THE DECAY OF THE AMERICAN DREAM

I EXPECT TUITION, A JOB, A HOUSE, AND RETIREMENT
As most of you know I keep a running list of stories that I want to post and then as I have time I will work on them and post them when complete.  Some stories take so long to get back to they become dated and I simply trash them.  I was about to discard this one when I took a few moments to rewatch it and I was simply stunned by how easily our American values have been sapped from us and how it has only taken one or two generations for us to become convinced that independence and personal responsibility are not core tenets of American society.

In the following 5 minutes clip we see an interview on Fox News with a Valencia College professor Jack Chambless.  Professor Chambless describes an exercise he has students complete in the beginning of the year where they write an essay explaining what the American dream is to them and also what the role of the federal government should be in their lives.  Unfortunately, the results of the assignment highlight the extent our attitudes have been warped and how quickly we have created a citizen base that expects care from an external entity for life.  Is it any wonder that the Obama campaign created the internet campaign video on the Life of Julia where the government provided assistance in every stage of her life?  This wasn't some odd mix up or some ill-conceived campaign idea, they were creating a video that targeted the very beliefs that many young people expect and want!  Conservatives better not brush this off as some stupid liberal foul up, this was an intentional advertisement highlighting the things that liberals identify as a goal and now many young people believe are important!!!

THE WAR IS COMPLETE WITHOUT FIRING A SHOT
While a small percentage of students simply wanted the government to leave them alone (10%), a staggering 80% see the government as a mechanism to provide them a college education, a home, employment, and retirement.  As I see results like this I am simply aghast and am reminded of writings by J.R. Nyquist that suggested that Russian Communists had planned and schemed throughout the last 40 years to infiltrate our college professor ranks to wage an ideological war from within the US.  If this idea of a long term war of ideas driven by intellectuals is in fact true, we can see that their efforts must have been more successful than their wildest expectations as they have destroyed the very basic principles of capitalism in that there is no expectation of success AND failure along with reward AND risk.  In corporate banking and finance we have nationalization and at a personal level we have the social nanny state.

I will concede that college aged students are typically more liberal and frankly inexperienced in real life but this shocking interview reveals that our youth expect "someone" to care for them and that they have a right to anticipate that some benevolent force will pay for the things they need or want in life.  Unfortunately, I don't think that these kids realize that often just like in trading, when you minimize your downside (some government provides everything for you) you often limit your upside as well.  Second, I'm sure they haven't thought that they too could be the source of government redistribution as everyone is willing for the government to take and take and take as long as they are the beneficiary.  When you are the target of the asset confiscation, suddenly we all become proponents of a free market system!

GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments at http://www.goatmug.blogspot.com/

G8 RIDES IN TO RESCUE GOLD

A few days ago I wrote a post titled, A LITTLE INFLATION AIN'T SO BAD and I discussed how we are suddenly seeing lots of comments from Europe and Germans that perhaps the inflation bogey man that they have feared isn't so bad.  I mentioned essentially that central bankers will pretty much throw out all reservations and any moral conviction regarding inflation to save the Euro and their failed system.

SAVED BY THE G8
My post was basically an introduction to the idea that gold and silver may actually have corrected and that this recent fall would be the last great opportunity to buy before rallying hard on new central bank action.  A few days later we have seen a pretty strong reversal in gold and so I wanted to put up two charts that give you a technical idea of where support and resistance might lie.  Remember though, if this printing and new found like of easing gathers steam at the G-8 meeting this weekend, gold and silver will rally significantly.

SAVE US WITH YOUR PRINTER PLEASE
In the chart below we see the powerful bounce off of the $1530 level on May 16th.  Over the course of the next two days it has climbed to $1590.  We are clearly still in a downward channel with a upper trend line at $1630 and $1690 which is overhead resistance outside of the channel.  Downside support and the channel boundary is still around $1530.

I do not see much danger in testing the bottom of the channel unless the G-8 says that they are prepared to allow Greece to exit.  Although if that happens, gold will probably also launch higher as Spain, Portugal, and Italy may be right behind them.  Because there is such a chance of this blowing out of their control (like it is in their control) there is absolutely no way that I see them not printing here and spewing more Euros to every willing taker.

