YOUR INNER-MOST THOUGHTS BETRAY YOU

ORWELLIAN THEATER IS BACK
Back in July of 2011 I posted a copy of George Orwell's movie 1984. I went back and looked at the article and discovered that I added because our Congress was providing entertain debate about the debt ceiling and the administration was full of double speak and threats about the future. With the revelations of our lack of privacy and the confirmation by Edward Snowden of all of the statements made by William Binney, in "The Program", I feel like it is probably time to give readers another shot at the brilliance of Orwell and his uncanny ability to see where things were going 60 years into the future.

I will leave you with these thoughts and questions from the movie.

Ignorance is strength!

The party gives them exactly what they want.

How do you know what exists?

I encourage you to watch it.  How Orwell would have ever imagined the things he did when writing it is amazing.  I am awed by the idea of the screen in every home and building monitoring every action.  It is very much like today as your Xbox with Kinect "hears" what you say, your phone reports your every location, your emails contain every thought, and each search is recorded to provide a profile of your innermost desires and thoughts.

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/

SHADES OF THE TRUTH

IS THIS THE TRUTH?
You are in great hands with Representative Hank Johnson leading the questioning of the NSA Director on domestic surveillance.  It will be interesting to see how the remarks made in this hearing measure up with the facts that are now confirmed in the NSA leak probe.





Oddly, when all things are fleshed out, we'll find that the NSA Director Kieth Alexander probably was telling the truth in some sort of convoluted lawyerish way where the definition of technical capability and "intercepting" was somehow different than what the normal human being understands it to be.  It is clear though in watching the video that Alexander was parsing his words and trying to stick with a specific script and even changing Hank Johnson's questions to fit his narrative.

BRAVE WITH CONSEQUENCES
The young idealist, Edward Snowden did a very brave thing by coming forward with actual documents that provide proof that the NSA does perform many of the things that Hank Johnson asked about in the forum.  Unfortunately for Edward Snowden, he will be pursued not as a whistle-blower, but as a spy and the full force of the government will be used to imprison him.

I think that many young men and women have discovered that President Obama offered them a great hope of Utopian principles but sold them a load of rubbish instead.  This new generation is idealistic and powerfully motivated by the greater good and fairness and emotion.  All of these are wonderful, but they leave them open to being manipulated.  I guess all of society is like that.  Snowden describes the let down when he realized that Obama accelerated the programs that the Bush government created after 9/11.
Read The Guardian article here -
NSA LEAKER REVEALED

I actually had pulled the following story and new video for publishing back in February of 2013, but somehow got distracted and busy, or frankly just didn't want to risk putting this story up.  I guess it is time to give it some attention as it is exactly what Snowden is now confirming with real documents.

MUST WATCH THIS! - FROM EARLIER THIS YEAR....
William Binney gives us an 8 minute review of the extent of how your government monitors your life and how they attempt to use all of the available data available to them to construct a view of you.

THE PROGRAM .

Interesting, this program even mentions the Kieth Alexander interview with Hank Johnson.  As I mentioned above, Director Alexander seemed to be answering every question with framed words to meet some specific way of communicating.  Oddly, since I had watched the video, The Program, I almost thought that everyone in the USA knew that everything we did online, in email, phone, and even with our bank and credit card accounts was monitored.  I guess others didn't.

ARE WE SAFER?
So, the question really is, will the efforts by the NSA and other government agencies make us safer?  The answer is of course, no.  Perhaps low level attackers that are capable of small attacks might be caught planning things on the internet, but the reality is that larger, smarter attacks will be coordinated well outside the net cast by these guys.  In addition, the huge volume of data of the program makes it harder to actually narrow things down to specific threats.  The Boston bombers are a perfect example as these men should have been monitored, but even after warnings from the Russians, they were somehow able to plan and carryout bloody attacks.  Where was the fruit of all of this surveillance capability?

