New Year: Divergence Ahead...L&C

I was going to call this piece, the Christmas Present, but there are too many lousy gifts out there as it is, not to mention the bad news in the media recently. What I am calling your attention to is this: there is a change taking place in the market and the signs of this divergence is your phone call.
When you look at the advance/decline line, you can see it clearly. From the lows of 2009 until October highs in this year, the change is occurring. The market in bull mode rendered a 20 to 1 ratio of new highs to new lows. Now, the tempo is 3 to 1 on NYSE, even on AMEX and 2 to 1 on NASDAQ. The market is breaking down. There are more indicators and yes, the fiscal cliff is a big part of it.
Gold
From a new high in September 2011 of over $1900 per ounce, it is now at $1659 and trending lower.
Oil
It began this year over $100 per barrel and held in a range from $90 to $110, but recently is falling as low as $77 with a present bounce to $88. The trend is down.
Copper
The good doctor of the economy is sinking. It has falling from $4.60 to $3.55 today. The trend is lower. These essential commodities are indicating less demand.
Finally, there are many leaders in the business world who see trouble ahead. I call to mind this leader because it has been correct in calls about the economy in recent years. The ECRI, Economic Cycle Research Institute calls for a recession in 2013. I would add this to the list. The government says that unemployment is down to 7.7% and I disagree. It is much, much higher. If you look at the actual number of people employed and compare it to the number of people employed before the recession and add the correlation of population growth from 2007 until today then, common sense tells you that the government is lying. The divergence in numbers is huge. Consider this tidbit. Our GDP has not reached 4% for 12 years straight and that covers the boom period. Take your profits and just sit tight. If the market implodes, you can buy what you want for a much cheaper price. Better safe than sorry, my mother would say.
Liars and Crooks: Congress and the President in the dealing with the fiscal cliff problem. The actual fiscal cliff is already law and it is a far better solution than whatever the above could come up with for our nation.

Bad Boy Christmas List...(by request)

What does Warren Buffett, Goldman Sachs and our government have in common?
They all made our list under one category or another from hypocrites to phonies to just basic criminals.
The Oracle of Omaha is loved by many and I use to count myself among the group. However, time reveals all and "...Time has come today..."
Warren is best known as a value investor. He has been quoted many times as being opposed to credit default swaps(CDS). He once labeled them as, "weapons for mass financial destruction." That was then. Today, he found ways to profit from them and he uses them. He even advises lawmakers to continue with the non-regulation of them. The rock group WHO has a song for you, Warren. It goes like this, "We won't be fooled again..."
Now, you may think that was bad, but it gets worse. In 2010 Warren purchased Burlington Northern. He immediately laid off 10,000 workers and since he has been twisting political arms to change our border laws to allow train inspections for engines, cars and parts to be done in Mexico. A champion outsourcing if I ever heard of one. He claims to be bullish on America. Which America I ask? The one that squeezes workers for bottom line profits and uses our present unemployment stats as pressure to scare off any worker protests? Actions speak louder than words. Warren is no George Bailey.
Next, the Wall Street darling, Goldman Sachs. By the way, our Treasurer, the IMF and ECB are all ex-Goldman employees. Goldman use to proclaim that they never took TARP money. They lied. They just took money under another bailout program. They have been questioned about the toxic mortgage securities which caused the recession of 2008. They were found to be selling those securities while behind closed doors, they were betting against them. I question whether they know the meaning of the word fiduciary. There are no Amadeo Giannini's working there or anywhere on Wall Street which is the root of their problems.
Finally, our President and his latest tiffs with the Republican party over the debt ceiling and the fiscal cliff. The big deal that needs to be done before 2013. It will end up like the one in 2010 where Obama showed no conviction as he agreed behind closed doors to extend the Bush Tax Plan. The deal added $110 billion to our deficits. Since then, the Tea Party candidates have entered the fray, however I see no real conviction here too. I see the same type of big deal like my recent call to Visa where I asked them to eliminate my debt ceiling. They hung up on me.
Who Wins, Loses?
The government wins and the citizens lose. It is time to think about starting a new political party that represents our wants and direction for the country and its future. All hail the Liberty Party.

