Irrational Exuberance of the Green Shoots

Given the sheep herd’s tendency to want to see this rally continue, this article will likely not be very popular. However, before anyone should express indignation at the title of this article and ask if I am aware of the recent surge in global markets, note that whenever a large disconnect has existed between the reality of economic fundamentals and stock market behavior, this large disconnect has always yielded disaster at some point in the future.

This historical phenomenon, in fact, birthed the coining of a new term, “irrational exuberance”, by the ultimate insider, former Federal Reserve Chairman Alan Greenspan. Of all people, it is no shock that Alan Greenspan perhaps understood this concept better than anybody else for it is the firm that he worked for, the US Federal Reserve, that largely continues to create such dissonance in markets today. In fact, today, dissonance in stock market behavior and economic reality may be at one of the highest peaks since the period that preceded the Great Depression. In the absence of free markets, rising stock markets and declining economic conditions are entirely feasible.

The Role of Dollar Debasement in the False Green Shoots Theory

The tremendous surge in US markets that we have recently experienced, despite the production of the largest 3-month rally in almost 80 years, has still seen the S&P 500 index rise only 8% on the year. Furthermore, if one takes the true rate of dollar debasement into consideration over this same time span, the 8% rise has in all likelihood, produced no gains at all in real wealth. In fact, contrary to beliefs being espoused by shills for the financial industry like Charles Lemonides, the Chief Investment Office of ValueWorks, the worst possible thing that could happen in the future would be to see the DJIA surge from 9,000 to 15,000. Earlier this week, Mr. Lemonides stated:

“When you have better economic conditions and really, really compelling valuations; and you’re bumping up against the top end of a range it’s sort of a good recipe for breaking through that range and going significantly higher.”

Lemonides, in an interview, attached numbers to his view, and stated that the Dow could easily reach 12, 000 in six months to twelve months and 15,000 in two years. If the Dow reaches 12,000 in six months, then it will mark the debasement of the US dollar into near worthless paper. In terms of creating real wealth, the Dow soaring to 12,000 will likely create none. Just like the Feds will never publicly tell you that their actions of slashing interest rates severely diminishes the purchasing power of your dollars, financial shills that keep talking about economic recovery will never publicly state that a run much higher in US markets can only be achieved with further severe debasement of your dollars.

Yes, it is possible for the amount of money you own, as represented by your stock portfolio, to increase greatly at the same time your real wealth is being destroyed. Greater ownership of more money, especially under this current environment, will not necessarily translate into an increase in wealth and a higher standard of living. And this is the concept that the financial shills don’t want you to understand. Anybody today that is pumping the idea of green shoots, whether a CEO of a large multinational company or a financial journalist, should resign when the blow-back of their irrational exuberance materializes. Why? Because there are only three possibilities that can explain the actions of people that speak of green shoots today:

(1)They have no understanding of how money is created and what gives it value;
(2)They have no idea of how to interpret economic statistics to determine if a recovery is realistic or not; or
(3)They understand (1) and (2) but choose to hide (1) and (2) from the public.

Thus, it is no harsh statement to conclude that someone that is incompetent or someone that has no moral character should resign.

The Role of False Government Statistics

Most recently, two major events largely spurred US markets, and consequently global stock markets, higher. The first was the “surprising” improvement of initial unemployment claims reported by the US Labor Department on July 11th of 522,000, the lowest such number reported since last January. The ever-opportunistic US financial media pounced on these numbers to report that the economic bottom “was in” and that recovery was now on its way.

However, anyone that understands anything about how governments calculate key economic statistics knows that almost all statistics that they produce are a heap of rubbish. Ironically, worsening unemployment claim numbers reported yesterday were virtually ignored by the financial press due to their underlying agenda to stoke the levels of irrational exuberance to even higher levels.

Admittedly, these levels of irrational exuberance exist primarily on a psychological level and are presently maintained by computerized trading programs that have continuously taken advantage of low trading volumes to pump stock prices and indexes higher. Full-fledged irrational exuberance would manifest itself in a spike in trading volumes as well, which has not yet happened. Were the Dow to spike to 12,000 in six months as Lemonides thinks possible, then automated trading programs would almost certainly be insufficient by themselves to accomplish this. Such a significant spike higher from this point would have to occur on the back of much larger trading volumes. Were this to happen, then we would have full-fledged irrational exuberance on our hands.