ARE WE TO BELIEVE THAT COURTS WILL PROTECT US?
We are told that when there is a real threat that evidence is brought to a judge with the FISA court and then a warrant for monitoring is either granted or denied based on the merits of the case.  While I'd love to believe this, we have a perfect example in the White House leak probe where the Attorney General LIED to a judge to include the FoxNews reporter, James Rosen, and named him as a co-conspirator in the case!  In otherwords, even our top enforcement agent, Eric Holder, will fabricate facts and twist the scope of a case to get the administrative approval necessary to create and substantiate the legal basis for what they probably already had in the information trove!!!!  Frankly, do you trust the judge to be independent when he is guaranteed a nice pension for life if he does the good work of the "citizens" by allowing the state police to get their paperwork in order?

No, my belief that this program of monitoring is not really for the purpose of protecting us, I can only guess the real purpose, but clearly our civil servants, military, and three branches of government are not functioning in a way to protect citizens from unlawful searches and the growing encroachment of government reach is beyond what probably can be controlled now.

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 athttp://www.goatmug.blogspot.com/

PAPER TIGER? PAPER CITY?

GHOST CITIES
Please take a few minutes to watch this 60 Minutes video on China's ghost cities.  I've written about this several times, but given the recent new action by the Chinese government to curb real estate inflation, it seems as though the may be new movement in possible deterioration of their most-loved asset market.  The Communist government announced new taxes that require sellers to pay 20% capital gains taxes and also mandated that purchases of second homes must be paid for with 60% cash down payments.

WHAT ELSE CAN THEY DO?
Given the investing approach and lack of alternatives, who knows if this will be the final straw that blows them up?  As we know, central planning and central banking and a zero interest rate world creates all sorts of mal-investments and mis-allocation of investments to compensate for distortions in yield and risk.

Enjoy;



Thanks for reading.  I've been slammed with lots of projects, please check back frequently as I am trying to post 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 athttp://www.goatmug.blogspot.com/

4 REASONS YOUR HEALTH INSURANCE WILL INCREASE BY 50% IN THE COMING YEAR

I haven't seen much information that is helpful to aid employers in preparing for the impact of the implementation of Obamacare in 2014.  Today, I happened to read a great blog post which summarizes the real results that will come from the passage of the greatest change to our entitlement system since Social Security and Medicare.  My friend, the owner of Texas Health Design penned a great article that needs to be read and reposted and retweeted.  With his permission I've included it here in the Goatmug blog for your reading.  If you are in many of the southern states and need health insurance, make sure to go to his site and get a quote.  www.texashealthdesign.com

Also, I suggest that you add his blog to your blog visits.  He posts pretty infrequently, but when he does, it is worth the read.  http://texashealthdesign.com/thdblog/

BAD NEWS NOW IS BETTER THAN LATER
I hate to tell you the bad news, but it is best to get a dose of reality earlier than it is to have a shock when bad things hit. Despite the fact that our leaders told us that we could expect lower healthcare rates, you’ll be paying more for health insurance next year. Politicians have a funny way of doing things and often the name of their legislation is an indication of the coming irony. While the sweeping healthcare law that passed in 2009 became dubbed, “Obamacare”, the formal name for the legislation is the Patient Protection and Affordable Care Act. Washington insiders must have simply chuckled as they must have known that the law would do anything but make healthcare affordable!
The re-election of President Obama ushers in the notion that Obamacare is here to stay and while Republicans will gnash their teeth and complain and threaten to defund specific portions of the bill, they really cannot do anything to prevent the wholesale change to the healthcare distribution system in the United States. Don’t get me wrong, the medical and healthcare system is cracked, but I’m not sure the solution is to simply break it off entirely and throw it in the trash. Many of the anti-capitalists and socialists in our country proclaim that this “fix” is the ultimate deathblow to evil insurance companies and will usher in a one-payer system for the United States. Perhaps we’ll see this, but one thing about those insurance companies, they are pretty smart. In recent months we’ve seen them acquire large physician and medical practice specialty groups, purchase medical billing firms, and also electronic medical record firms in an attempt to own the entire process. In their eyes you may squeeze their profitability on the insurance side, so they’ll simply own everything.