Two Christmas Ideas...L&C

Christmas is only fifteen days away and my suggestion for you won't help you this year. With that said, don't leave yet because this is easy money. Thank you, Rodney D. and Joe P. for the laughs in the original, Easy Money.
Have you heard that Canada will no longer make pennies? It is no secret that there is no copper in our pennies and the Fed is about to end the nickle for the same reasons that Canada is killing the penny. It cost too much. That's right! If you missed collecting silver coins before they proved Gresham's Law that bad money will drive out good money, well, I'm sorry. For example, a silver dime today is worth around $3 bucks. A roll could buy you some nice presents, if you had the foresight. It was and is, easy money.
Mining and Agriculture
This leads me into my first suggestion for you. Start collecting nickles because they will generate between five and six times their value with inflation. You see, the Fed lies about inflation and every once in awhile, they kept caught in their lies. If there is only a .02 inflation level, how come copper pennies and buffalo nickles cost so much? Mine the system!
Think of this as your own Christmas Club saving program. I don't know whether banks offer that savings plan anymore, but the return on your savings will be greater than any bank rate on even a T-Bill. Yeah, I know that you need to store it too, but again, $5,000 in nickles will be guaranteed to become over $25 grand. Your closet floor will be put to good use rather than old smelly sneakers.
The other idea is to plant something in your yard or house. Food inflation is off the chart. Eggs are up 68%. Bread is up 45%. Milk, forget about it! Our country has been blest with the best climate to grow things. If you live in the North, you can plant an apple tree. If you live in the middle areas, you can grow berries, peaches, pears and more. Southern California and Florida got it made with citrus. This is healthy. Natural food make great gifts and the initial cost of seeds is next to nothing. All you add is water and love.
The choice is yours, but the old saying applies here,"twice is nice!" Do both!
Liars and Crooks: All the talk about the fiscal cliff is another lie. It is already a law and it takes effect on 1 January 2013. Government is trying to create a crisis, to which they can attempt to steal more power from us. This is the sad truth of America today. Let us respond with, "End the Fed!"

Stimulus Lie:California & Greece...L&C

The title of this piece has many layers like an onion. When governments announce a plan to "move" the economy with stimulus, one gets the impression that a new idea is being used or an improvement to the current state of affairs is being implemented to uptick the economy and employment. This is the first lie. The second lie is the deception as to what the stimulus is really being utilized.

In the recent news the next Greek bailout funds are being released because the Greek government and the EU have come to a new understanding about Greece's debt, austerity measures and future growth for that nation. In this plan Greece will not have to pay interest on the money received for ten years, which will lower Greece's debt-to-GDP ratio to a more manageable level and allow some spending for growth with the hope of job creation. Sounds great, doesn't it? Unless you were a purchaser of a Greek bond because in addition, they're cutting the interest rate so you get less than what was originally agreed, you have to wait in doubt for ten more years before you receive any interest and who knows if there won't be a default before that time or what inflation will be. Who would buy anything from these people in the future? Good luck with that plan.

Now, how does this relate to California? Well, if the golden bear state were a sovereign nation, it would be in the top ten economies of the world. Not only that, it would be in the same bailout mode as Greece. When the US announces its yearly budget, there is pork barrel called stimulus for states. This money does nothing for the state economy except maintain the status quo. Like Greece, the money is used to pay debts, government workers, health care, pensions, unemployment or other benefit plans. Nothing new is created. No new schools, hospitals, bridges or roads built. It is money from Peter to pay Paul.

For Example

The Obama administration stated that the government would receive $2.480 trillion in revenues for 2011 when they submitted their budget in 2010.  The US only received $2.3 trillion. In one decade that means the US will add another trillion dollars just to poor management, just like in Greece and Europe. California does the same thing except state charters force state governments to balance their books, at least on paper.

With the recession in 2008, every state suffered. When the US government passed the stimulus plan in 2009, the states got in line. In that year, California had a deficit of $86 billion. It received $41 billion in revenues, leaving a $45.5 budget gap. Stimulus to the rescue. California, being the largest by population, got the most: $51 billion.

