Financial topics

[aedens]

The straight talk, by multiple people, during this video is unusual.

Good guys vesus bad guys in credit. Equates to moral hazzard and they could care the F#$K less. Punish the prudent and bash them with seven ways to sunday with programs to give your very soul to fiat nirvana, no thanks. Until Citizens remove idiots like Shumer, Pelosi et al. we will never recover, period.
H, your conveyance was much to what we remember. Later both sides did admit how analytics lacking on both sides from Able Archer and RYAN and that came out later. I had family there and we still convey how narrow the ability of people to understand the consequences of those day's. It seems like every 20 years or so the Nations go on autopilot stupidity.

[Higgenbotham]

US failures and solutions.


Failure Number 1: The 9-11 Attacks (2001)

Solutions: Based on failed intelligence, invade a country that had nothing to do with the attacks as a feel good measure. Leave Osama Bin Laden free to roam around for 10 years while he releases videos ridiculing the US. Create the largest bubble in the history of the world based on denial, fraud, and delusion. Export that bubble to the rest of the world so it also destroys the world economy. Create another huge bureaucracy that bankrupts the economy and restricts freedoms. Rebuild the Twin Towers and show lots of pretty pictures.

Failure Number 2: Hurricane Katrina (2005)

Solutions: Pretend that it didn't happen. Don't change anything because if it ain't broken don't fix it. Our infrastructure is fine. Just wait for the next failure. Take advantage of the solutions to the last failure as the bubble is still going strong. Elect a zombie half black president to help ease the pain.

Failure Number 3: The BP Oil Spill (2010)

Solutions: Show a lot of empathy for oil covered birds complete with pictures to get the focus off the real problem. Engage in the biggest money printing extravaganza that the world has ever seen to lift the resulting malaise (Quantitative Easing 2 announce 4 months after the BP Oil Spill).

Failure Number 4: Fukushima (2011)

Solutions: Engage in a partial coverup and media blackout once the initial excitement wears off. Don't link the words "Fukushima" with "General Electric" and don't talk much about the fact that about 2 dozen similar GE reactors to the one that failed at Fukushima operate in the US. If any petitioners request that something be done with the Mark 1 reactors, ignore them. Continue to engage in the biggest money printing extravaganza that the world has ever seen. Wait for the next failure.

[aedens]

Wave 2’s take time and so we may see this unfold over the remainder of the week.
The MACD has turned back up to complete wave 2 we have added in a “early” divergence indication on the MACD
which is typical for major tops and bottoms which is more often referred to as convergence. INDX

[Higgenbotham]

Problem:
Jul 19 8:30 AM Initial Claims 386K
Jul 19 8:30 AM Continuing Claims 3314K
Jul 19 10:00 AM Existing Home Sales 4.37M
Jul 19 10:00 AM Philadelphia Fed -12.9
Jul 19 10:00 AM Leading Indicators -0.3%

Solution: Talk about printing more money.

Wave 2’s take time and so we may see this unfold over the remainder of the week.

If the rally doesn't fade today, we still have a Tulip Bubble mentality operating I would say.

[aedens]

The cheerfull and village have turned japanese and never seen the script IMO.
http://advisorperspectives.com/dshort/u ... lation.php

[aedens]

http://mises.org/daily/5651 no man status as we discussed.

[aedens]

In another slice of event news the hedgy's are in the bent of mind that we will be commodity based only. I found that typical to the keynasian acolytes cult bent of mind fascinating in design to intent. I just noted it a jesture of confusion and made a mental note of it since we already captured that here.

[aedens]

They understand perfectly well what is going on and what is coming.

[Higgenbotham]

The cheerful and village have turned Japanese and never seen the script IMO.

His main thesis is that S&P 500 corporate profit margins are the highest in history at 7.8 percent (75-year average is only 4.9 percent), having been goosed higher by unprecedented government economic stimulus that is unsustainable given public debt levels. As the stimulus is withdrawn, corporate profit margins will be hurt and revert back towards the mean of 4.9 percent, yet analysts are expecting profit margins to continue higher!

http://www.investingdaily.com/15002/are ... ns-peaking

Let's examine this further. First of all, it won't revert toward the mean; it will slam down under the mean. John can tell anyone who doesn't know why that will happen.