Now the election has passed, insurance companies have about 13 months to prepare for all of the final steps of implementation required by January 1^st 2014. Because of this, every purchaser of health insurance (whether a mega corporation, small business, or individual policy buyer) will get a rude awakening over the next year. How is it possible that the Affordable Care Act could make health insurance unaffordable? It really is simple, there were provisions within the law that mandated specific changes to how health insurance premiums were calculated and also requirements that prescribed how much or little insurance and risk could be taken. In the following paragraphs I’ll highlight four reasons why your health insurance premiums will increase by 50% by your next one or two renewal cycles. These mainly focus on group plans, but the same metrics will affect individual policies too so we’ll see a convergence to higher prices in the coming year.

As you read this you might be inclined to interpret this as condemnation that the law’s application is wrong. I would argue that I’m not saying that at all. I am simply reporting what the impact will be on health insurance purchasers. The key change that is made through all of their adjustments is simply that there is a fundamental cost shift going on. In the past, sick and unhealthy people or folks that used the system or cost the system more paid more. In the new system, sick and unhealthy or statistically higher users actually pay less AND their portion is shifted over to the healthy non-users. That is the key, just because the sick people pay less doesn’t make the cost disappear, they end up being the cost of other people. I argue that this is fundamentally wrong.

GENDER NEUTRAL PRICING
Let’s face it, women consume more health and medical services than men on a typical basis. I know this because my wife visits the doctor once a year even if she isn’t feeling poorly. Men on the other hand don’t often use their preventative care benefits and won’t even visit a physician even if they are ill or know that they are in need of attention. While I’m making a broad generalization, it is true from an actuarial perspective as well and insurance companies created pricing for men and women based on their consumption of health services. As a result of this evidence, men received cheaper health insurance rates than women. Obamacare legislates that insurance companies can no longer do this. The effect of the law is that men and women will no longer receive prices that are different based on their gender. As a result, we may see some policies for women go down in price, but policies for men will go up significantly. This is the first example of cost-shifting.

AGE BASED PRICING
A sixty-four year old will go to the physician much more than a twenty year old typically. As a result of this, insurance companies were creative enough to create pricing metrics that essentially included eight pricing bands where as a policy holder aged their premiums would go up. To clarify, that meant that age based calculations could be a factor of eight to one where the older person could pay eight times the amount of a young teen. In the new system, the spread between an eighteen year old and a sixty four year old insured can only be three times higher, meaning that there is much less difference in available pricing for insurance companies to target. In this case the impact will mean that younger people that consume significantly less health services will pay much more for their coverage because insurance companies will tighten up their factors and raise the lowest premiums and slightly reduce the premiums for older folks. Again, just another example of how the new law passes someone’s actual cost to others.

INABILITY TO ADJUST BASED ON PRE-EXISTING CONDITIONS
The third blow to consumers in the legislation is that insurance providers cannot rate a policy based on a person’s health conditions. In other words, a fifty year old applicant with cancer and a history of four heart attacks will receive the same price as a fifty year old personal trainer with no medical history. As a result of this stipulation, healthy purchasers of insurance will absolutely pay more as the average premium that insurance companies receive must rise to absorb the new influx of sick people that will rush to obtain health insurance. In the past, individual insurance policies could be declined as a company would not want to insure a person with a history of cancer and four heart attacks. In 2014, the health insurance provider MUST insure them and therefore they will adjust pricing for everyone to make up for the higher costing sick applicants they will receive in the future.

