Tuesday, April 17, 2012

There's No "BS" Like Government "BS"

The Government reports garbage and the morons in the financial media reports that garbage as hard facts - Charles Biderman, Trim Tabs Independent Research
Mr. Biderman didn't exactly discover plutonium here with this revelation, but he provides excellent analyis of why the Government-released retail sales report this week is a complete farce.  Yesterday's retail sales report for March was reported to be up strongly led by auto sales.  However, as Biderman details in the brief video presentation linked below, the Government numbers on auto sales for March are at an extreme divergence from the numbers reported by the auto manufacturers themselves, which showed an unexpected and precipitous drop for March.  Biderman's 4 1/2 minute rant is well worth watching, and he offers realistic replacements to track retail sales data and employment simply by tracking credit card sales and tax revenues.  Not only would that be more accurate, but it would enable to the Government to get rid of part of its Census Bureau and BLS bureaucracy, cut expenses and take a step toward reducing wasteful, useless Government spending:  LINK

On to housing.  Yesterday the National Association of Homebuilder's builder sentiment index was released.  It plunged 3 points from the previous month to 25 and was 4 points below consensus expectations.  Note: any reading below 50 is negative.  Then today housing starts for March were released and those plummeted nearly 6% from the previous month and were substantially below the Wall Street consensus estimate.  Of course, the media had to spin a positive on this so it was highlighted that building permits jumped.  But this was entirely for multifamily/apartment dwellings.  Here's a LINK  An increase in the number of apartment units is another variable that will put downward pressure on home values.  In fact, for most of the last year, any perceived strength in the housing market has been due primarily to an increase in demand for rental units.  We also know that foreclosures are quickly ramping up again and this will further depress home values. 

It's going to get a lot worse in the housing market.  Make no mistake about that, despite any Orwellian attempt by the media and industry pimps to put lipstick on the pig and despite the enormous amount of taxpayer-subsidized support that the Fed and the Obama Government are throwing at the housing market.  In fact, this chart below pretty much will explain the basic problem with the housing market - and for the entire economic system for that matter.  I sourced this chart from the daily King Report and the numbers were compiled by Sentient Research from the Government (BLS).  Just to clarify this data series, it is MUCH uglier if you strip out Government entitlement/transfer payments (social security, welfare, etc), which are included in the Government calculation of household income:

(click on chart to enlarge)


  1. several folks I know have recently been swayed by media reports that "houing has bottomed" and the level of their interest is near the "buy" level. Friends/clients looking to move retirement money and savings into FL real estate because "it can't get much worse."

    Feels like 2006

    1. A year or 2 ago, there was a trend up here in Canada, where people we're buying "cheap" properties in Flrodia.

      NOW they're buying up properties in Arizona. I guess they think the recession is over....bwahaha what a bunch of fools.

      -Sicilian Gold

    2. *Florida

      Sicilian Gold

  2. michael schumacherTuesday, 17 April, 2012

    I love how the blue portion indicates the entry/exit of recession.... You could flip that upside down and it would look better.. :-)

  3. The Future of Gold and Money

    He says that he has become an agnostic or an atheist with regard to his belief in government-backed money as he fears that governments are in a position whereby they are going to debase currencies such as the “paper dollar and “paper euro” “in a big way.” Gold becomes one of the “alternative religions” in that environment.

    History shows that a deleveraging downturn takes a long time and can take 7 or 8 years. Inflationary pressures are building and will be seen in the second half of the cycle, according to Bishop.

    Bishop says he would put some of his money into gold but is prohibited from this due to the investment policies of The Economist.

    He advocates owning gold as a “portfolio of money” and diversification and advocates having 5% to 10% of one’s money in gold.

    Bishop is reluctant to give price predictions but believes gold will be higher at the end of the year and higher in 5 years.

    The Economist magazine has a strong Keynesian bias and has been one of the most anti-gold publications in the world with many simplistic, unbalanced and ill-informed articles.

    There have been a few more nuanced and balanced articles pointing out gold’s safe haven qualities primarily by “Buttonwood” however most coverage of gold has been negative.



    ... the worm is slowly turning.

  4. Ron Paul needs your help now. Donate at Ronpaul2012.com. Needs to raise 2.5 million. Hes half way there. To arms !!!

  5. By the way Dave,

    Thanks for all the work you do. We really appreciate it out here!

    -Sicilian Gold

  6. Regulators to Ease a Rule on Derivatives Dealers

    The agencies that wrote the rule covering so-called swap dealers note that their policy would oversee the largest derivatives players that pose a systemic risk to the broader economy. And despite exempting many companies from oversight, the rule still would capture the vast majority of swaps contracts because it applies to several big banks like Goldman Sachs that arrange most of the deals. Under the rule, the agencies also must study whether the $8 billion figure is appropriate. The agencies could change the figure if it proved too high or low.

    Some watchdog groups, however, fear that regulators are carving out a significant loophole that will open the door to problems. The exemption, the culmination of wrangling among the regulators and a yearlong lobbying blitz, would excuse firms from having to post additional capital and file reports.

    “That’s bad for the markets, customers and the system as a whole,” said Dennis Kelleher, president and chief executive of Better Markets, a nonprofit advocacy group.


  7. Thanks SG, i appreciate the feedback!

    People have faith in the idea of "buy the dip" or "buy when there's blood flowing in the streets." There's not real blood flowing yet because the Government and the Fed have intervened in order to prevent real blood.