The California Legislative Analyst's Office(LAO) has given their outlook. The state will suffer budget gaps for the next five years. In 2011-2012=$25 billion short. In 2012-2013=$22 billion short. Get the picture? With all the talk about the debt ceiling, fiscal cliff, taxes and unemployment extension benefits, the real problem is how much are the states going to receive because in addition to California, there are 39 other states in need. The US and the Fed are lying to all of us about our current status and state of affairs. Fitch Ratings knows. They have already announced that if the states don't get money, they will downgrade their debt. I wonder if Fitch is aware of the next tidbit?

It gets worse because there is back story. The California books closed with a so-called balanced budget, however many bills were not paid and they were rolled over into next years budget. This year California will add $5 billion from unpaid bills and if you recall, when the former Greek prime minister finally got into the books, he found the same type of tricks which only makes things worse for Greece as well as California. It is going to be very ugly when these fiat accounting tricks get exposed and people line up looking for their money
Liars and Crooks: Congress, the President and the Fed when the true cost of all our deficits become known. If you recall President Bush kept both wars off the books and I only can imagine what else is not counted. I do know this, Social Security and Medicare are off the books and no one can estimate how much is needed each year from revenues to cover these benefits. God only knows what else can come forward as due payment. So, whatever is suggested by the two political parties, it will be rejected until the last minute as Obama the"appeaser" will cave, but his image will be he did it for the country. Image is everything and substance is nothing...for these people. I wonder what the image spin will be when the holders of debt get in line and want their money, NOW! End the Fed!

Revising H.Dent's Cycle...L&C

Are you familiar with Harry S. Dent? He has written a few bestsellers with accurate predictions about our economy, the stock market, inflation and deflation. His breakthrough studies revolve around demographics. Economic pundits disregard his work and their track record of never being correct is the best recommendation for Dent.

In his most recent work, The Great Depression Ahead, Dent says our economy has peaked because the earning and spending habits of the present generation, the baby boomers is over. He divides life into four seasons: innovation, growth/boom, shakeout and mature. These four seasons span 80 years and this is a reflection of our economic cycle. As I continue, I will add an important feature of his work to which I differ on one aspect, the commodity cycle.

Kondratief Wave
was the beginning study in this demographic cycle thinking, but Stalin killed this great economist because he said it did not matter what any leader or government attempts to do, the cycle will prevail and in 1929, proved its validity. You see, contrary to beliefs, inflation is caused by children. This is the innovation period. Ideas are developed. New products follow, but generally only the wealthy can utilize them. This aspect is an important concept in the four seasons. Dent applied the S-curve principal to demographics. For example, the cell phone. This new product needed refining, the costs and service was poor and penetration limited. With improvements the masses adopted the technology.
If you look at a chart along the S-curve for the cell phone, back in 1990, it reached only 1% of the population. By 2000 cell usage reached 50% and by 2008, usage entered into the mature level with 90% penetration. It is the same with everything. Now, when a product reaches the mature stage, it can suffer from shakeout. Only the strong will survive. Keep in mind other ideas about capitalism like Joseph Schumpeter who injected the point that capitalism has within itself the fact that new ideas destroy old products,"creative destruction.": Vinyl records to the eight track to the compact disc to the CD. If you apply this shakeout concept to reality, Gateway is gone. Dell and HP are in decline. The PC is in the mature stage and even Intel is having some problems.

According to Dent, our economy is in the shakeout season and deflation will surface as the biggest threat to our economy. He says, real estate will suffer and he is on the money with that call. He also says commodities like gold and oil will suffer in price. He bases this in a correlation to the shakeout season as Dent says there are two 30 year commodity cycles within the 80 year lifespan cycle and the first 30 years cycle just peaked. I disagree. I believe that we only have reached the 50% penetration level within the commodity cycle and the time difference between Dent and I is because the economic life cycle has been altered by modern governments with their central banks running deficits with disregard to strength of currency which have affected the markets along with regulations. If you look at any trend in any product, there is a pattern in the up thrust or down slide. Nothing goes straight up or down. There is a zig-zag trend. At the moment, housing is bouncing, but I feel that this is just the zig movement and the next level will be down or zag stage to complete the cycle. Now, I think that gold will have to reach the 90% level before capitulation takes affect. I'm sorry, Harry, but I see a big, big, upside in gold before it feels any deflationary effects. 
Liars and Crooks: Will be exposed when Congress talks with the President about the debt ceiling, the fiscal cliff and the subsequent effects on taxes and spending. You will see only personal image and lack of character as opposed to what John F. Kennedy wrote about in his, Profiles in Courage. 