But first, let’s examine the two bogus events that help stoke the fires of the green shoot shills. Consider that in a June unemployment report, the BLS (Bureau of Labor Statistics) noted the following:

“About 2.2 million persons (not seasonally adjusted) were marginally attached to the labor force in June, 618,000 more than a year earlier. These individuals wanted and were available for work and had looked for a job sometime in the past 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. Among the marginally attached, there were 793,000 discouraged workers in June, up by 373,000 from a year earlier. Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The other 1.4 million persons marginally attached to the labor force in June had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.”

Though this June report was referring to total unemployment figures in America and not initial claims, the purpose of discussing these reporting methods is to illuminate the highly fraudulent nature of the unemployment numbers reported by the US government. Note that the 793,000 discouraged workers, and the 2.2 million workers that had not sought work in four weeks (nearly 3 million people in total), though unemployed, are not counted as unemployed.

Furthermore, the BLS creates all kinds of other bogus categories to count as employed those people that are truly unemployed. From their own website, consider this section entitled “Who is counted as employed”:

Example 1: George Lewis is 16 years old, and he has no job from which he receives any pay or profit. However, George does help with the regular chores around his father’s farm and spends about 20 hours each week doing so.

Example 2: Lisa Fox spends most of her time taking care of her home and children, but she helps in her husband’s computer software store all day Friday and Saturday.

Under the Government’s definition of employment, both George and Lisa are considered employed. They fall into a group called “unpaid family workers.”
Thus according to the government, performing household chores, but not actually earning money, is sufficient to be included among ‘the employed”. By counting people that earn zero money among the employed, it certainly makes the green shoots theory look viable doesn’t it? But the calculation of unemployment statistics becomes even more ludicrous.

On their website, the BLS actually includes definitions of what they consider as “actively seeking a job”. One must “actively seeking a job” to be considered among the unemployed. The BLS states that “attending a job training program” or “reading about job openings that are posted in newspapers or on the Internet” do NOT qualify as actively looking for a job. Thus, an American citizen could elect to attend a job training program after being laid off in a valid attempt to find new work, but in the eyes of the US government, this effort does not count. Thus, this person would not be counted as unemployed when in reality, he or she, is of course, unemployed.

But the fraud doesn’t stop here. The BLS also seasonally adjusts unemployment statistics to distort real statistics. These adjustments often have no bearing on reality and greatly skew real results as these adjustments are made at the discretion of BLS officials. For example, even though the ACTUAL number of initial unemployment claims in the US for the week of July 11th was 667,534, the BLS seasonally adjusted this number, per their discretion, to 522,000, thus spurring the announcement from the financial shills that this economic crisis has bottomed. And this is not even where the manipulation of unemployment statistics end. It keeps going on and on and on, but for the sake of saving space and boring you to death, I believe I’ve stated enough to make my point.

And the point is, if you are an honest person truly trying to determine the real rate of unemployment in the US, the LAST source you should ever reference is the US Department of Labor. However, this is the FIRST source referenced by shills for Wall Street that wish to talk up stock markets. In reality, if one strips away all nonsense and lies incorporated into Department of Labor unemployment statistics, the real rate of unemployment in the US is now over 20% (Source: Shadowstats.com), a figure that hardly paints the economic recovery that the green shoots charlatans desperately want you to believe (By the way, these same shenanigans are not just employed to unemployment statistics but to every major key economic statistic reported by the US government).

The Role of Analysts in the False Green Shoots Theory

Secondly, investment analysts have been extremely complicit in selling America the green shoots nonsense. The second quarter earnings has been nothing but a constant parade of “surprise earnings that beat analyst expectations.” Since I’ve already explained in this article how this con game works, I’m not going to elaborate too much how this scam works within the confines of this present article.

However, let’s consider just one hypothetical example of how the financial shills that work on TV and in newspapers twist reality to sell economic recovery and paint terrible corporate earnings with their revisionist paintbrushes into a positive picture by using Nokia’s recent earnings press release.

STOCKHOLM — The world’s top cell phone maker, Nokia Corp. , on Thursday said second-quarter earnings fell 66 percent as the global recession sapped demand. The company scrapped its target to gain market share this year and its stock sagged. Net profit was euro 380 million ($535 million), down from euro 1.1 billion in the same period a year earlier. Sales tumbled 25 percent to euro 9.91 billion. Analysts polled by SME Direkt had forecast a profit of euro 328 million and sales of euro 10.1 billion.