To sum it all up.  Gold and silver have bottomed here (thanks to the G8) for a while and you can look to targets above to sell if you are trading the shiny stuff.  If you are a long term holder, I hope you added more.

GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments at http://www.goatmug.blogspot.com/

SYSTEMOLOGY / SNAP PHDs

My friend Amy from Slope of Hope wrote the following excellent comment that I knew someone would state, and she is right on.  So instead of posting the comment in the comment section that would never be read, I wanted to respond right here and give Amy her due.  Thanks for making a great point Amy.

AMY'S COMMENT

"I think we need to be careful about blaming "those damned bums on welfare". Most of them want to work. It's not their fault that we're in this mess. We're watching the biggest rip-off in history and many of those 46 million are victims who don't have a clue what's happening."

Amy, you are so right of course.  I don't want to paint the picture that most of these folks are not needing it.  Although with 46,000,000 on the roles, I'm going to guess at least 2% to 5% just aren't deserving like the recent story where the million dollar lottery winner was a participant or the report that 20,000 Wisconsin university students had to be kicked off last year.

My post really is lamenting that we are seriously saying that 15% of our entire nation's population is receiving benefits that help to feed themselves.  15% of people aren't earning enough to buy groceries!  That is really why I track this data each month, I'm of the mindset that this is awful and I completely understand that all of them would probably trade places with Mark Zuckerberg or even Goatmug in a heartbeat.

SYSTEMOLGY PHDS
Going deeper, I'm in fact not blaming any of the people that would actually be enticed to go get some aid and benefit for free, in fact it is a natural by-product of what they been told and sold.  I actually blame our entire system as it is removing the notion that self reliance at any cost is better than taking a hand-out.  Once the stigma is removed for these things you almost create an entire class of people willing to live at that standard of living in order to not have to do anything.  Just think about New Orleans prior to Katrina where you had literally generations of families "working the system".  Was it a good living, no, not one bit.  Could they be blamed, perhaps a bit, but it is what they knew and is where they were trapped.  Could the government system be blamed?  Heck yes, as it was easier and better for the government to give them just enough to keep them in control rather than have to face them, deal with them, teach them, and actually raise them up to be people that could stand on their own.  Essentially the entire system created entire classes of PHDs in systemology or the science of working the system to maximize benefits with little or no work.

This is the vision for government in our day, get funding, provide services, advertise services, grow the budget, provide services, and grow the program.  In this set up, SNAP or CALFresh government employees have misaligned incentives as their success depends on the programs growing bigger and bigger.  What motivation does the Director of SNAP have to get people to be self sufficient and get on to real productive lives?  None!  If they do get financially healthy, the Director of SNAP has less power, reduced funding, and less prestige.

A MINDSET SHIFT
In closing, I also lament the shift in mindset this entire country has begun to undergo.  Would you ever have imagined that a large part of the population in the USA would demand forgiving their student loans and demanding this as some right like the OWS movement?  The government and socialists and Democrats and Republicans have grown government so large that we've begun to see government and regulation as the answer to every problem.  In this country we used to do things without government, now it seems no matter how ineffective government is, we need more government to fix the problems created by the government.  Just ask Congress.

GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments at http://www.goatmug.blogspot.com/

HOW MUCH DOES $6 BILLION BUY? - FOOD STAMPS

ONLY 46 MILLION ARE NEEDY, 270 MILLION TO GO!
The release of the SNAP data for February highlights that we are still near record usage for foodstamps here in the US.   The month of February panned out with the following details.

46,326,352 of your fellow citizens are using your tax dollars to feed themselves and their families.
The cost to feed these folks was right at $6.160 Billion.  The average family receives about $278 a month.

YTD, actual participation is down 27bps!! ALRIGHT!  Year-over-year usage is still up 4.8%.


