors, Deputy Monckton was at the bottom of the ramp with his lights flashing and flares across the bottom of the ramp. Mike rolled to a stop and cranked the window down and asked “Hi Jack! What the heck has you out here freezing your tail off this early in the morning?” The Deputy unsnapped the cover from his parka over his face, took a sip of coffee and then spit out some chew to reply, “Mike, you are not going to believe this, I’ve been ordered to close this exit. Locals are the only ones allowed in for the next ten days per the Sheriff and Mayor Hilldegest. We’re supposed to turn everyone away here and off  the old Highway 52 and 210 exits. I hope you’re going home, there’s some wild stories circulating out there!” Mike grabbed a huge gulp of coffee and wiped the over flow off his now frozen beard in the negative 21 degree temps to tell the Deputy “I’m going home and locking and loading. I’ve got a about a third of a load of pork from IBP to deliver tomorrow in Duluth, but now, we might just need it here. Call me if you need my help on the patrols, I’m locking this sucker up.” The deputy said “thanks” gave a half-hearted salute and moved his car to let Mike through. Little did Mike know that the little town of Fergus Falls would get very, very busy before the week was over.

Meanwhile, back in Hampton, Georgia….

February 22, 2010 0315 A.M. ET

Tom finally had the joy of handing a clerk $72.00 to pay for 30 bucks worth of toilet paper and a bunch of canned goods. Amazingly when Tom arrived home a half hour later his wife greeted him at the door. “Well, was it worth it getting all that toilet paper?” Sandy asked. As Tom looked uncomfortably at his lovely wife of twenty years, he started to speak when she interrupted and said “uh, I don’t see any of this magic toilet paper? Where is it sparky?” Tom looked down as he set the first load of bags of canned food down and a full two cases of Saltine crackers and started the story, “Well, uh, honey, you see there was this guy in the parking lot and uh, well, you see, he uh, well, gave me $10 a package for toilet paper I paid $5.99 per package for! He’s such an idiot!!!!” Sandy was not impressed. She said in a stern and disgusted voice “And if we run out because the stores are closed, will you let me use all that money you just earned to wipe my butt?”

“Uh” was all Tom said as he looked down and meandered back to the car for another bag full of canned veggies and Ravioli in the middle of the night.

February 23, 2010 1:41 A.M.

Crap, I forgot to turn off the computer. Look at all the emails and nasty messages. Maybe it is just a bad dream or the bourbon but I swear that even at this time of night the “Day After” as the media was calling it seemed like it was prime time as thousands of people were on my favorite message boards, many pleading for help about their investments or what to do to survive. After finishing up my business in the bathroom, I figured I might as well turn on the idiot box and see if the mainstream had figured out just how severe this historical event was or if our morons who helped make this mess had the nerve to utter any statements from Geneva yet.

As I flipped through I wondered if slugs like Cramer and Kudlow would ever show their face on television again.  I had managed to convince the wife that I needed at least three televisions but that didn’t fly so two would have to do along with a split screen on my monitor as I used when I formerly day traded. She was wonderfully tolerant but knew that I had a clue this might be happening so understood and enjoyed a bottle of wine with me as we talked on the patio before retiring for the evening. Unfortunately my office beckoned and when I saw the insanity on my screen my head almost exploded.

There it was, live at eight minutes until 2 a.m. a repeat of a special “Fast Money” segment on Bubblevision proclaiming and pushing the “Best Stocks to Buy” when the market re-opened next week. The best stocks to buy? These morons are acting as if this was just eating some bad undercooked chicken from a local Chinese choke and puke and once you purge it, you can chow down some more, just add more soy sauce! At 2 a.m. the mood returned to my more somber dark outlook as the Bloomberg network began live coverage from Switzerland and their attitude was 180 degrees from the propagandists on other channels.

The interview they had with the Swiss Finance Minister Merz was pretty much to the point. He looked into the camera and sternly proclaimed “We will not sacrifice Europe nor our economy to save America and their illogical banking structure. We will issue a statement tonight after President Obama speaks at 6 o’clock Geneva time.”  I figured that might give me time to squeeze in eighteen holes and enhance my hangover if I could get back to sleep but that would mean convincing my boss to tee off at 7:30 a.m. instead of 9:30.

05:09 A.M. ET

The snooze button felt good but sleep was not an option. I left my wife’s warmth and comfort to sleep on the guest bed and kept the television volume on low just in case the EAS decided to activate because the ChiComs got sick and tired of the excuses from Obama and Bernanke in Geneva. Of course my paranoid self got the best of me and made me get up, shave, shower and listen intently to the local station which broadcasts the Bloomberg Radio Network exclusively in the early morning.  What was unusual about this mornings program, as I smelled the coffee cranking up from my automatic Mr. Coffee (Dunkin Donuts, fresh ground if you’re curious) was the appearance of the morning team of Tom and Ken a full two hours plus before they normally come on the air. Bloomberg “Surveillance” was on at 5 a.m. and that meant either big news was breaking or there was some serious concern on the behalf of the big money crowd. The first interview they had was with a New York City Councilman who worriedly professed that the longer the markets were closed and the more dangerous the projected actions, the worse the city would be hit. I found that interesting because locally, nothing much of anything beyond the international fiasco was really going on. The bank closings and gas stations running out of gas was just taken in stride by the masses and that’s why I was hurriedly shaving and then putting toilet paper on the fresh cut when Tom Keene said that the projected Dow opening if it were to open today was down thirty percent if it were allowed to trade according to some experts.