If Nokia (NOK) were a financial company, and the green shoots shills desired to pump its stock price higher, they would state in a highly visible newspaper or television program that Nokia’s earnings stomped analysts’ expectations by almost 16% and surprised to the upside, without ever focusing on the 65% decrease in profits. This is how the green shoot fraud works. By twisting corporate statistics to serve their message and gladly accepting clearly false government statistics as truth, the green shoot advocates have found it possible to sell an economic recovery in an environment devoid of workers, full of profits simply engineered for a quarter or two through cost cutting measures achieved by firing employees, and devoid of the production of any real goods.
In July the Los Angeles Times reported,

“Trade at international ports is on track to drop more than 10% this year, one of the steepest declines ever, according to a new maritime industry report. Cargo ships will carry 27 million fewer containers by year’s end than they did in 2008 — a reduction roughly equivalent to all of the cargo containers handled by the five busiest U.S. seaports in a typical year, according to London-based Drewry Shipping Consultants’ Container Forecaster Report. ‘There has never been a decline like this before. We have never seen numbers like these,’ said Neil Dekker, editor of the Drewry report. ‘The container industry is looking at a $20-billion black hole of losses. We can expect a lot of casualties.’”

As I’ve stated many times before, a rise in stock markets, when created under socialistic, fascist economic environments will not track the underlying fundamentals of a nation’s economy. In fact, the act of currency debasement can lift stock market indexes to higher levels while simultaneously creating zero real wealth.

The End Game is Still Economic Disaster

In the end, disaster is coming due to the toxic combination of foolish fiscal and monetary policies and combined lies being spread by financial executives and politicians desperate to sell the idea of an economic recovery. And yes, even though I believe another stock market bubble is forming that will burst contrary to the general consensus now that believes the head and shoulder formation of the S&P 500 chart has been invalidated, even if the S&P 500 were to soar another 30% higher, the circumstances that would have to materialize for this to happen would be disastrous to the real wealth of all Americans and all foreign investors in US stock markets. Thus, a rise to Dow 15,000 would still be a disaster were it to occur.

All green shoot espousers would be well served to heed Patrick Henry’s advice given in his famous “Give Me Liberty or Give Me Death” speech: “Are we disposed to be of the number of those who, having eyes, see not, and, having ears, hear not, the things which so nearly concern their temporal salvation? For my part, whatever anguish of spirit it may cost, I am willing to know the whole truth; to know the worst, and to provide for it. “

Today, the green shoot shills that work for the banking and financial industry are unwilling to see or hear reality nor to reveal this reality to the public. The actions of the green shoot shills is truly shameful, as when the worst of this reality manifests itself, the public will truly be unprepared to provide for it.

Comments

[AndrewBaker:]

Thanks for a really great article. I know many on here will applaud it too, yet still the falsehoods that get reported and broadcast to all who will listen are inflating the markets higher. When it is so easy for anyone who looks to find out that real wealth creation is just not happening; that financials/banks never do anything to improve an economy but live by sucking wealth from it, then how come the buying continues?

Programmed trading on its own can't be responsible for all the rise, so there are people out there either cynically buying because they are using other people's money (mutual and pension funds) and earn from it, or stupidly buying through greed because they are afraid of being left behind in the rally. Both are doing a disservice to any hopes of a rational market returning any time soon.

I've been tempted, I admit, to buy into this - and would then have hoped to have got out in time - but it's just too high now to take a risk. I'm sticking with gold and some commodities. I'm also holding on to my S&P and financial shorts, though soon I may have to come out of these, as they are hurting!