SNAP DATA - http://www.fns.usda.gov/pd/34SNAPmonthly.htm

NO REASON NOT TO, GIVE ME MORE!
The improvement in the data is slight, but I am hopeful that this trend continues.  When we examine the growth of the program it is not hard to see how it came about as the economic times have been tough.  At the same time, we have forces within the system attempting to create and increase dependency  on the government.  In 2010, California renamed their foodstamp program to CALFRESH in an attempt to remove the "stigma" of receiving foodstamps.  Is it any wonder we have citizens demanding services and saying that they deserve to be taken care of?  No, we have officials that tell users of programs that it is their right to be served and cared for, that the role of government is to make sure everyone is healthy, full of food, happy, and catered to.  The notion that government is the benefactor of course is a lie.  Government simply crowds out those people that would naturally step in and care for the needy.  Government also is only the middleman that doles out services by taking funds and spewing them out in an inefficient manner.

I don't want government programs to advertise on radio, tv, and print that they have all this "free stuff" and it is very acceptable to receive benefits.  I WANT there to be a stigma associated with living for free, for receiving free food, for having medical care that someone else provides and pays for.  When there is no stigma there is not any attribution that the services are scarce and that there is an expectation that they will only be provided for a short time.  When advertisements scream that the government wants to provide these resources it suddenly conveys that there is no limit to the amount of benefit that can be received and it costs people nothing.  By having a massive entity taking in taxes and distributing services we create an impersonal situation where recipients never see the real cost of the benefits and feel as though they need to maximize the amount they receive in any way.  (Think about having an insurance company pay your medical bills - you have no real idea about the cost, so you use the benefits as much as possible).

The promotion of dependency must stop for the good of our nation, it's poor, and for the ones that are seen as the producers in our country.  If the target continues to be placed on our most successful, we can bet that the incentive to earn and gain will be less great.

GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments at http://www.goatmug.blogspot.com/

CHARTZILLA

I had a request from a friend to slap a few of the charts that I frequently review up again, so I thought that I would oblige.  I'll add simply a sentence or two about what I think, but most are very similar in terms of signaling a sell or being very close to doing so.

As we view these charts notice that they are all set to view a weekly time frame and all have a 14 day EMA an 40 day EMA line.  Essentially a 14 EMA over the 40 day EMA can be bullish and a 40 day EMA over a 14 day EMA can be very bearish.  The slope of this EMA relationship is also important as you'd want to remain skeptical of a bullish signal where the 14 day EMA crosses over the 40 day EMA when the slope is actually heading down.  Ultimately, this longer term signal can be useful to capture bigger longer term moves.  Almost every chart here has suffered significant damage in the last month or two and so all confirm signals to sell and get into cash.


BLACKSTONE (BX) - $10 or $8 could easily be in reach here.  Another JPM hedging fat finger at another bank or hedge fund will send BX much lower.

CATERPILLAR (CAT) - Global growth slowdown.  CAT needs a serious reversal to make that right shoulder form or else it is doomed.

Australia Ishares (EWA) - Need some Chinese inflation to save the day, otherwise it will go the path of all commodities without QE3.

Canada Ishares (EWC) - Same as EWA above.

Malaysia (EWM) - I get that toppy feeling here too.  Time to exit.

 Korea ishares (EWY) - EWY has failed to break out.

Freeport McMoran (FCX) - The last year gives us a pretty well defined declining trend.  Uncle Ben needs to step in to save the metals and the miners.  A break below $32 would be disastrous.

Indonesia (IDX) - I hate to bet against this one, but it sure looks like it is about to roll over.

3M (MMM) - I'm inclined to punt this one as it looks to have stalled.  I still think it is in the large-cap dividend space which will receive benefits as investors look for yield in all kinds of places.  Corporate bond yields are so low, 3M is absolutely got to be a substitute investment for consideration.

Pfizer (PFE) - No reason to panic.  Apparently dividend paying drug companies are a shelter from a brewing storm.  Beautiful chart here.

Utilities (XLU) - Ding, Ding, Ding we have a winner!  As a safe haven and a dividend payer perhaps it is one of the best "relative value" hiding places.  If things get really scary, XLU will break down too as it faces pretty major resistance overhead.

Valero (VLO) - Didn't we say sell gas related stuff May 1?  See you at $15.

Western Refining (WNR) - This has been a wonderful gift, time to exit.  Greed can be a very bad thing if it causes you to lose your money after seeing big gains.  Don't let it slip away as $8 is a long way away.

That's it for now.  More charts to come later.

GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments at http://www.goatmug.blogspot.com/