06:00 A.M. ET

As I finished my shower the sounds of Bloomberg Radio faded as I turned it down to turn up Bloomberg television and hear the big announcement from the new President of the EU Van Rumpoy state the following:

“The United States Dollar in its current form is no longer an acceptable medium for a reserve currency or international trade with members of the European Union. We have expressed our policy on this matter to the other world leaders and President Obama at the morning meeting. The resolution of the matter will be completed soon and the announcement of our final policy decision will be enunciated at 6 o’clock European Central Time.”

Stunned, I reached for the half full glass of now somewhat warm wine and chugged it. While the sheeple as I affectionately nicknamed them might have slept through this announcement, it was Armageddon for our country. Screw it. I’m going to play golf one more time before it hits the fan. This is absurd.

06:25 A.M. ET

The ‘DING’ on my toaster oven went off faithfully with my last ‘Everything’ bagel and the cream cheese tasted extra rich this morning. It was almost if enjoying life without work was better but instead of retirement it was more of a resigned “now what” attitude. As I walked back into my home office with my bagel on my plate, the beautiful wife was awake and asking what my plan was. I reminded her that there was no work today so go back to bed but she insisted on going into her office, I guessed to answer phones that were not going to ring and hoping someone would help her figure out what was next for her state contracts. I told her that I’m playing golf with my boss so I have my excuse for playing hookie from reality. Just as she was going to reply in a rather rude outburst I asked her to be quiet as Prime Minister Brown from the UK began to speak:

“Fellow citizens of the world, America and the United Kingdom have long enjoyed a special relationship. The matters being discussed within the halls of this meeting in Geneva will not benefit the citizens of the crown nor the free world. The United Kingdom has elected to depart this meeting and recognize the United States Dollar as the primary reserve currency for trading purposes and we fully expect and accept that the Americans will make good on all debts past and present that are owed to our nation as we too shall be strong and persevere in the face of this unwarranted attack on our sovereignty.  The crown and eagle shall stand together, alone if we must. We will not abandon the ally which helped us survive World War Two and the Cold War. Thus the meetings here in Geneva,  from the perspective of the United Kingdom and our financial agencies, are now concluded. Effective at midnight tonight, the United Kingdom shall withdraw from our participation in and investments of the World Bank and International Monetary Fund. Good day and God Save the Queen.”

06:37 A.M. ET

I walked into my bathroom and got quite ill to my stomach.

07:oo A.M. ET

As I tossed my golf bag into the back of my pick up truck the cell phone rang and of course it was my boss. He said that he had lined us up at the country club but only for 9 holes because he wanted to see what President Obama and the rest of the G20 said at noon today. After signing in and the usual pleasantries, we headed out to the practice green to attempt to warm up a bit. Thankfully, it was a nice Florida morning where global warming had cooled the tee off temp to a robust 49 degrees and as I tried to find my stroke  I muttered under my breath an obscenity (or four) about Al Gore’s family tree and dumped a little Irish Whiskey into my coffee to warm it up.

We walked to the first tee from our golf cart and the Marshal said cheerfully “Have a good time gentlemen, it may not matter tomorrow!” With that I figured it was time to fire up a Diamond Crown #7 and enjoy the scent of a Pyramid Maduro as my golf game was not going to be so hot today. My boss said jokingly “I’ll take one on the second hole if you have one, I’ll be out of business soon anyways” and as he chuckled proceeded to hit a nice drive about two hundred and seventy yards down the right side of the fairway. I reached into my bag and handed him my last cigar and told him to enjoy today because tomorrow was going to really suck. He replied, “Yup. As soon as the courts open, I’m filing Chapter Seven.”

That made for a nice shank about seventy yards behind his ball and in the tall grass leaving me a mountain to climb. But the best part was getting away from the Marshal who was acting as a starter today to work off tips (of course we gave him $10) as now we could talk and drink like Kamikazes on their final mission. The truth about our local situation was about to come out.

09:17 A.M. ET

The Par 5 sixth hole was a monster today with the tees set back in the dew laden grass some 547 yards from the pin. The inhalation of my cigar helped but adding a cocktail to the mix did not hurt. My boss, a normally reserved sixty three year old self-made millionaire was chugging drinks like a mad man and telling all. He told me how the local banks were all insolvent criminal enterprises, as if I did not know that already. He told me that fifty percent of the commercial real estate was already delinquent or ready to be foreclosed upon. He even told me that half of the private jets at our Sarasota airport would be repossessed  if any damned fool would buy them for 30 cents on the dollar! As he hit his second shot off the fairway, I took a swig straight up. The hangover I had this morning was nothing compared to what was coming for America.

11:00 A.M. ET

The approach to the 9th hole was one of both a glazed over look of relief and horror as we knew that once were settled down to watch President Obama’s speech at noon, our lives and our nation would change forever.  My boss laughed as I birdied the hole, giving me a scorching score of 49 on the front nine and he finished up to whip me by ten strokes yet again.  Knowing full well that our relationship as employer and employee was practically over, I looked at him half serious and said “You know if you actually gave me a fair schedule for time off, I would hit the ball as well as you do.”  He let out a huge belly laugh and said that he was buying the first round and not to worry, he was giving every employee one month’s salary on Thursday with the cash he had on hand and more when the banks opened to insure everyone survived before he filed for bankruptcy.

“Dear God” I thought to myself. He’s either fleeing the nation or ending it all. The local news was chocked full of reported and rumored suicides around our community as of yet the names were unconfirmed this morning. The blaring of sirens out to Longboat Key and helicopters flying to our local hospital disturbed the normally quiet winter evening, yet it seemed surreal to everyone who lived in our community. The bartender at the country club looked us in the eye and asked “Are you staying for the big one?” My boss, being the the guy with the attitude now of “whatever” replied, “You mean they are showing a repeat of the Bucs game today again?” The bartender laughed and replied, “No, you know, President Obama and the bankers are going to screw all of us retirees in forty-five minutes! We don’t matter any more, so we figure we’re toast.”