Jul 24 07:12 AM

[User 353732:]

It seems to me that there are 3 great and widening disconnects in America today. From these, many of our economic and social pathologies flow, such as those you deliniate.
1. The disconnect between economic risk and reward,. The ruling elites have succeeded in engineering a system where more amd more economic risk is shifted to the middle class while more and more rewards are funneled to the top 1%. The rulers keep most of these rewards and use the rest to bribe and control an expanding underclass( perhaps 25% of the population now?), which pays no taxes, provides minimal, if any economic value added, resents and envies the "rich" by which they really mean the middle class, lives sullen and increasingly brutal lives where crimes against persons and property are viewed as a form of "social justice" and encouraged by Hollywood and Manhattan cultural elites. As a result the middle class is being compressed, herded, financially squeezed and bullied by both the rulers and the bribed underclass. No stable, prosperous and real economy can be fostered under these conditions.
2. The disconnect between the Government and the Constitution. Our founding generations would have viewed as a criminal assualt on life, liberty and the pursuit of happiness the casual shredding of our Constiution by the Govt. at every level(Fed, sate,county, municipal). When a Govt, starts to treat the Constitution with contempt and as an obstacle rather than an inspiration, it also starts to treat citizens as subjects and people as masses. This in turn leads to the self perpetuation, expansion and aggrandizement of the( political, media, financial) Govt. for its own sake.
The quantitative effect of this disconnect is manifest in the shriveling purchasing power of the fiat dollar. The qualitative effect of this disconnect is manifest in the shrinking ethics of the governing class.
Deceit, fraud and thievery have become the common instruments of statecraft. Decit by the media bosses,fraud by the political bosses and thievery by the financial bosses are conducted without shame or remorse as the disconnect between the rulers and the ruled expands. When the Constitution is dishonored, it is no longer"We, the People, but "We, the Rulers, and They , the Masses".
3. The disconnect between the products of the great majority(not all) of high schools, colleges and universities and the skills, knowledge and, importantly, attitudes needed to thrive in the global economy and changing global distribution of wealth creating capacity and demographic power. A significant majority of young people who emerge with non-professional degrees or non-technical training lack(but do not know or seem to care they lack) the human capital to engage in real work, producing real goods and services that create real value for real people. These young people run the grave risk of underemployment if not outright unemployment for several years and face the prospect of downward mobility. A downwardly mobile middle class cannot possibly propel the economy upwards.

Jul 24 08:12 AM

[John Galt:]

Feds will never publicly tell you that their actions of slashing interest rates severely diminishes the purchasing power of your dollars, financial shills that keep talking about economic recovery will never publicly state that a run much higher in US markets can only be achieved with further severe debasement of your dollars.

Yes, it is possible for the amount of money you own, as represented by your stock portfolio, to increase greatly at the same time your real wealth is being destroyed.


- That is Keynesian economics in a nutshell. You get more money in the short term and feel "richer"... Nomial wealth vs real wealth... Your paycheck goes up 100 bucks but the exact same basket of goods goes up 110 bucks.

It is a shame these ideas are believed by our government. They probably aren't even really believed, they just go along with them because it gives them a mandate to print free money and expand political power.

User353 is correct with the mass "bribes" of the lower class. You have people who can't even read or write and never payed taxes voting for president. People who put nothing into the system but only take, with a say in how to run the system.

Who is John Galt?

Jul 24 09:18 AM

[CautiousInv...:]

As I posted elsewhere today, as reported earnings are poised to be off 44% from last year on a 27% drop in sales. If this is green so be it but I see it through a different lens and do not see green; most are not looking at YOY performance, only reported versus estimated.

The reason the media is seeing green is that analysts and companies low-balled estimates, setting up companies to come in ahead expectations on lower sales and cost cutting through employment cuts. It's odd that we react to growing unemployment in one fashion and then we celebrate it when it temporarily offers stimulus to quarterly earnings.

It's hard to extract from current valuations what growth expectations are, but I feel confident that future growth will be less than what is expected. When this becomes apparent, what some of see as a disconnect between current valuations and current realities will be brought into alignment through a correction.

Following this, the market must deal with the realities of the new normal in which there will be anemic growth amid reduced consumption, stagnant trade, growing government, crushing deficits and rising taxes.

Jul 24 09:35 AM

[Leftfield:]

One step to take: Take government employees, have them do their chores around the office for free and count them as employed.
We have a most toxic combination of incompetent and utterly amoral leaders who seem allergic to doing the right thing. The economic dissonance you write of (surging financials, moribund economy) reflects the general cognitive dissonance in our society that has no choice but to resolve via the hard realities we won't escape much longer.
Thanks for an enlightening article.

Jul 24 09:59 AM

[knight:]

Thank you KIM. You are clear and to the point and are backed up with excellent thoughts and research. Please continue the great work.