    Note: I used the term "faitn." It's no different than faith in a religion. In fact, the last 40 years in the country have been designed to promote faith in fiat and faith in big Government.

    The people buying up homes in FLA and AZ are morons.

  8. Details Of The $291 Trillion In Derivatives To Which American Taxpayers Are Exposed

    The entire US GDP is less than $15 trillion each year. The gross notional amount of derivatives issued in the USA is more than $291 trillion. Does that sound like a lot? Apologists for derivatives dealers don't like it when we talk about derivatives in terms of the notional totals. Large numbers, like these, discussed publicly, frighten too many people. According to the apologists, gross "notional" is misleading, because it does not include "hedges," offsets and the limits on interest rate risk.

    In fact, the total amount of derivatives cannot be accurately presented in any other form but gross notional obligations. The risk to society cannot be judged in any other way. That's why the FDIC, US Comptroller of the Currency and the Bank for International Settlement (BIS) all use gross notional.


  9. Why the Global Banking System Is a Scam

    America is a great country. As with any business, its success is based on the balance of its assets against its liabilities. Its assets are a plentiful supply of natural resources; land & minerals, plus 300 million specimens of the most creative creature on planet Earth.

    These assets are hindered by one main liability, a ruling class who imported a monetary system of theirs from Europe a while ago. It is a non-free market system which is enough of a hindrance to negate all the positives of any country in time.

    Boiling of the Frog

    Now things got interesting. Since not enough currency is in existence to cover all the debt owed to the lender, then the assets, real things or “real wealth,” are now owed to the lenders. The problem with this is that if the lenders acted upon this fact the populations of the developed world would quickly realise that they are all in fact broke, as all property would get consumed by the Banksters as repayment, leading no doubt to a world-wide revolt against the secret overlords of this system. So, instead of this, things have been manoeuvred to allow a more gradual slow “boiling of the frog,” or austerity programs coupled with placing ex-Goldman Sachs employees into key government positions across the western world.

    Greenspan Detected a ‘Flaw’

    Simply put, due to the fact that only the principal is borrowed into existence, not the interest, the result is never-ending debt allowing that the real wealth of miners, farmers, builders, engineers, fisherman and any other positive endeavour to be taken for free by those in “the club” via theft or fraud.


  10. Visualizing Aubrey McClendon "Rehypothecation" Scheme... And The China Trail

    Aubrey McClendon is no amateur when it comes to shady personal transactions involving his company, nat gas giant Chesapeake: Back in October 2008, just after the financial crisis erupted, he was forced to sell more than 31 million Chesapeake shares for $569 million to cover margin calls generated from buying CHK stock just prior on margin. The company’s stock fell nearly 40 percent the week of McClendon’s share sales. McClendon issued an apology but the company’s credibility with many shareholders suffered significantly. It looks lie the story is repeating itself, only this time the margined security is not company stock, but company loans.


    Billionaire Eskenazis Risk Default As Argentina Takes YPF

    Argentina’s billionaire Eskenazi family risks default on more than $2 billion of debt after the government seized control of oil company YPF SA (YPFD) and said dividends would probably be reinvested in the company.

    The family’s Petersen Group, which has 25 percent of YPF, owes Spanish partner Repsol YPF SA (YPF) 1.45 billion euros ($1.9 billion) after it bought a stake in YPF, the Madrid-based company said April 16. The Eskenazis counted on YPF dividend payments of as much as 90 percent of profit to repay Repsol and about $680 million of loans with banks including Citigroup Inc. (C)

    ...is this a trend and is this detrimental to their personal assets?

  11. Thinking People are Dangerous to the "Elite" of the World

    People that have the time, freedom, and ability to think are dangerous to the governments of the world. Most of the governments and corporations of the world are blocking forces to both technological progress and also societal progress. Why aren't people allowed to change. People that are debt slaves, that are making life and death choices between food housing and medicine are not dangerous; they are surfs who are controlled. Another financial guy, Don Harrold, realizes that the finance has become much less relevant. Integrity, and not accepting lies, will determine if we continue as a species or if we suffer an economic life-support survival based dirt nap. It may take the plane hitting the cliff for people getting the idea that reform must occur.. Has this occurred with Fukushima or are a few people among the majority aware. Who will make it who will not? The future is more uncertain now than it has been in the history of the world.


  12. Von Greyerz - Bank Failures, Disorder, Massive Panic & Gold

    “Eric, I don’t know if you read the book by John Galbraith, ‘The Great Crash 1929?’ He wrote about how every day there was a bad piece of news, and in the end, everybody gets immune to it. I think that’s exactly what we are seeing now.”

    “The banking world is on the way to bankruptcy here. We’ve talked about the leverage in the banking system, but people don’t seem concerned about it. What we are going to see, one day, is when these dominos start falling, there will be panic.

    Banks are supposed to come down to 20 times leverage. There is only one bank of the top twenty-five banks in the world today that is below 20 times leverage. Every other bank is above. 20 times leverage means that if they only lose 5% on their loan book, they have lost their capital.

    I will bet you that virtually every bank in the world has a bad debt position which is worse than 5% of their assets. And if you look at an entity such as Deutsche Bank, do you know what their leverage is? 62 times. It means that if they have a bad debt position of 1.5%, the bank is bust. Deutsche Bank is bigger than German GDP. So, if something happens to Deutsche Bank, Germany goes under.


  13. Need something to take care of the BS. We're just circling the toilet bowl.