My boss, saddened, looked at him and handed him a $100 bill to my astonishment and said “Old man, this may not be worth anything today, tomorrow or ever again, but take it for what it is worth now. A thank you for helping our nation make it this far.”

I started to get a little misty eyed at that point.

11:55 A.M. ET

CNBC interrupted with news that a WalMart Super Center was in the midst of a riot as it was closed due to running out of stock on the north side of Lexington, KY. As footage rolled in, the scroll said “6 dead, 15 injured” and just as the reporter was getting ready to speak….

11:59 A.M. ET

Attention all broadcast, cable and satellite outlets, this special emergency broadcast from Geneva, Switzerland and the President of the United States begins in 10, 9, 8, 7, 6, 5………..

November 18, 2009

The following story in italics is a potential fictional time line for the day the dollar died. I hope not to instill fear or loathing but to give everyone some perspective on a POSSIBLE outcome which does not really take much of a reach to come to any conclusion. Despite popular belief and promises from those who wish to rob you of your savings and investments, the collapse of the dollar might just be an event measured in hours, not days as their control is not what it seems…..

Mike was less than an hour from home in Minnesota after dropping his load off in Fargo but knew he needed to top his tank off this Sunday evening to insure his rig would make it home. He pulled into the Petro Truck Stop just outside of Fargo and hopped out of the cab into the bitter twenty below temperatures which he could not believe had already hit at ten o’clock at night. He slid his fuel card into the pump waiting for the next prompt when the “SEE ATTENDANT” message flashed in the screen. He blustered, figured it was another card problem and whipped out his Master Card and slid it in after the pump reset and again the “SEE ATTENDANT” message flashed up. “What the hell is going on?” he thought to himself as he wandered into the long line of drivers boisterously yelling at managers and clerks alike.

Tom finished up his shift on the docks at the Nestle warehouse in Hampton, Georgia at exactly 11 o’clock at night and decided that because of the scuttlebutt he had been reading on the message boards, it may not be a bad idea to pick up a few cans of food and some toilet paper at the local WalMart Super center. Even though it was a Sunday night, they were always stocked and it was just five minutes out of the way to his home. As he walked inside the store, his mouth dropped. It looked like the day after Thanksgiving sale with every register open and ten plus people deep at 11:30 p.m. “Oh my God!” he gasped as he walked in grabbing the last shopping cart with the wheel that was half locked up.  As he walked as fast as he could to the aisle with the paper goods, he looked at all the shelves then noticed the clerk who looked stunned himself. “How in the SAM HELL does WalMart sell out of Toilet Paper son?” he screamed at the eighteen year old kid. “Sir, I don’t know what is going on. Is the world ending? I’m a little freaked out!” the clerk stammered. Tom realized that he was not to blame and as he calmed down said to the kid “Son, I don’t know what is going on either. It must be an ice storm on the way. Are you folks getting another truck soon?” The clerk said in a very low voice “Sir, I think there are two coming at 2 a.m. I would wait here if I were  you.” With that information Tom slinked outside to his car and called his wife at home just before midnight to tell her he would be staying to wait on the WalMart trucks.

1730 ET…February 21, 2010

It was a typical Sunday night in my household, a tremendous dinner, nice weather in Florida and of course a chance to chat with my friends online about the events of the world. The big news was that on Friday, February 19, 2010 the US Dollar Index closed at 69.07 far below any level in history and of course shattering all known technical support. As I grabbed a glass of Port and settled in front of my computer at 5 p.m. Eastern to watch the Asian fireworks and watch Bloomberg and CNBC-Asia on my computer, I noticed the Middle Eastern markets closed in horrid shape. The Israeli market closed three hours after the open and down 22% for the session. The Saudi markets closed after one hour and down 41%.  Other regional markets did not open or were shut down due to national emergency declarations. As I tuned in expecting the usual repeat on Bloomberg, it was live with a somewhat excited news babe reading information from a blog reporting “rumors” that the CEO’s of Citigroup and Bank of America were in meetings since 11 a.m. with the New York Fed. At that point, it was time to put the port up and break out the hard stuff.

Gold had closed at a record high again, up some $37 to finish Friday’s session up at $1289 and change so I figured it would be jumping again with all of this worldly instability on display. I searched the boards and feeds like mad, looking for anything on an Iranian attack or outbreak of war elsewhere in the world but nothing was found at all. As 6 p.m. Eastern flipped up on my watch, CNBC interrupted their programming with a live update from New York instead of Australia or Tokyo about the meeting at the NY Fed. Bloomberg also broke from their Asian coverage with a brief story but no details as to why there was a meeting today or who else was there.  As the New Zealand markets opened, the prices went nuts but shockingly to the upside. Their markets shot up 11% on the open to break over the 3900 price level but that was not the story. As the futures opened in Chicago for the evening session, no matter where you were in the world that day or night, you printed that screen at 6:04 p.m. Eastern time as the prints were staggering:

Gold UP $212.15 to $1501.15

Silver UP $39.13 to $81.06

US DOLLAR INDEX DOWN 9.5869 or just over 14% to 59.4830

US S&P FUTURES DOWN 49.13

US DOW FUTURES DOWN 472

NASDAQ FUTURES DOWN 135

Holy Smokes!  This was an absurd way to start the night and my phone started ringing along with text messages and emails out my wazoo. The sense of panic was evident on Bernie Lo’s face as he came on to the air discussing what was happening in the futures market and fortunately he announced that Jim Rogers would be joining him after the next break. As the commercial started at 6:09 p.m. Eastern the scroll at the bottom of the screen was bright red with the headline:

ALL U.S. EQUITY FUTURES ARE LOCK LIMIT DOWN…..TRADING SUSPENDED UNTIL 0900 ET MONDAY FEB 22….US DOLLAR BEING SOLD ACROSS THE BOARD

By 6:15 the Euro was trading at $1.92, the Kiwi (New Zealand Dollar) at $1.26, the Aussie Dollar well beyond par at $1.39 and the Canadian Loonie rocketing past par to $1.33. The U.S. Dollar was in a full fledged collapse and the world was putting money anywhere they could to escape the carnage. As the New Zealand equity markets struggled to handle the order flow an announcement emerged at 6:27 p.m. Eastern time that they would no longer accept U.S. dollars within their nation for the next 72 hours until the United States Federal Reserve Bank introduced stability measures.  That instantly turned a huge move to the upside to down 17% in less than three minutes and soon thereafter, trading was suspended by 7 p.m. Eastern time.  Instead of waiting to see what was next, I left at 6:51 p.m. to run down the street and take $500 from the local grocery store ATM,  returning just in time for the top of the hour news.

1900 ET

The Australian markets attempted to open but due to order imbalances they were delayed twenty-seven minutes. It was a buying frenzy in Australia also as the Aussie Dollar was skyrocketing higher and gold continued to gain, now up $273.20 per ounce in less than two hours of trading. The Chicago board was going to make a statement at 8 p.m. ET and the world was holding its collective breath because something bad was happening again in the United States and everyone wanted to buy into foreign markets to escape the American disaster on the horizon. After a brief opening, the Australian government followed suit with the New Zealand announcement and suspended acceptance of the U.S. Dollar for commerce until further notice. The Japanese were very quiet in the mean time as they announced at 7 p.m. they would keep their markets closed but the huge move in the Yen caused massive concerns as noted by the central bank. The yen appreciated from a close of 79.8213 on Friday the 19th to an opening of 48.7326 in less than an hour of trading. Nobody wanted dollars and even fewer people it was discovered wanted the British Pound.  The Pound for the first time in its history was worth less than 100 yen and it was well on its way to joining the US Dollar in a death spiral.

2000 ET

The internet is crawling. Message boards were lit up with record numbers of participants. Rumors swirled about declarations of martial law, bank holidays, secret wars and other crazy things. Yet my phone messages, conversations, texts and emails told me there was something very very wrong. Two of my friends called me to tell me the consequences of the failed 30 year bond auction last Thursday came home to roost over the weekend. Citi and BoA were rumored to have a huge CDS obligation due to the interest rates being blown outside of the norm and the 6.05% yield from the auction cost the banks an estimated $400 billion each if  they were forced to settle open swap contracts and derivative issues by Monday or the end of the month. The swaps and derivatives which were to prevent the collapse may actually have finally started it but nobody could verify anything that was happening as the NY Fed looked like a war zone with hundreds of cameras around the building and reporters speculating endlessly on every cable channel.

2100 ET

I did not know who to believe but when Bloomberg played the excerpt from Jim Rogers’ interview just after the top of the hour where he said “this is what a currency collapse looks like and if you were not prepared, you were wiped out” really resonated with everyone on the Bloomberg set and throughout the news worldwide. The Chicago Futures were closed by order of the CFTC and SEC and that was the big announcement but it was assumed anyways because there was no way the COMEX or anyone else could possibly have kept up with the demand for precious metals as the last print had gold over $1579 per ounce and worse, the base metals closing at obscene prices like $6.79 per lb. for copper! The Shanghai markets were ordered open for domestic participants only and no overseas selling was allowed nor trading in US Dollars thus allowing the communists to manage their banking situation without outside influence. Unfortunately a rumor was confirmed on FNC later in the hour that Chinese troops were deployed to all U.S. and British bank branches inside their nation. That only permeated the panic already felt on the internet and in the air. The news at the top of the hour was even more shocking.

2200 ET

CNN led the hour off with coverage of the “FINANCIAL CRISIS OF 2010″ with breaking news about two hedge fund managers committing suicide in their offices in New York. That did not help the confidence level nor did the statement from Treasury Secretary Timothy Geithner at 10:09 p.m. Eastern that the “government was in full control of the situation and that the panic world wide was unwarranted.”  When he finished the statement assuring that the financial markets would probably open on time in the morning, the snicker from CNBC’s team of Gasparino and Griffith spoke volumes about what was really occurring.

2300 ET

Somehow a picture of Goldman Sachs CEO Blankfein and JP Morgan’s CEO Jamie Dimon entering the New York Federal Reserve building was leaked out and broadcast on cable news and financial news outlets causing more discussions and a genuine sense of panic to grip everyone. Reports about credit cards not working for the last two hours nationwide were swamping the newsrooms but no comments from VISA, Master Charge or anyone else was forthcoming.

0000 ET February 22, 2010

It was officially a panic. Reports on local news stations about grocery store shelves being cleaned out and ATM machines running out of money hours ago and not being refilled were broadcast nationwide. Even my local station had a story about accessing the reporter’s bank account online and all they got was a very scary message as they attempted to reach his bank’s web page:

404-NOT FOUND

0100 ET

WWOR and WCBS started reporting that gas stations in the New York City and northern New Jersey areas were running out of gas even though credit cards did not work. The cable news stations and financial news networks just recycled earlier news with updates at the top of the hour. The world markets were closed and everyone was holding their breath to see what happened the next morning.

