Iconoclast421

The Worst Case Scenario (Someone Has to Say It)

It's all about energy. The Fed can print all the money it wants. But if there is 5% less energy then the economy as a whole has to take a 5% haircut. However, the Fed knows this and that is why they are printing, even beyond what they are allowed to do under law. They are buying debt that is not government backed. They could pump the markets up to any level they wish, now that they've thrown down the gauntlet and thrown the rule of law out the window. So they can inflate GDP to whatever level they wish. But in the end the average person will end up paying more for a loaf of bread and a tank of gas than they can afford. The Fed cannot print barrels of oil. So the real economy will contract, but inflated dollars will push up corporate earnings, and that will push up the markets. It's the perfect scheme, and the only ones who get screwed are the poor and they're too stupid to figure it out. So in a sick and twisted way, this is social darwinism at work.

Legalized Accounting Fraud Boosted

"Some have decided that since their credit is going to be trashed anyway they will charge their groceries and everything else on their credit cards and stop paying those too, stashing all their cash "somewhere else" and waiting for the inevitable - bankruptcy.

Yes, hiding that pay is a crime. And? So is accounting fraud - in theory."

Congrats Karl, you have discovered the driving force behind the Next Big Bubble! I've been calling it the "permanent delinquency bubble" or the "nonpayment bubble". Imagine if millions of people all charge up their credit cards and borrow all the money they can. And then they "launder" that money into the "black market"... (that place where money goes when it is no longer easily traceable.) The Fed thinks its gone but its really still there. There is your replacement for falling wages and incomes.

Then the Fed prints more money to patch up the holes on all the bank balance sheets. Now you have two chunks of the same money floating around the economy... both on wall street (represented by the banker bailouts) and on main street (represented by money "stolen" from the credit card companies and dumped into the "black market".)

Now all we need is for swine flu to come along and "eliminate" some fossil fuel demand, keeping energy prices low.

Voila: instant twilight zone recovery. With a dash of selective debt forgiveness based on political favoritism. (That is no small thing either.)

I used to joke about how the next bubble will be confirmed when banks start giving loans to people who are already are in default on a mortgage owned by that very same bank! Now I dont think it's a joke. I think we're really going to start seeing things like this happen. We're way beyond ponzi now...

Warning: The Coming Credit Dislocation

Oh my gods!! Another "so it begins..." thread from Karl! Looks like it is once again time to buy Citi $5 calls!

HFT: The High Frequency Trading Scam

Rather than stop the HFT, there is every reason to assume that over the next few years it could increase by a factor of ten. Will it matter that eventually 99.9999% of all trading will be this sort of manipulation? Nope. There is no law.

The manipulation and criminality has only just begun. It's funny that you mention the mafia and protection money. Sooner or later, the criminality will become as open as the mafia running a protection racket. It happened in Germany in the 1930s. People will and have learned to turn a blind eye to it.

Even in today's world where it is so easy to capture crime and corruption on video, it still does not matter. Already we are seeing multiple instances where blatant crimes are commited right on the camera, with the perp in full view and fully identified, and yet the victim receives nothing in the way of justice. The closest to justice he will see is having his video pulled off of youtube!

Welcome to Economic Hell

Karl for all we know, Japan failed with QE precisely because they are a nation of savers. Had Japan been a debtor nation with the world reserve currency, then how does QE fail? QE bails out debtors while punishing savers. This is fact and I doubt you'd deny it. In the US, GDP is driven by DEBTORS, not savers. This is also a fact and you know it. If we were all frugal, the economy would not grow. There exists no law in nature that says we cannot simply keep printing money and creating more debt. Sure it might increase exponentially, but it pushes GDP up when it would otherwise collapse. I just do not understand why you continuously carp about our debt and other bearish things, yet you still havent responded to the imminent long term timing signal shifting to bullish as indicated on this chart:

i468.photobucket.com/a...

Note that this is an extreme bearish scenario where we lose 30 point a week yet the longterm buy signal is still generated. So its safe to say it is imminent, yet you still havent written one ticker about this. And I learned about this stupid signal from you! Lately when I read your stuff I get the same feeling I get when I watch one of those cheap hacks on tv...

Nothing Suggests We're Anywhere Near the Bottom

I'm having trouble understanding where that 50% number came from. I think the Chiang screwed up, or something happened last april that skewed the data. Here's some other data from the report: "Retail sales were down $2.6 billion
(-12.5%), personal income taxes fell by
$9.2 billion (-19.7%), and corporate taxes
were $614 million lower (-7.5%) than last
year’s total at the end of April."

So for the first 4 months of 2009, personal income taxes are down by 20%.