MANDATED LOWER DEDUCTIBLES
I think many have discussed one or two of the pricing adjustments discussed above, but one other change that is required that will hurt many is simply not being discussed. A provision of the Affordable Care Act requires health insurance plans to have a minimum of $2000 deductible. As health costs and health insurance costs have risen over the years, employers have struggled to find a way to afford health plans to provide their employees coverage. As a result of increasing premiums, employers have decided to offer higher deductible plans in an effort to control their expenses. The Affordable Care Act simply attacks this coping mechanism by mandating that employers cannot offer plans with higher deductibles to their employees. I estimate that more than 50% of the small employers here in Texas use plans with a deductible that is greater than $2000. What this means is that employers must now purchase a lower deductible plan which will increase their monthly premium costs significantly.

I am currently working with a small general contractor that has two families on their health plan. In their situation I just quoted a $4000 deductible Blue Cross plan which cost $2683 per month to extend coverage. The same plan with a $2000 deductible plan would cost the firm $3216 per month or 20% more!

WHAT WILL EMPLOYERS DO?
If 50% of the employers are “under-insured” they will certainly take several actions in response to the realization they are facing significant price increases. Remember, not only will health insurance prices go up due to the deductible mandate, but they will go up for other reasons including the pre-existing pricing issue, gender neutral pricing, and age based pricing requirements. In response to the looming price hikes, what do we expect employers to do?

First, if the small business is subsidizing the amount employees pay for coverage, they will reduce the amount of financial help they are providing. By law, employers are required to pay at least 50% of the employee-only health insurance costs. If the employer is paying 100% or 75%, they will certainly drop their contribution to the minimum of 50%.

Many employers will stop paying a portion or all of family coverage for their employee’s dependents.

Many small employers will simply stop offering coverage.

Finally, employers that have at least 50 employees will begin cutting hours of existing employees to ensure that their employees work less than 30 hours per week. By reducing their hours, employers can avoid the requirement to offer and provide employer health programs. This move alone will have a dramatic impact on our overall economy.

BUSINESS KILLER
I think we’ve done a good job outlining the issues created by the Affordable Care Act. I recently visited with a company that is a retailer (alcoholic beverage industry) that has 500 employees. This successful business has been working and growing for thirty years and has expanded throughout a few states. The owners of the firm are some of the hardest working people I have ever met and they continue to work sixty and seventy hours a week despite the fact that they are extremely wealthy and sixty years old. As we visited about their business and the impact of the healthcare legislation they became very serious. They see this as an attack on their business that could kill it. Their business has razor thin margins and they simply cannot afford a 50% or even a 20% increase in their expenses. While our leaders express that the rich can pay their “fair-share” and that everyone deserves health care they really are saying that hard working people will pay everything for others. I asked what they planned to do in response to the coming changes in 2014 and I was shocked by the seriousness of their response.

First, they planned to reduce the hours of every employee that was not a manager to 29 hours a week.
Second, they would consider dropping their current health plan entirely and paying the penalty of up to $2000 per full-time employee if the increasing cost burden was too much to handle.
Third, they would close all but their most profitable stores as the margin compression they see might be too great to keep those average stores open.
In this example, the penalties this firm could face could be as much as $1 million per year (if all the current employees were full-time). Have you considered what you would do if someone came up to you and told you that because a law changed you would now need to pay an additional $1 million per year!?? In their minds, this is simply robbery. We will hear more stories like this as large and small employers grapple with the impact of the sweeping changes that will without a doubt increase health insurance premiums by 50% in the coming years.

INDIVIDUAL PLANS
If you are reading this post and wiping your brow saying, “whew, I have an individual plan, I’m glad this doesn’t impact me”, you are wrong. All of the pricing stipulations also apply to your policy so you will be soon paying significantly more for your policy. Essentially what I’ve been saying is that there will be a price convergence of individual policies to meet or match employer pricing. While we do have 13 months till the final implementation of the Affordable Care Act you can still review your options and attempt to lock in decent pricing before the health insurance carriers really begin to factor in all of these provisions.
If I can help you examine the impact of the law changes on your existing employer plan or your individual plan please let me know, I’d love to help you navigate this process to help you manage your benefits and costs.

