Connecting Dots

- Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency.

- John Maynard Keynes

In last week's piece we informed you that our call for a "Stealth Recession" is still in play. This week we offer you supporting factors that will help you see our point.

Market

The latest really in the Dow and other indexes failed to hold on price. There is no conviction. Volume at the rally was low. This demonstrates the market is really building cause for its next move. The longer the market stays below resistance points and in consolidation, the bigger the next move will be.

Oil

The corrupt Fed may leave out the most important commodity in their inflation matrix, but you and I need it every day. The price of oil keeps rising as we mentioned last week. In addition, the energy sector under the XLE made a new all-time high last week. Inflation is not going away. In a related report, an alarming point about the excess spending by our government with the military as the biggest spender was released. This year the interest on our debt will surpass $663 billion. That unbelievable figure is set to double by 2028. Now, more than ever we need a balanced budget and the Fed ends! There are other ramifications that can be seen in the US and around the world.

In the US...

...another gift to the world from America, the movie industry is suffering. It is not the strike. It is the debasing of the currency. Ticket prices to see a flick are way too high. Our largest movie chain, AMC will soon join Radio Shack, 5&10 Woolworth in the netherworld of failed businesses. In the...

UK

One of their largest retail stores filed for bankruptcy. The 52 Wilko chain is gone - out of business. In...

Asia...

...mainly China, homeowners face this reality. The largest real estate company entered into bankruptcy. The second in size, Country Garden is following in their footsteps. Real Estate is 17% of the Chinese economy. It shows a common bond with the people of China and US citizens. The desire to own your own home.

In the US, the Fed causes home buyers to become the biggest obstacle. In China, the Communist Party as well as one of the oldest sins of man, greed. The party is seeking world domination with money. They spend their budget on buying resources, land and shipping ports. The US military squanders our lives and resources on military bases and weapons. They have over 100 military bases around the world. Why? You can call it anything you want, but this is a form of imperialism. This is wrong and it only causes antagonism against America. Neither government looks out for their citizens. The military is the biggest, most wasteful component in our budget. Back to China...greed shows itself in the real estate developers expansion plan. After they exhausted all the local banks in China, they turned offshore. Now, the Communist Party manipulated their currency, the yuan to keep it low versus the US and world currencies to push exports. The yuan should be the most expensive currency because China leads the world in manufacturing. It is the largest exporter and user of commodities. Their currency should be at the highest. Manipulation! Anyway, it is causing a backfire to real estate. Many of these loans are to American firms on processed in US dollars. Since the dollar is high, more yuan is needed to cover loan debt. This is basic economics. Your costs are rising and sales declining. Chinese firms are in do-doo thanks to their government's expansion plans that do little for citizens.   

Remember to keep your home. This crisis will pass and you will still have a roof over your head.                                                                        Peace.