Jul 24 12:10 PM

[DiverCity:]

The problem is that the chump populace has not a clue about the facts presented by Mr. Kim. If, then, perception is reality, as the Wall Street shills, the banksters, the lying Federal Reserve and the lying politicians clearly believe, does that mean the chump populace will bring about the hoped for recovery by opening up those pocketbooks, maxing out those credit cards and taking out those home equity loans? That is clearly what the aforementioned shills, fraudsters and liars seek, and no doubt they are colluding to convince us chumps that economic recovery will happen right soon now. Unfortunately, even if they succeed resulting in a modest recovery, the can has been kicked just a little farther down the road to ruin.

Jul 24 01:01 PM

[conceptwizard:]

As Lincoln himself stated:

"The money powers prey on the nation in times of peace and conspire against it in times of adversity. The banking powers are more despotic than monarchy, more insolent than autocracy, more selfish than bureaucracy. They denounce as public enemies all who question their methods or throw light upon their crimes"

And followed with:
"I have two great enemies, the Southern Army in front of me, and the bankers in the rear. Of the two, the one at my rear is my greatest foe. As a most undesirable consequence of the war, corporations have been enthroned, and an era of corruption in high places will follow. The money power will endeavor to prolong its reign by working upon the prejudices of the people until the wealth is aggregated in the hands of a few, and the Republic is destroyed"

Throughout much of the 1800s and into the 1900s, the United States suffered several economic crises, one of the most significant of which was the Great Depression of 1873. As Howard Zinn explained:

"The crisis was built into a system which was chaotic in its nature, in which only the very rich were secure. It was a system of periodic crises – 1837, 1857, 1873 (and later: 1893, 1907, 1919, 1929) – that wiped out small businesses and brought cold, hunger, and death to working people while the fortunes of the Astors, Vanderbilts, Rockefellers, Morgans, kept growing through war and peace, crisis and recovery. During the 1873 crisis, Carnegie was capturing the steel market, Rockefeller was wiping out his competitors in oil"

I do not see today as much different, just the tools of aborbing the wealth are different, high speed computers and conduit connections to political power are more entrenched. Whst the significant difference is we are on a Global scale and this will end up o a Global outcome.
The public has to become more aware somehow as to what is really happening to them.

Jul 24 03:45 PM

[untrusting ...:]

"1. The disconnect between economic risk and reward,. The ruling elites have succeeded in engineering a system where more amd more economic risk is shifted to the middle class while more and more rewards are funneled to the top 1%."

Very very well stated. A great one-liner of exactly what has been happening in the US currently and accelerating over probably at least the last decade or two.




On Jul 24 08:12 AM User 353732 wrote:

> It seems to me that there are 3 great and widening disconnects in
> America today. From these, many of our economic and social pathologies
> flow, such as those you deliniate.
> 1. The disconnect between economic risk and reward,. The ruling elites
> have succeeded in engineering a system where more amd more economic
> risk is shifted to the middle class while more and more rewards are
> funneled to the top 1%. The rulers keep most of these rewards and
> use the rest to bribe and control an expanding underclass( perhaps
> 25% of the population now?), which pays no taxes, provides minimal,
> if any economic value added, resents and envies the "rich" by which
> they really mean the middle class, lives sullen and increasingly
> brutal lives where crimes against persons and property are viewed
> as a form of "social justice" and encouraged by Hollywood and Manhattan
> cultural elites. As a result the middle class is being compressed,
> herded, financially squeezed and bullied by both the rulers and the
> bribed underclass. No stable, prosperous and real economy can be
> fostered under these conditions.
> 2. The disconnect between the Government and the Constitution. Our
> founding generations would have viewed as a criminal assualt on life,
> liberty and the pursuit of happiness the casual shredding of our
> Constiution by the Govt. at every level(Fed, sate,county, municipal).
> When a Govt, starts to treat the Constitution with contempt and as
> an obstacle rather than an inspiration, it also starts to treat citizens
> as subjects and people as masses. This in turn leads to the self
> perpetuation, expansion and aggrandizement of the( political, media,
> financial) Govt. for its own sake.
> The quantitative effect of this disconnect is manifest in the shriveling
> purchasing power of the fiat dollar. The qualitative effect of this
> disconnect is manifest in the shrinking ethics of the governing class.
>
> Deceit, fraud and thievery have become the common instruments of
> statecraft. Decit by the media bosses,fraud by the political bosses
> and thievery by the financial bosses are conducted without shame
> or remorse as the disconnect between the rulers and the ruled expands.
> When the Constitution is dishonored, it is no longer"We, the People,
> but "We, the Rulers, and They , the Masses".
> 3. The disconnect between the products of the great majority(not
> all) of high schools, colleges and universities and the skills, knowledge
> and, importantly, attitudes needed to thrive in the global economy
> and changing global distribution of wealth creating capacity and
> demographic power. A significant majority of young people who emerge
> with non-professional degrees or non-technical training lack(but
> do not know or seem to care they lack) the human capital to engage
> in real work, producing real goods and services that create real
> value for real people. These young people run the grave risk of underemployment
> if not outright unemployment for several years and face the prospect
> of downward mobility. A downwardly mobile middle class cannot possibly
> propel the economy upwards.