Please contact us at info@texashealthdesign.com anytime!

GOATMUG WRAP UP -
There you have it, a great article and great perspective on the health insurance market that will really impact the US economy.  As Nancy Pelosi promised, we'll have to pass it to see what's in it..... she wasn't kidding was she?

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 athttp://www.goatmug.blogspot.com/

A LITTLE FRAUD IS OK --- MARKET SYSTEM IS A JOKE

A LITTLE FRAUD NEVER HURT ANYONE?
I am on vacation this week, but couldn't resist making a quick post after seeing this clip today.
Without more comment other than a brief introduction we have Rick Santelli speaking on CNBC about the Federal Reserve Chairman's off-hand dismissal of the Libor-gate under reporting incidents.





Key take aways from this whole mess are;

1)  As long as the fraud you are doing is to save "the banks" it will be seen as ok.
2)  As long as you are manipulating markets and it is only a few bps, then it is ok.
3)  As long as the Fed knows about the fraud you are doing, it is ok.
4)  As long as the markets are close or open, it is ok to commit fraud.

WE ARE NO DIFFERENT - BANANA REPUBLIC HERE WE COME
I don't know why I am so upset by this.  In the midst of the crisis there was talk about this happening and it was pretty obvious that it was.  I think that I am so disturbed because it really does reveal the level of absolute corruption in our "free" market where if you are connected and big enough, anything goes with the blessing from the government and leadership. We have become a centralized communist state where those in power skim off the top and receive blessings and financial rewards.  The people are simply the mechanism to create the wealth that is stolen.  Are we Russia or China or perhaps Mexico?  Perhaps, it is clear though we are not above fraud, corruption, and manipulation.

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 athttp://www.goatmug.blogspot.com/

WELCOME TO THE THEATHER - 1984 STYLE

WORLD MARKETS ARE THE FOCUS
I heard today that the President and CONgress were rushing to try to get some type of debt ceiling done (temporary or not) before Asian stock markets opened for the week (Sunday evening in USA time).  I'm struck by this because I'm simply floored by the fact that these politicians are spending any time focused on what equity markets are doing rather than focusing on the task at hand.  What I'm getting at is the notion that they are scurrying around to avoid a fall in markets shows me that this is all just a big show for the markets! 

Yes, this isn't some new revelation since the timing for all major announcements seem oddly planned EVERY single time to coincide with a Sunday night bombshell or options expiration Friday.  As I've noticed these events I've pinched myself saying, "no, it's just a coincidence".  However, after having an entire arm covered with red whelps, I am finally of the mindset that a game is being played to juice markets and keep them elevated. 

The story here - http://www.foxnews.com/politics/2011/07/24/leaders-seek-debt-deal-before-asian-markets-open/

"White House Chief of Staff Bill Daley warned Sunday that the financial markets are starting to have doubts about the ability of Washington to strike a debt deal, as lawmakers scramble to come up with a plan before Asian stock markets open.



The Asian markets will start to open Sunday evening Washington time, ahead of the Dow opening in the U.S. Monday morning. U.S. officials are cognizant of the possibility that a failure to outline a path forward by then on how to raise the debt ceiling could roil the markets."

Now give me a break!  We have several days until this deal needs to be done, and rest assured that our friend Ben Bernanke is quite willing to buy up all the debt in the world to keep us from having an interest rate problem.  I saw Tim Geithner on tv telling us how irresponsible those Republican politicians are being and how the apocalypse will be unleashed if something isn't agreed to immediately.  While the warnings are grave we can retain a sense of confidence in our financial overlords as every other problem we've faced in the last two years has been met with a change of the rules, a bending of all reality, twisting of economic paradigms, and a moratorium on basic math.  Forgive my tongue and cheek approach to the drama, but I personally don't think there is any chance of a deal not getting done, and with hours to spare they'll unveil another monstrosity that will solve nothing and only ensure that Amerika's future is just a bit dimmer. 