0200 ET

As I struggled to stay awake, NY Federal Reserve President Denis Hughes came to the microphones with Dimon, Blankfein and shockingly Ben Bernanke. Hughes immediately deferred to Bernanke who said that the President would address the nation at 7 a.m. Eastern Time and that he felt the crisis was averted for the moment and that everyone should have faith in the United State’s policy of a strong currency and banking system. After that statement was concluded, Bloomberg switched to a banking analyst from Singapore who said that the U.S. was now a hulking smoking black hole in the ground and the only thing it was good for was to return those worthless dollars back to “THAT” nation so “THEY” could burn them to stay warm this winter.

0300 ET

Someone on the message board posted a story from WTOP that military police were seen setting up roadblocks throughout Washington, D.C.  There was no video or other confirmation within that hour. I had to make double strength coffee at that point in time but instead set my alarm for 0500 to try to grab a nap. I was not about to miss what was going to be a day to remember in American history.

0509 ET

So sue me! I hit my snooze button then realized I fell asleep with the computer and television on and the news was flying. In big bold red at the top of CNBC’s screen was the announcement COUNTDOWN TO SPEECH and a counter moving towards 0700 Eastern. As I flipped the channels half awake, I noticed a BREAKING NEWS announcement on CNN and there was a feed from WSB in Atlanta, GA with their helicopter video of the Georgia State Patrol closing off all streets within three blocks of the Federal Reserve Bank in Atlanta and also around the Federal Home Loan Bank. That sent a chill down my spine as I flipped back on to the computer to see over two hundred unread emails and message upon message about shortages, internet outages, credit card problems and worst of all, gas stations running out of fuel. The other shocker was the suspension of international flights in many U.S. cities as the suppliers put every airline on C.O.D. effective immediately at 2:30 a.m. Eastern Time and that suspended a ton of flights inside the United States and worldwide. The cascading effects were stunning, even to those of us who were warning about it.

0530 ET

Several European markets attempted to open in coordination with Middle Eastern markets but the declines were so severe that within ten minutes of trading the authorities shut them all down within a half hour:

Russia -35%

Saudi Arabia -43%

Israel -22%

Switzerland -17%

Germany’s DAX -41%

CAC 40 – 29%

FTSE 100 – 32%

The Euro was up another 10% against the dollar and the Swiss Franc was now worth over $1.40 U.S. As the discussions about the problems with the U.S. dollar accelerated, banks were being shut down in Europe in nation after nation to prevent runs. Sadly for the Brits, the Sterling was now trading so poorly in Europe that it was worth just 1/3 of a Euro at some trading desks. By the top of the hour, video of riots in front of banks in Frankfurt and Glasgow were broadcast nationwide.  At 5:55 a.m. Eastern the news took a dark turn with this BREAKING NEWS headline:

OBAMA AND BERNANKE TO SPEAK TO THE NATION AT 6 A.M. EST

0600 ET

The speech was low key, solemn and to the point. Obama announced a one week bank holiday. All credit card transactions and all collection actions of any sort were hereby suspended for seven days.  All financial markets were closed until further notice.  All mortgage and bill payment due dates were suspended for thirty days and no past due notices nor penalties were to be allowed by Federal Law. All schools were closed for seventy-two hours be they public or private.  The city of Washington, D.C. was hereby declared to be under a state of martial law and all citizens were ordered to observe a curfew from 8 p.m. to 8 a.m. daily. Just as that sunk in, Ben Bernanke stepped up to the microphone to announce that President Obama, Treasury Secretary Geithner and all of the Federal Reserve Presidents along with himself were going to depart for Geneva for an emergency meeting of the G-20, IMF, World Bank and United Nations Financial Stability Working Group.  Bernanke also announced that Citigroup, N.A. and Bank of America were hereby nationalized and placed under control of the United States Treasury under the auspices of the FDIC and that Sheila Bair would have an announcement at 8 a.m. Eastern. As he finished the announcement, an obviously exhausted Federal Reserve Chairman concluded by assuring the citizens of the nation that a stable currency was their only goal from this meeting of world financial leaders. I noted he did not say what currency though he was referring to.

0800 ET

By now, CNBC, Fox Business and Bloomberg were knee deep in wall to wall coverage but so were the broadcast and cable networks. America was on the brink was the preaching and screaming and the “bulls” were being gored by the permabears every time they uttered any statements about “how we’ve been through worse” etc., etc.

The announcement of the seizure by the FDIC of two of the largest banks in the world was pretty standard and short. The follow up statement by Ms. Barr though is what caused every newsroom to take pause when she stated that “further consolidations will be announced in the next seventy-two hours.”

The Bubblemedia was stunned and even shocked when Canada announced that they would attempt to open their financial markets for two hours of trading and that their banks would be open for normal domestic customers and business from 10 a.m. until noon Eastern time.  Everyone on television looked at each other and just asked “How?”

0900 ET

I had forgotten to call in sick to work but then again the phone call from the company owner was pretty much a “well now what” as we laughed in a gallows humor discussion. He understood why I was home and he had already told the employees that he was closing at noon and would reopen when we could actually collect real money on what we sold and leased out. I told him I would call him at home later or meet him with a bottle on the golf course in the morning, weather permitting.

The chilling video of the Federal Reserve heads, Geithner and Obama boarding Air Force One to leave for Geneva from Washington, D.C. really had an impact on me.

1000 ET

The Canadian markets opened up 10% in ten minutes then rolled over down 31% by 10:30. The scary part was that the Canadian dollar kept on rising even though commodity trading was suspended and everyone was wondering just what gold would be priced at if the markets were allowed to trade.