Gary North Misses the Boat on Economic Theory

Gary North doesn’t enable comments, so I’ll put them here.

1. Gary North attacks Mish for saying that “Lending comes first and what little reserves there are (if any) come later.” Gary North says Mish “is making this up.” But that statement on reserves comes from Steve Keen, and Keen is right on the money. This goes over Gary North’s head completely. That is the reason he calls it “gibberish.” He needs to read Debunking Economics and flush out the years of crap stored in his toiletbowl of a head.

2. There will ALWAYS be inflation because of the open fraud and abuse of the monetary system we witness on a daily basis. If we are threatened by “inevitable” deflation, the Fed will simply print money to buy up bad debt thereby turning bad debt into good debt while simultaneously debasing the currency. If the Fed cannot legally buy the bad debt, it will break the law and buy it anyway. That is where Karl made his mistake. Karl might have been right that the Fed would not print money and drop it out of helicopters because such a blatant act would cause the bond market to blow up. However, the Fed did not drop free money out of helicopters. The Fed printed free money and used it to buy worthless assets. The Fed knew damn well that this money would end up being used to buy treasuries, opening the door to endless wasteful stimulus spending that doesn’t do anything for the economy except ensure continuing “paper growth” even against a backdrop of declining living standards.

3. Note that the Fed claims to be politically independent, but in reality the Fed has funded virtually the entire 2009 federal deficit. How is that is not a political move? Yeah, yeah because if they didn’t the system would collapse blah blah blah. Lame excuses don’t make the Fed any less of a political organization.

4. Gary North thinks an awful lot of stuff is irrelevant. I’m sure 5 or 6 years ago, he would have called the nascent housing bubble irrelevant. Many like him did. Hell, he very well might have been one of the idiots who worshipped the Fed as it blew a bigger bubble. Why even argue with someone like that? The almighty Fed is IN CONTROL. Yeah right, until they arent. Until they blow a bubble so big that it wipes out the entire productive base of the economy. What then? Is that #%!ng irrelevant too? The last bubble took out 20 million jobs. How many will the next one kill? 50 million? 100 million?

5. 10 years ago you were a conspiracy nut to think that the federal reserve system was designed from the ground up specifically for the SPECIFIC purpose of transferring wealth away from the masses into the hands of a select group of powerful people. If in our collective wisdom, we still believe it is conspiracy quackery to believe things like this, then I guess we best prepare for another 20 million jobs lost. And then some. Remember, the next bubble is always bigger.

Welcome to Economic Hell

Check out this chart:

www.nowandfutures.com/...

In Q3 1922, the Weimar stock market bottomed out. Within one year it had gone up tenfold, and that's in US dollars!

Supporting the Financial System by Bleeding the 'Real' Economy

I wouldnt rely to heavily on the "too big to fail" mantra. I believe Goldman Sachs will meet its very timely demise within 2 years. And THAT will mark the bottom of the depression. It all comes down to one thing: Fear. Right now, the banksters operate without fear, and thus with impunity. Sooner or later, the general public will instill a very palpable sense of fear in all these criminal CEOs and board members. Either that, or the general public will just stand there and be sheared until they have no skin left. I doubt that.

How Donahoe Broke eBay

The shill bidding is pretty bad. It is absurd that they would make it so you cannot do any research on the bidding history of the person bidding against you. It would only take a couple minutes to see if they are a legit bidder. But if the act of shill bidding (combined with relisting) results in profits for ebay, then there is your motive, and I wouldnt expect it to change. I've pretty much stopped bidding nowadays. There usually is no point to it. Either they provide a decent fair price to "buy it now" or I find someone else, or I simply dont buy at all. Isnt it ironic that ebay's auction functionality is completely broken?

HOG Is About to Catch Swine Flu

HOG's price is all about beta and has nothing to do with fundamentals. As far as technicals go, I've seen a lot worse looking charts somehow keep going up.

btw how is that TBT trade going?

Analyzing Strange Volume on the NYSE

So the true NYSE volume, minus this garbage, is less than 4 billion. Should that be surprising for august? How much of the remaining 3.5-4 billion volume is also pure pooper scooping? And is there an easy way to chart the total NYSE volume minus these 4 stocks for the past year?

Monetizing the Debt: Open Market Operations and Statistics

Did Bernanke say under oath that he is not monetizing?

1 Month, 24 Bank Failures: Random Event or Wilting Economy?

Maybe if we get 48 bank failures in august, the DOW will break 10,000.

Reading Behind Recovery Headlines

5.7% vs a year ago doesnt make much sense. How much is the "same store sales" effect skewing the data. (You can doctor sales data by using only same store sales and conveniently ignoring the stores that closed.)