WASHINGTON GENERALS WOULD MAKE GREAT REPRESENTATIVES
Have you been to a Harlem Globetrotters game?  I love them and go every time I have a chance.  Those guys are funny and entertaining and the kids think they are a blast.  My kids haven't figured out that the Washington Generals (the perennial opponent of the Globetrotters) are laying down so the Globetrotters can win.  My kids don't realize that the entire game is a show and there is no competition going on down on the field of play.  Likewise, I think the entire drama unfolding in CONgress is simply a ruse where each side of the isle is attempting to make the most out of the situation.  They are all on the same team, they are just wearing different jerseys to keep up the facade that a competitive game is under way.

So, with that realization, I want to give you the opportunity to watch a movie you may have seen a long time ago.  You may have read it in high school back when they actually tried to teach you important ideas and challenge you to think.  The entire theater that is Washington relies on all of us buying into the divisions of a two party system where one can be good or one can be bad based on our frame of reference.  Let's face it, we all like to be on a team!  The problem sets in when you discern that neither one of these teams is good. 



I will leave you with these thoughts and questions from the movie.

Ignorance is strength!

The party gives them exactly what they want.

How do you know what exists?

I encourage you to watch it.  How Orwell would have ever imagined the things he did when writing it is amazing.  I am awed by the idea of the screen in every home and building monitoring every action.  It is very much like today.

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/

FINANCIAL WIZARDS DIG FOR PROFITS

WATER SHORTAGES MAY BE GREAT BUSINESS FOR BANKS?
I found an interesting article today in Bloomberg about why the world should care about China's water problems.  Unlike what I first thought when glancing at the title, the author doesn't suggest that China will attack neighbors for their water rights or anything close to this.  The article's author suggests that some financial alchemy would be the prescription for solving the world's water problems.

http://www.bloomberg.com/news/2011-07-06/why-we-care-about-the-price-of-water-in-china-peter-orszag.html

I won't go into depth into what Peter Orszag highlights as reasons for the water issues, but they are the same ones we hear about China all the time.  They have polluted everything, including their water supply.  They are using all energy sources and burning them takes a bunch of water.  Oh yes, there is also a terrible drought as well.  All of these things are reasons that the world should assist China in fixing their situation.

WHAT TYPE OF HELP SHOULD THE WORLD PROVIDE?
1)  You knew it would be long to find that if the "global village" was going to get involved that the first answer had to be that we need to fix CLIMATE CHANGE!  I mean it is simply stunning that in one sentence Orszag links that we need to reduce water pollution and then somehow jumps to the notion that we must address climate change.  Can it be that simple?  What specifically does global warming have to do with polluting streams, rivers, and aquifers?  Are we heading somewhere?  Does this sound familiar?

2)  The second recommendation is one that seems reasonable.  We should provide more potable water.  I get this and I'm for it.  Let's get more desalinization plants and cook up some drinkable water.  No argument here.

3)  Finally, we get to the meat of the posting.  We need to let the "market" begin pricing water to effectively manage usage of supplies.  Here is the quote;

"Water is Earth’s most valuable commodity, and yet in most countries it is given away free -- as if it had no value at all.

If China moved more aggressively to price water in a manner that reflected demand and supply, it could teach the U.S. a lesson in using market economics to address environmental issues. As a colleague of mine at Citigroup Inc., the analyst Deane Dray, has written, “water has never been priced efficiently.” In the U.S., water is generally heavily subsidized, and prices aren’t adequately linked to usage levels.
Just as we need to price carbon in order to avoid a climate crisis, we need to price water to avoid a water crisis. Market forces can work wonders for the environment, but only if we have the political courage to create them. "

THE REAL AGENDA
Here is the takeaway from all of this nonsense.  Peter Orszag is a Vice Chairman of Global Banking at Citibank and also a former official in the Obama Administration.  Mr. Orszag probably has several main goals here, so I'll assume his motivations fall into just a few camps.