As the day wore on, it was a blur of shocking story after shocking story. The President and his entourage arrived in Switzerland along with other world leaders but little was discussed or disclosed. The reports of banks being fire bombed by nuts throughout parts of the U.S. made the international news and caused all of us to feel somewhat uncomfortable as to what was next. The 8 p.m. interruption of normal prime time programming with a FEMA NEWS ALERT which lasted ten minutes and was repeated at the top of every hour with little if any information caused even more panic in the masses. Today I watched our dollar die in a matter of hours even though I knew how it was killed months if not years ago. I just wondered how bad the announcement out of Geneva was going to be as our bankers and politicians sold our souls out to save their rear ends.

I also wondered if I would ever sleep again.

November 16, 2009

IF Obama bowed to the Saudi King as the picture above indicates and they are rated #4 with the other Oil Exporters for purchasing our Treasuries…..

AND

IF Obama bowed to the Empeoror of Japan as the pictured above indicates and they are rated #2 for purchasing our Treasuries……

THEN WHAT

Did Obama do BEHIND CLOSED DOORS with the Chinese Premier last night since they are the NUMBER 1 buyer of Treasuries?

a. Hugabutt

b. Lewinsky

c. Sent Michelle in

d. Sang “The East is Red” wearing a sarong and high heels to entertain them.

e. All of the above

What a schmuck…..

Remember our friends, our neighbors, our Troops as Thanksgiving approaches. Do what you can to help a military family or add to a care package locally.

Thank you to all in uniform.

November 10, 2009

According to the Mainstream Media and “Conventional” thinking, YOU might be a lagging indicator if……

You live in Cape Coral, FL and are not in some level of mortgage delinquency or foreclosure.

You are one of the 10.2% unemployed which is actually 17.5% when measured using table U-6 or even worse when using the measures of unemployment in the Jimmy Carter administration like Shadow Government Statistics does:

You bought 1000 shares of Citigroup on November 10, 1999 at the closing price of $36.81 and still believe your broker when he or she tells you that the November 10, 2009 closing price of $4.18 is just a blip and you’ll recover all your losses.

Your credit card A.P.R. is still below 21.9%.

You wonder why your $3.75 11.5 oz. box of cereal costs 75 cents more than it did two years ago when it was 16 oz.

You object to  paying higher taxes while your neighbor who works on a General Motors assembly line gets four weeks of paid vacation in December plus medical benefits thanks to the taxpayer funded TARP bailout and illegal bankruptcy action.

You haven’t seen or own every Michael Moore movie ever made.

You actually watch network news.

You still eat meat after all of those damned commercials from Algore’s folks with that stupid Coca-Cola polar bear on an ice floe thanks yours and the cow’s contributions to global warming, er, climate change.

You are not on a payment installment plan with the IRS, state, and/or local government tax authorities.

You still actually pay for and read the local newspaper or New York Times.

You think going into debt for 4 years to buy a new car through cash for clunkers was a good idea to gain 10 mpg at a taxpayer cost of $24,000 per vehicle and spending $3 billion to generate $375 million in fuel expenditure savings.

You are one of the viewers causing CNBC’s Squawk Box ratings to fall behind Fox Business thanks to the antics of an ex-alcoholic alleged basketball racist.

You are one of the “uninformed unwashed masses” the elitists despise that caused Obama to have a net -10 with a 40% strong disapproval rating today.

You were one of those fools who bought that worthless relic gold on November 10, 1999 at $295.75 per ounce and held it today where it closed at $1101.50 per ounce.

You don’t have ten times the amount of debt to your income level.

You don’t use your debit card and happily pay the $1.25 fee to purchase a $5.95 Vende Coffee at your local Starbucks every morning.

You still think that in 2009 it is a Radical Muslim’s fault when a Radical Muslim commits a terrorist act.

You still make your mortgage and credit card payments on time.

You still think that Jesus Christ is the Messiah when everyone else knows he lives at 1600 Pennsylvania Avenue in Washington, D.C.

November 8, 2009

From TradingMarkets.com report on the markets and economy, Friday November 6, 2009:

Separately, the Commerce Department released its report on wholesale inventories in the month of September, showing that inventories fell by a little less than economists had been anticipating. The report also showed a continued increase in wholesale sales.

Let’s parse this news and add some graphs.

Despite the seasonal bump, which is just wholesalers attempting to clear their inventories for Christmas, the levels we are at are still below the September 2007 levels, considered the last pre-recession Christmas retail season with any hint of normalcy. The lack of wholesale sales is further emphasized by the continuing decline in durable goods which are at abysmal levels, no matter how you cut it.

The sesaonal uptick will soon end if the pattern of the past two years validates and by the end of this year, we should be below 2007 levels across the board.  Unless we see a dramatic turnaround in the next two months, the level of CRE failures due to a retail and manufacturing implosion will horrify more people than give them hope and change.

The decline in wholesale inventories, despite the positive spin, is not a positive as we are in the teeth of the Christmas season and the two year plus chart reflects that fact:

The fact that the Bubblemedia spins this as a positive, reality is that retailers see no great visit from St. Nick and thus are terrified to get trapped like they did last year. The raw numbers tell the tale and until you see the wholesale inventories start to increase, small and large businesses are voting with their brains by indicating they do not trust the administration nor future actions of the banksters. There is no inventory build because no one can find cheap capital to start a new business, expand an existing one, or gamble that a large inventory order will be a profitable proposition for the future. That should give everyone a clue as to our future and I will follow up this series with another one on December 10th or 11th when the new data is released.

For those that care, by the way, one little important fact:

These are NON-SEASONALLY ADJUSTED numbers or the raw real deal. No fantasyland or politically influenced figures for the purposes of measuring where we really are at.