Jul 24 03:51 PM

[untrusting ...:]

Great comments and so very true. The biggest problem is what to do about it? If Pete Petesen with his billions and full-time staff and non-profit institute are working hard to educate about the national debt and other issues, and seemingly making little progess .... then what hope is there for the masses? Only practical thing I can see is to try and do the best one can to keep themselves in good financial condition and not get taken to the cleaners by the elite and the crooks, but that is easier said than done.


On Jul 24 03:45 PM conceptwizard wrote:

> As Lincoln himself stated:
>
> "The money powers prey on the nation in times of peace and conspire
> against it in times of adversity. The banking powers are more despotic
> than monarchy, more insolent than autocracy, more selfish than bureaucracy.
> They denounce as public enemies all who question their methods or
> throw light upon their crimes"
>
> And followed with:
> "I have two great enemies, the Southern Army in front of me, and
> the bankers in the rear. Of the two, the one at my rear is my greatest
> foe. As a most undesirable consequence of the war, corporations have
> been enthroned, and an era of corruption in high places will follow.
> The money power will endeavor to prolong its reign by working upon
> the prejudices of the people until the wealth is aggregated in the
> hands of a few, and the Republic is destroyed"
>
> Throughout much of the 1800s and into the 1900s, the United States
> suffered several economic crises, one of the most significant of
> which was the Great Depression of 1873. As Howard Zinn explained:
>
>
> "The crisis was built into a system which was chaotic in its nature,
> in which only the very rich were secure. It was a system of periodic
> crises – 1837, 1857, 1873 (and later: 1893, 1907, 1919, 1929) – that
> wiped out small businesses and brought cold, hunger, and death to
> working people while the fortunes of the Astors, Vanderbilts, Rockefellers,
> Morgans, kept growing through war and peace, crisis and recovery.
> During the 1873 crisis, Carnegie was capturing the steel market,
> Rockefeller was wiping out his competitors in oil"
>
> I do not see today as much different, just the tools of aborbing
> the wealth are different, high speed computers and conduit connections
> to political power are more entrenched. Whst the significant difference
> is we are on a Global scale and this will end up o a Global outcome.
>
> The public has to become more aware somehow as to what is really
> happening to them.

Jul 24 04:28 PM

[Economic Lens:]

This cannot continue for more than another year or two before it comes apart. However, don't underestimate the Fed and Goldman Sachs working together to hold this balloon up far longer than anyone thinks possible.

Jul 24 06:46 PM

[Joanito:]

yep.... you're right. Specifically about the public being unprepared part. Not going to end well.

Jul 24 11:24 PM

[J. S. Kim:]

I rarely have the time to revisit my articles posted hear and read everyone's comments, but today I have, and it is encouraging that many people today are much more enlightened and educated about the financial fraud that is truly systemic in our country from the regulators, to the lawmakers, to the lobbyists, to the CEOs to gov't offiicials to the Feds, etc.


I would encourage everyone reading this article to visit The Worldwide Initiative to Permanently End Financial Fraud at www.endfinancialfraud.org and to participate in this grassroots movement to spread truth about the roots and origins of this global monetary and financial crisis.


I actually included this link in the original article posted on my blog but the link was edited out of the posting here. Though all of us are discouraged that perhaps just a tiny part of our population understands the concepts discussed in the comments here, I believe that we can't let our frustration curb our efforts to spread the truth and that we must push forward.


Eventually one of us who engage in such efforts to spread the truth will see our efforts become viral and succeed in educating the masses. This week, we added a video log to the page above and will post new videos every week to help explain this financial crisis in perspectives not told by the mass media and that help push the truth forward.