First, market based pricing for a necessary commodity like water would be a great place for a bank like Citi and JPM to completely dominate.  That is all we need is another situation where banks hold and trade valuable commodities (like oil) rather than provide lending services.  (What business are they in again?)  As a Vice Chairman, I can guess that he's in the business of business development.  Is there any doubt this is the angle he's playing here?

Second, this all comes back to Orszag as an excuse to wage war on Global Warming, errr, I mean Climate Change.  Actually a better word for this would be a market mechanism for pricing carbon emmissions throught the creation of related credits based on the fiction of climate changes due to man.

Last, as a former senior administration official, I suspect that Mr. Orszag would identify himself as a senior believer in the Global Village concept where we collectively should jump in and solve all of the problems in the world without concern for national sovereignty.  I'm not so sure China is quite so open to the UN's type of help and doubt seriously that they would comply with any rules related to water pricing or carbon trading at all.  So if China doesn't participate could we really be looking to get into pricing of water here in the USA as well?

WHEN FINANCIAL WIZARDS GET COOKING THEY MAKE A MESS
As a Financial Analyst at a large firm many years ago I was a financial wizard.  My firm had many offices throughout the world and as each location became connected over the years, communication and connectivity costs grew significantly.  In my younger days managing corporate spending I led a team that intended to allocate and charge out these costs because the parent company was subsidizing all of the expenses and we needed to look more profitable at the core business. 

With an enthusiasm that is unmatched in the finance world I created an amazing soup of allocations and charges to all of the global offices for everything from executive leadership to T-1 lines and GWANs (Global Wide Area Networks ---- big, big, Internet pipes!).  The executive team and board bought my allocation strategy and I looked great and on paper, our corporate offices gained $15 to $22 million a year simply by waving a wand in front of an excel spreadsheet. 

Clearly the home office saw me as a hero and the global offices saw me as a.....goat.  What really happened was that the entire scheme was a bunch of garbage.  The company didn't make any more money than it did previously, and you had about 10 global local CFOs that were angry every single month when we reviewed these communication and technology related charge outs.

My wizardry added absolutely no value to the bottom line, but some executives in the home office looked much better.  Perhaps I made them more bonus money at the expense of some to those in other locations?  When an excel guru starts trying to price your IT costs or your carbon credits or your water, you must recognize that you are not going to benefit one bit.  Things will get very complicated and someone might earn a bonus, but it isn't going to make much difference in the long run.

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/

INDEPENDENCE DAY - DECLARING FINANCIAL FREEDOM

I wanted to wish you a very happy Independence Day.  I pray that you have a very special time with family and friends and that you take time to reflect on the blessing that it is to live in America and to be an American. 

As many of you know I often lament about how being an American is changing and that we are losing the key traits that have made us a great nation.  Despite these fundamental losses we are still a wonderful nation comprised of amazing people.  We are still a nation that largely recognizes that Jesus is our sovereign king and we have a history that can only be explained by understanding that a supernatural being had a hand in making things work out "just right".  Without that direction, there is no way that the United States could have formed. 

Having recognized these things, I want to challenge you to make this year a year of freedom and independence.  Freedom and independence from what you may ask?  Plainly, we must declare freedom from financial bondage.  I don't write this as one that has claimed victory over these things although I do a solid job most of the time.  I challenge you to look at the compulsions that drive your purchases of many items and identify your real needs and the motivations behind the outlay of hard earned cash.

I live in an area of absolute affluence.  When I take my children to school, they are surrounded by homes that cost in excess of $1.5M per house.  My children play with kids that have parents that are CEOs and executives of large oil and technology companies.  In other words, my family lives in a fantasy land.  No matter who you are, when you live in this environment, it is difficult to have a realistic view of life and not have your point of view shifted to this alternate reality.  I admit although I love my home and believe it is perfect for my family, I often see these mansions and think, "we could live there, why don't we make it work".  Well, the reason we don't make it work is that in my state, property taxes for homes like this would be at least $30,000 a year!  That is a deal killer for me, but more importantly I need to examine the feelings and desires in me that make me contemplate such a drastic move given how wonderful my situation is currently.