November 7, 2009

1. BLS  Table A-12 Section U-6 “The Real” Unemployment Number

This month the number deteriorated to a level of 17.5% which since the proverbial beginning of the crisis in roughly February 2007 indicates that we have seen an over eight standard deviation from the unemployment/underemployment levels at that time. That is unprecedented and has not been seen since the Great Depression if my calculations are correct.

2. Birth Death Model Adjustments

Never discussed in polite circles nor the mainstream media, the computer continues to crank out numbers that requires any sane person to suspend belief and accept that the recovery is not a dwarf driving a Shriner’s car and sprinkling magic fairy dust to make the general population as stoned as an Occidental College freshman.

The 86,000 jobs created would be amusing except for the fact that the claims are so outrageous as assuming 14,000 jobs created in the Financial Services arena and 5,000 in Construction.

3. Speaking of Birth/Death Construction jobs:

Maybe they were all assigned to building a man-made lake to store all the bullcrap Washington D.C. is generating to prevent the fumes from creating a massive surge in Global Warming and temperature increases.

4. Birth/Death Comparison and the Headline Number Minus the Computer Fantasy

So if you minus the Birth/Death fantasy we lost 276,000 jobs on the headline number.  Good luck to all of you employees who had jobs created for you by the BLS computers.

5. The Revisions Continue but Does the Differential Really Matter?

No matter what one thinks of the quality of the BLS statistical models, you have to give them credit as a swing from revisions of -244,000 to positive 44,000 is impressive. If only we could balance our check books and file our taxes using their calculators…….

6. Maybe, just Maybe We can get a Job with the BLS

Because the key number to look at here is that the graph with revisions demonstrates that since December of 2007, we have not had any net job growth in this economy. It is not getting any better and in fact the reality is that the lack of credit access to small businesses will only amplify the problem and continue to aggravate an already tenuous employment situation into the next election.

Got Farmland?

Ya better or you may starve…..

November 6, 2009

Greetings sports fans one and all! It’s time for the Sheila Bowl this week and flushing and swirling financial institutions getting ready to take the final plunge and the ignorant who kept deposits over $250,000 in the banks getting ready to take that death defying dive into the blue (hopefully not yellow) swirling water at the bottom of the bowl as they went above the FDIC deposit insurance guarantees….

Here’s your pregame show, starting with an update of the DIF funding since the failures of August 21st with the balance left from the DIF fund based on the data on June 30th:

Ouch. Almost $8 billion in the hole so Sheila had best collect those fees from the banks before they fail and get that into the bank asap. Maybe, just maybe, should should quadruple the fees on banks without branches, you know, like Goldman Sachs ya know? Well, let’s tune in for tonight’s action because one thing about our neck of the woods in Florida:

She could shut half of them down and still have a boatload of insolvent institutions….

November 6, 2009

Malik….meaning “Master” or “King”‘

Nadal….rough translation to “Noble” from “Nadil”

Hasan….meaning “good” or “handsome”

Major Malik Nadal Hasan is a martyr.

A man and a name which will now live in infamy in the history of the United States, our beloved military and now a hero of the Islamofacist movement. While the American people will be spoon fed excuses about the mental condition of the killer, how this was not terrorism, and of course how the religion of peace had nothing to do with this, the reality that should slap anyone with two ounces of common sense should begin to understand that America has been at war for almost two decades now. Yet so few, except for the families of the dead, wounded  or those engaged in the battle, wish to acknowledge this fact.

America’s war was not one that we sought out for profit, for glory, or for spoils. The war was brought to our shores not because of geopolitical conflict, nor an enemy wishing to conquer our nation’s vast resources. This war was started, engaged in, and amplified on September 11, 2001 because we are the infidels, the evil children of Satan that prevent the world from falling under the veil of a religion based on a child molester’s drunken visions. Sadly, as long as our fellow citizens are pacified by ignorance or bribed with baubles, the citizenry will never understand the enemy that kills our friends, neighbors, and protectors, nor will they act to acknowledge that this war even exists.

We make excuses for our enemies and excuses for ourselves as they kill, without mercy, without apology and without regard. And this time, as it was in 2003, the new politically correct military suffers another self-inflicted wound. You see, the killing is not without a historical basis, nor is the idiocy of a politicized military new. It has happened before. Within our military. And with dire results.

On March 23, 2003 (ET) Sergeant Asan Akbar rolled two fragmentation grenades and two incendiary grenades into three tents where officers were sleeping at Camp Pennsylvania in Kuwait. Not long after this attack, Sadam’s Iraqi military launched a Scud missile at our troops in Kuwait which was destroyed by a Patriot missile.  As the bloodied troops stumbled out of their tents, Akbar opened fire with a M4 shooting two of the soldiers.  Captain Christopher Scot Seifert, age 27, died from his wounds and fifteen other soldiers were wounded also before he was subdued.

Quoting the article from the London Times on March 25, 2003:

As Akbar was being led away after the incident, fellow soldiers heard him shout: “You guys are coming into our countries and you’re going to rape our women and kill our children.”

Fast forward six years to tonight,  and numerous incidents around the world and inside the U.S., within the military and in civilian society. The United States military was the target of a planned attack by some Islamic illegal aliens who walked across the Mexican-American border and planned to evolve from their day jobs as pizza delivery men into terrorists to attack our soldiers at Fort Dix, NJ. More rings of suspected terrorists arrested from Colorado, New York, etc.