The US GDP is about $15 trillion and if we assume for simplicity (in order to get a maximum number) that all of the GDP is created by corporations, then corporate profits are about $1 trillion per year.

The US federal deficit is about $1.5 trillion per year. How ever you slice it or dice it, that excess gets spent into the economy and in general there a two main beneficiaries - large corporations by way of government contracts, bailouts and subsidies and poor people who can't save money. When poor people spend a government handout, of course the corporations only take their cut because they also have to provide something in exchange. Let's say a poor person goes to Wal-Mart with a food stamp card to buy a hunk of Kraft cheese. Kraft gets their 7.5% of wholesale (probably higher), Wal-Mart gets their 7.5% of retail (probably not that high), the media conglomerate that Kraft pays to advertise gets their cut and so on down the line. The poor person gets very little value of cheese and as that money gets circulated around in the economy virtually all of it that is not consumed ends up back in corporate coffers as profit with the exception of the little that wage earners can save out of their cut. To be specific, someone who is employed by one of these corporations will in all likelihood be able to save some of their wage, which then doesn't circulate back into the economy so the corporations can siphon it off.

Bottom line, a very high percentage of excess government spending in the form of government contracts, bailouts, subsidies, and aid for the poor winds up as corporate profits. I don't know what the percentage would be. My gut says it would be at least 1/3 of the $1.5 trillion. That's over $500 billion, or over half of all corporate profits using my simple assumption that maximizes an estimate for total corporate profits.

So now let's say the goverment balances the budget. Now we can see where this is going. We can see how the academic "expert" Village Idiots and assholes will stand behind the corporate Village Idiots and assholes who are part of this scam and pay their wages and consulting contracts, and declare, according to their phony expertise of which they have none, that deficit spending is absolutely necessary.

Balancing the federal budget would force gigantic, overstretched, money siphoning, unprofitable dinosaurs to get profitable without lobbying and sucking at the goverment teat when their idiot managements have NO IDEA how to get profitable, NOT A CLUE, without doing just that. And that's where the vicious spiral of deflation can begin to take hold.

So what I'm positing is that without government deficit spending there would be very little profit in this economy, on average. I believe from looking at the numbers that if the government were to balance the budget or already had, that perhaps 1/3 to 2/3 of the corporations in America would not be able to operate at a profit and would go bankrupt.

Let's say, though, that the government does not balance the budget, but keeps deficit spending until their credt rating is ruined. I would say, in that case, we've reached close to the end of the line anyway because the bond market is only going to take so much before an even worse crisis takes hold and the US credit rating is ruined, hyperinflation takes hold, and the entire world monetary system is destroyed, which will then probably bankrupt even more corporations than if they stop deficit spending now. Further bolstering that view would probably be what Buffett was saying when he interviewed with Alan Simpson and Erskine Bowles on CNBC the other day, though he can't say it explicitly.

[Higgenbotham]

This week, the financial media is asking if the new Yahoo CEO will be able to turn Yahoo around when the others have failed.

To answer this question, first, we know that the tech companies that are very clever like Google and Apple have a knack for siphoning the excess money that is in the economy off into their coffers. Apple has an enormous amount of accumulated cash.

We can see how this happens. Consumer X may have a mortgage that they are not paying. No worries, the zombie who occupies the White House makes sure that the bank who holds the mortgage gets their bailout, their cut of the $1.5 trillion deficit, and we can add one more house to the shadow inventory. Consumer X can then go out and buy their favorite Apple devices with the money they save by not paying their mortgage and the zombie hopes this scam can go on until the election (to be clear, I'm not voting for Romney either - he's another farce and the Pub party should be absolutely ashamed to put that caiber of candidate in front of the public).

Assuming that the new Yahoo CEO, who comes from Google and is one of their 20 original employees and supposedly a major contributor to their success, can maintain that level of performance, then I do believe Yahoo can be turned around under the condition that the $1.5 trillion in deficit spending continues. If it does, those clever folks at Google, Apple, and now Yahoo will be able to find a way to continue to siphon a good share of that $1.5 trillion into their coffers.

On the other hand, if the budget is balanced next year and the excess $1.5 trillion disappears, then my assumption would be that no matter how good Yahoo's CEO is, there will be no possible way to turn Yahoo around. And I don't think even Apple will have an easy time of it if that were to happen.