Monday, August 29, 2011

Economy In A Tailspin; Get Ready For Some Serious Socialism From Team Teleprompter

Pending home sales for July were reported down 1.3% in July this morning.  The "spin" put on this was that the index was 14% above last July and the NAR chief idiot, Lawrence Yun, commented that it was above the "low" for April.  I almost don't want to shred that statement because it is so stupid.  To begin with, April is still part of the "dead" season for housing.  Conversely, July should be one of the peak selling months.  Moreover, a trend of high contract cancellations began in May and June, and I expect it to continue in July.  July will thus be worse than initially expected as indicated by the Pending Sales index.  Quite frankly, it looks like the entire 2011 selling season will be dead.  Here's the news report:  LINK

In addition, the Dallas Fed released its regional manufacturing index for August this morning.  It declined substantially from July and is close to going negative.  And it was well below the consensus Einsteinian group of highly paid Wall Street economic clan, who can't seem to hit the broad side of Adam Smith's barn with their forecasting.  Here's the report:  LINK  As you can see, almost every single input variable was negative, indicating the likelihood of serious economic contraction in the region.  This report is consistent with those from Chicago, Philly and Richmond.  Collectively I would expect, short of some incredible David Copperfield-esque perception manipulation from the Government, that we will see a negative GDP print for Q3.  I also think we could see a negative print for Q2 when the Government reports its final revision on September 29th.

To address the above situation, I expect at some point that the Fed will roll out some sort of massive money printing program in conjunction with a massive "stimulus" program to be unveiled by the Teleprompter early September.  Expect that we are going too see a MASSIVE transfer of wealth from Taxpayers to the housing sector.  As an example, take a look at this article from Bloomberg detailing how the Government is now largest home seller.  Here's the kind of policy response we'll get from the Teleprompter and his Big Government solution:  
The government’s housing inventory is just one challenge facing President Barack Obama as he prepares to run for re- election next year. The administration also is exploring ways to help hard-hit neighborhoods, unemployed homeowners and underwater borrowers whose houses are worth less than what they owe -- many of them concentrated in battleground states including Florida, Ohio and Nevada
Here's the link and try not to weep while you read it:  LINK

In order to justify his Big Government policies, the Teleprompter has announced the appointment of Bernanke's academic colleague, Alan Krueger, to be his chief economic advisor.  I couldn't find a lot about Krueger's economic views other than he's some kind of expert on education and minimum wages.  Given that he's a Princeton economist, I would also suspect that he heavily buys into Keynesian policies, which have demonstrated utter failure in practice.   Krueger has never had to work in the real world and thus has no grounding in reality.  Expect  a very heavy dose of Government programs designed to spend Taxpayer money putting people to work building a lot more useless infrastructure projects and bridges to nowhere.  Also expect a heavy dose of education subsidies and bigger student loan programs.  All of this, mind you, paid for using printed money and much higher Government borrowing.  Here's summary from Bloomberg on Krueger, which is consistent with the information I found using google:  LINK

It's getting nice and cozy in the Oval Office now, with the Teleprompter doing a great job reading the scripts  prepared for him by his chief of staff, ex-JPM director William Daley, and now his new chief economic advisor whispering sweet nothings into his ear about spending a lot of borrowed money for infrastructure projects and student loans.  Based on his academic background I expect Krueger - in a move right out of Atlas Shrugged - to lobby hard for a big increase in the minimum wage as well.  I'm shrugging right now because Big Government always fails and it transfers a lot of wealth to the elitists in the process.

It's getting really ugly out there on Main Street and in DC.  With all this coming money printing and Government "stimulus," I expect to see - on balance - a big rally in the price of gold and silver, especially as we now entering the prime Indian buying season and the Chinese demand for gold is accelerating.  This won't come without a lot of volatility, which will include some aggressive by attempts by the Fed and its bishops - the bullion banks - to force some big down days.  Buy these as best you can.


  1. So your conclusion is that the jobs report this Friday should be plus a couple hundred thousand based on the recovery?

  2. And if "jobs" stink it up on Friday, the buttheads (of Tepper's penguins ilk) will be saying "now he has to give us QE3!" and they may very well buy. But, real or implied Queazing has not worked. So I'll be buying gold.

  3. sound bullish to me...

    seriously though...the market will come back to earth in a hurry when the ISM and NFP are released Thursday and Friday.

    ISM will probably print below 50 meaning general manufacturing contraction. I don't see how it couldn't with the regional's in August all pointing that way.

    It's going to get ugly out there the next few weeks IMO. When people realize these numbers suck and QE3 is already priced in? No where to go but down.

  4. "It's getting really ugly out there on Main Street and in DC."

    Sorry to say that it already is ugly out here. My consulting business (internet stuff) has been dying a slow death for a year now. Around this time last year is when things started to slow down. Usually late summer, early fall is slowest time of the year and it typically would pick up later in the fall and into winter. Not last year and I don't see it happening this year either.

    At this pace 2011 will be my worst year since 2001-2002. Client work is drying up all over since no one wants to spend a dime if they don't have too. Even routine maintenance gigs now come with "can we get it done for X" where X is quite a bit less then years past.

  5. No rule of law, no confidence...

    Mr. Cheney’s Victory Lap

    Think, conversely, of what happened with the banksters: They broke the financial system, immorally profiting from that mess—demanded (and got) an unprecedented government bailout by essentially blackmailing the American economy—then paid themselves record-breaking bonuses with money given to them by the American people.

    But these banksters—swine that they are, without exception—did not overtly flout any rule. So nobody said a thing, except some confused souls on the margins and in the blogosphere. The mainstream media? The people with positions of authority? They didn’t say a thing—because the banksters didn’t overtly break any rule or law.

    Our economy is falling apart because our common spirit is exhausted, beaten down, and miserable—we have lost our vigor as a people. And the reason we have lost our vigor is because we have seen too many injustices, too much corruption—too much evil—that goes unremarked upon, tacitly accepted, and therefore unpunished.

  6. Socialism or fascism?

    Matt Taibbi on the SEC and Wall Street

    Rolling Stone writer Matt Taibbi discusses his latest article, “Is the SEC Covering Up Wall Street Crimes?” For the past two decades, according to a whistle-blower at the SEC who recently came forward to Congress, the agency has been systematically destroying records of its preliminary investigations once they are closed.

  7. The Man Who May Bring the Banksters to Justice (If They Don't Break His Knees First)

    The bank regulator's quote is reminiscent of George W. Bush's comment to a crowd of big money donors: "Some call you the elite. I call you my base."

    With the Federal Reserve, Wall Street's biggest banks, and the Obama administration all pressuring Schneiderman to back off, you can be sure private investigators are looking into every nook and cranny of his personal life since he threw a spitball in kindergarten when the teacher wasn't looking. His personal and professional life had better be above reproach -- let's hope that unlike his predecessor Eliot Spitzer, who also tried to take on Wall Street, he never consorted with hookers or been involved with any other personal scandals. Morever, a Democratic president has the power to threaten a Democratic Attorney General's political future, to try to block him from higher office, and even to encourage a well-financed primary challenge to his reelection.

    It takes steel cojones to stand up for the public interest against a united assault by some of the most powerful forces in the world, including Wall Street's biggest banks, the Federal Reserve, and the President of the United States. For those who would like to see the banksters brought to justice for crashing the economy while lining their own pockets -- and perhaps make a future generation of banksters think twice before doing the same thing again -- let's hope Schneiderman has the requisite assets.

  8. China declared war on the City of London and Wall Street when they opened the Pan Asian Metals Exchange and PAGE the Pan Asian Gold Exchange.....