On Jul 24 08:12 AM User 353732 wrote:

> It seems to me that there are 3 great and widening disconnects in
> America today. From these, many of our economic and social pathologies
> flow, such as those you deliniate.
> 1. The disconnect between economic risk and reward,. The ruling elites
> have succeeded in engineering a system where more amd more economic
> risk is shifted to the middle class while more and more rewards are
> funneled to the top 1%. The rulers keep most of these rewards and
> use the rest to bribe and control an expanding underclass( perhaps
> 25% of the population now?), which pays no taxes, provides minimal,
> if any economic value added, resents and envies the "rich" by which
> they really mean the middle class, lives sullen and increasingly
> brutal lives where crimes against persons and property are viewed
> as a form of "social justice" and encouraged by Hollywood and Manhattan
> cultural elites. As a result the middle class is being compressed,
> herded, financially squeezed and bullied by both the rulers and the
> bribed underclass. No stable, prosperous and real economy can be
> fostered under these conditions.
> 2. The disconnect between the Government and the Constitution. Our
> founding generations would have viewed as a criminal assualt on
> life, liberty and the pursuit of happiness the casual shredding of
> our Constiution by the Govt. at every level(Fed, sate,county, municipal).
> When a Govt, starts to treat the Constitution with contempt and as
> an obstacle rather than an inspiration, it also starts to treat
> citizens as subjects and people as masses. This in turn leads to
> the self perpetuation, expansion and aggrandizement of the( political,
> media, financial) Govt. for its own sake.
> The quantitative effect of this disconnect is manifest in the shriveling
> purchasing power of the fiat dollar. The qualitative effect of this
> disconnect is manifest in the shrinking ethics of the governing class.
>
> Deceit, fraud and thievery have become the common instruments of
> statecraft. Decit by the media bosses,fraud by the political bosses
> and thievery by the financial bosses are conducted without shame
> or remorse as the disconnect between the rulers and the ruled expands.
> When the Constitution is dishonored, it is no longer"We, the People,
> but "We, the Rulers, and They , the Masses".
> 3. The disconnect between the products of the great majority(not
> all) of high schools, colleges and universities and the skills, knowledge
> and, importantly, attitudes needed to thrive in the global economy
> and changing global distribution of wealth creating capacity and
> demographic power. A significant majority of young people who emerge
> with non-professional degrees or non-technical training lack(but
> do not know or seem to care they lack) the human capital to engage
> in real work, producing real goods and services that create real
> value for real people. These young people run the grave risk of underemployment
> if not outright unemployment for several years and face the prospect
> of downward mobility. A downwardly mobile middle class cannot possibly
> propel the economy upwards.

Jul 24 11:37 PM

[W.E. Heasley:]

Excellent article.

Agree that Unemployment data is basically rubbish.

The rate is north of 15% if you include the Self Employed and Contract Labor. Another indicator exists: plummeting Federal and State Tax Revenues. The unprecedented drop is Tax Revenue is more correlated with a 15% Unemployment rate than the published 9.5% rate.

Jul 25 04:20 PM

[sheeple123jump:]

It's clear by now, to most investors who follow and understand the arguements that Mr.Kim and others have been explaining so well in the last year or two.... that the U.S. economic system,and it's markets are a corrupt ,fraudulent and rigged game...which has singlehandedly led the world into a global economic collapse,and which today is working full time to distort reality and convince the public to buy into its fairytale recovery scheme.
While I applaud Mr.Kim for another fine insightful article....I'm ready to move beyond this reexamination of a terminally ill economic system....and explore the next important questions,which in my mind are things like...... 1) Are there ANY other countries in the world which have been successfully decoupling from the U.S. markets/economic system...which we could invest in and participate in a truly healthy economy moving forward ?.... vis.Brazil? India? Taiwan? anywhere?
2) Are there Any other currencies that are liable to maintain some real value/purchasing power that we could invest in ?
3) Is gold and silver the only safe 'currency' ?
4) If the 'market' collapses again as it did last year, and as Mr.Kim predicts, does that mean the precious metal mining stocks will ALSO collapse as they did last year?

I appreciate the insights and commentaries Mr.Kim presents...but I'd like to hear something insightful about a 'solution' instead of always a description,fine as it is, of the 'problem'.

Jul 26 04:46 AM