Yet our politically correct  Obama administration, just as Bush acted,  continue to assure the public that this is not a war with Islam but against the problem children of the “Religion of Peace” and the advocates of violence against all civilized society. Sadly, our political leadership and their cohorts within the mainstream media and educational elitists continue to deny the words of our enemies and dismiss their actions as irrelevant to the world stage. Within this deliberate act of ignorance and malfeasance, the assumption that “all Muslims” who serve within our military are always loyal to the nation first, their religion and its adherents second. Even though this may be true in some cases, the words of the Quran and the leaders within their sect demand the loyalty of the followers to the word of their prophet first, and nations or political leaders secondarily.

The long bloody river of denial continues to flow through our society as the bodies of our soldiers are returned from Iraq, Afghanistan and other nations embroiled in the war against Islam and its radical adherents. But the denial has created a situation within our military that I find disgusting and untenable; we challenge the Muslims in the services  not as to their loyalty to our nation but accept without question their commitments. The failure to understand the over twelve hundred years a of systemic murderous activity in the name of Allah is our Achilles Heel and the enemies of freedom know this. Thus begging the question as to why any member of the Islamic faith is allowed to serve on bases where or near units to be deployed are located, much less within our services as a whole. Why we would deploy “Muslim” Americans to theaters of war where they might be asked to kill one of the zealots defending their same faith, a violation of the word of Allah when done so at the behest of the “infidels” and its leaders?

The answers are simple, sad and tragically for the victims of politics, not war, a statement to the decline and fall of an empire.

America must allow the “diversity” of its forces to insure that it is reflective of society as a whole. That is the twisted Hegelian logic of Marx and Sociologists in the pacified world of academia and influencing the civilian bureaucrats within the Pentagon. The advisers who proclaim this nonsense never will serve within the military and view our soldiers with disdain and demand this policy as a necessity to prevent a racist elite service from evolving. When you take the perverted views of our elitists into account as part of this policy then one must review the economic and geopolitical concerns which influence our weak-kneed cowardly politically correct rulers, then you begin to understand why our military is ordered to adhere to policies inherently dangerous to the survival of our troops within and out of the conflict zones. America’s unwillingness to confront and deny the wishes of our Saudi masters by protecting our troops and securing all avenues of attack invites disasters such as what happened at Fort Hood today. The refusal to engage the Wahhabi sect and other various terrorist organizations funded by the same families that demand American loyalty and protection for their regime illustrates the fallacy of our proverbial “War on Terror” which will never end during my life time or yours.

By that same token, God forbid an American citizen elect to support a third party, vote for a pro-gun law or candidate, or speak freely about the Founding Fathers though, as that is a terrorist act in the eyes of the current regime in Washington and the prior administration. Thus why we shall continue to suffer attacks such as those on November 5, 2009 and March 23, 2003; infiltration is easy when Sociologists and cowards set policy and attempt to force the greatest military in history to act as a social experiment instead of just letting them do their job as Constitutionally mandated.

America has suffered another self-inflicted gunshot wound thanks to political correctness and submission to internationalism.

Must we bleed to death before we stop reloading the weapon of our own destruction?

November 4, 2009

Today the media celebrated more grandiose economic news.  First, they proclaimed the great news that Government Motor’s sales increased 4.7% month over month. Since year over year numbers are not important now because they do not look so hot and you can not compare a “private” GM to a “Government owned” GM now, let’s ask the question:

If you fall down a 100 foot deep well, climb up 4.7 feet to try to save yourself, does this mean you are saved?

Uh, no, you still have another 95 feet to climb and guess what? Japan, the EU, South Korea and the Obamanation just happen to be pouring slippery doses of competition and tax oil down the sides to insure you fall back to the bottom. When you hear the economic data, let us keep it all in perspective, please.

What do I mean by that? The Manufacturers’ Shipments, Inventories and Orders report from the Department of Commerce (Links to PDF of report) for September was widely reported as a 0.9% increase. For the seasonally adjusted numbers month over month that is true. But in reality, the first table for Manufacturers’ shipments year over year was down from last year’s deep in the recession abysmal number without seasonal adjustments by 14.5%. Thus once again, when you start to dig into the numbers and look at the big picture, it is not as good as you think. If you think that headline number is bad, there is worse news: Machine orders, down; Iron and Steel manufacturing, down; Material Handling equipment, down;  Computers, down;  Semiconductors, down; Automobiles and Light Trucks, down; Non durable goods, down hard. You see where I am going?

Despite the popular Bubblemedia take on the reports, once you dig down, what matters, what moves America forward, what manufacturing we need to restart our economy is declining still. Thus why I think Friday’s unemployment report could put a nail in this bear market rally’s coffin once and for all. If you look at the charts below of the Wilshire 5000 and IWM (Russel 2000 ETF) you will see why I’m now bearish and think the divergence of dollar weakness with equity weakness could become the new theme in the weeks ahead. For comparison’s sake, first my dollar theory as the UUP tanked after a brief rally going against all technical indicators and compared with gold via the GLD ETF:

The two huge volume spikes confirm Gold’s move and despite the need for a respite, geopolitical events and gold’s India party have overtaken the inactivity of the Fed and ECB to prevent such a move. Next the consequences of smart money not believing in this “Obama Economic Miracle” being reflected in the non-internationalized small business indexes of the Wilshire 5000 and Russell 2000:

I think by Monday of next week, the 50 DMA flattens out and rolls over moving south for a while. Just like the IWM:

Although the volume on the IWM seems to be increasing as the selling does, we have not seen any final capitulation despite the intensity of recent selling. I figure we roll over on the unemployment data and could see a rather dramatic sell off in mid and small cap equities by week end.

So keep climbing up the well walls and if you’re lucky, or starving, or thirsty, maybe one of those Indian gold buyers will toss you a smoke.