2 Trips: Shows US Lacks"It"...L&C

It gets the recognition, blame, innuendo, dreams, hope, hate and more. It is the endgame for being cool, desired or location. It is used to express almost anything in our culture and so, I will focus my use of it. I'm referring to is the lack of leadership, a weakness to do the right thing and yet, the lack of integrity by hypocrisy to say the right thing, but actually do the opposite.
It is not one particular person or political party as I will give you one example from each and it is not just in the US. Europe, Asia, South America, everywhere you go, it's the same old song. Thank you Four Tops, Billy Joel and others.
Republican
I could use any number of examples, but the daily affairs reflect best the true character make-up of the party from its alfa dog.
President Bush would on many occasions visit his ranch in Crawford, Texas. You say, no big thing. I beg to differ as one does not realize the total ramifications of cost which the taxpayer is on the hook. The news shows the President with dogs, horses and friends, but does not show or reveal this: One trip on Air Force One plus a second or third or forth cargo plane with his limo, helicopter, crew and hundreds of workers that need accommodations and all getting not only regular pay, but special pay for the trip.
Democrats
When President Obama visited India like he is visiting Myanmar this week, the press will cover it. However, like his previous trip this is what you won't hear. He flies on Air Force One and behind that plane could be 40 other aircraft like when he landed in India. He also took along 3,000 workers and provided some with armored cars, top hotels like all 870 rooms in the Taj Mahal and of course, extra pay, food and incidentals. Some members of Congress say that the trip to India cost the taxpayer $200 million "per day."
Now, when he gets back from his trip the President will say it is time to limit the deficit, create jobs and cut taxes. If the republicans were in power, they would say the same thing except neither shows a true understanding what that entails.
Liars and Crooks: This week goes to Europe and the IMF. France and Germany are beginning to feel the global slowdown with their economies. Lagarde, head of the IMF, has stated that maybe the EU should ease up on austerity measures with Greece. Guess what? The leaders of France and Germany are singing a different song. They say maybe we can live with a little more debt for another year as the leader of France is now promoting debt, the platform he opposed when he ran for office last year. Merkel in Germany faces an election year and now, she too is liking the idea of government debt to ease the pain. They all look to their central banks to continue this debt world and avoid reality. End the Fed!  

Election Results: Dissolution Resolution...L&C

Election 2012 leaves only one hope for America and that is this: more people disapprove of both political parties than ever before. Although I recommended that no one should vote for either candidate, I cannot claim all the credit for this result. With that said, I still can claim that I have tapped into our nation's collective conscious and more and more of my fellow citizens are reaching the same conclusion. We can do better than these crooks. We will not give them validation. Both political parties are corrupt! The Occupy Wall Street movement hit on that nerve except the founder had no real plan, execution or resolution. He needed my book, but Monday QBs are a dime a dozen.
Totals:
In the election campaign of 2008, Obama received 69 million votes on the promise of change. He didn't lie. I have .22 cents in my pocket. The Republican, McCain pulled in over 59 million votes in a losing bid for the presidency.
Today:
President Obama captured only 60 million votes, which is 15% less. The challenger, Romney only received 57 million votes. While this is close to the 2008 results, it is still far less. Consider this: the fact that there are over 200 million possible voters and the combined totals are 83 miilion short of the elective affirmation. More people dissapprove than approve!
Funny Math:No! You have to remember that within the Democrats and Republican parties their followers will vote the party line irregardless of personal approval. The growing number of Independents gives me hope for our nation. We can beat either of these two political parties. All we need is the right person to emerge and rally the nation and my book could be the spark to motivate such a hiden gem.
Liars and Crooks: This week goes to the prime minister of Greece, A. Samaras. He was able to push through the Greek government his austerity plan of tax increases, spending cuts and lower benefits for state workers. Funny, he ran for office opposing the very plan that he presented. He will be remembered for these infamous last words,"this will be the last time that the Greek people will have to sacrifice."