Presently, we live in an incredibly small neighborhood where everyone knows each other.  We love all of our neighbors.  My kids have kids their age right behind our house and we have a connecting gate where they can play at any time.  We can easily pay all over our utilities, mortgage, and taxes with half a month's salary from my spouse.  Our home was completely renovated several years ago, so we have no maintenance issues.  In other words, we are really blessed.

So, we come back to questions about why we would even consider moving, and the answer is simply that we have been programmed to want more and believe we need more when all of our needs have been completely met.  The next step in this path of deception would be to believe that I deserve more and therefore should act to change my circumstances.  Unfortunately, if I followed this path to completion,  there would be terrible consequences including stress, resentment, and fear.  We would be signing up for debt bondage that could be terrible for our family.  It is so important to recognize the destruction this kind of move would make and quell these desires that might jeopardize my family's financial position and happiness.  In my opinion, we need to combat the noise of society and the internal justifications to make wise choices.

To wrap up, please think about the areas in your life where you make financial decisions that don't make sense and are based on thoughts that you deserve possessions and are really not necessary.  Think through experiences of regret and damaged relationships because you had to have a car or home and acted to meet those desires.  One of my favorite authors, Patrick Morely wrote, "We buy things we don't need with money we don't have to impress people we don't like".

Today on the 4th of July I declare independence from thoughts that I don't have enough and that I need something better or bigger to make me happy.  I declare that I will breakout of the thought process that says I deserve things and that once I have them they will somehow complete me.  I declare that I will use my excess resources to bless others and work to enlighten them about the trap of financial bondage so they too can experience freedom.

HAPPY 4TH OF JULY!

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/

AMERICA IS NOT BROKE! -

Please read the following article where the newest genius in Wisconsin states anything but the obvious.  Michael Moore profoundly declares that "America is not broke". 

http://host.madison.com/wsj/news/local/govt-and-politics/article_8a60e128-4791-11e0-9892-001cc4c002e0.html

As usual Michael Moore is seeing America through his own distorted lens, but this time he is just flat wrong.  Oddly, I usually feel some sort of respect or admiration of Michael Moore in each project he does for no other reason than he really believes earnestly in his views and is willing to put them out there.  I can usually even put on a raging liberal hat and see his perspective despite my absolute disagreement with him.  In this case however, I just have to declare that he is completely off his rocker.

 Later in the article he notes that "America is not broke," Moore said "the country is awash in wealth and cash ... It has been transferred in the greatest heist in history from the workers and consumers to the banks and the portfolios of the uber-rich."  Once again, Moore gets some of the truth out there and then goes to work to distort the facts.  First, Americans were broke well before the financial crisis in 2007 and 2008, the media and the markets were too busy believing the lies and watching "Flip This House" to believe that we weren't rich.  Second, the same banks that Michael Moore claims are rich are actually completely bankrupt, leaving me to wonder who really is rich there Mike?

What this really is about is Michael Moore interjecting himself into Wisconsin politics on the side of unions.  Wouldn't it be great if he actually did a story about the destruction of the middle class due to unions creating uncompetitive landscapes for companies?  Wouldn't it be great if Michael Moore exposed the corruption of the unions?  Wouldn't it be amazing to see this guy on the right side of any angle?

If Wisconsin and all the other states aren't broke then I am not sure what constitutes being broke.  Unfortuantely I think we will ultimately see what happens when a "not-broke" country like Greece. Ireland, Portugal, or a US state like Wisconsin does end up being exposed as broke.  When at long last the endless money supply and unlimited debt comes to an end, we'll see that the conditions that are being displayed by Wisconsin are in fact an indication that America is broke.

GOATMUG 

THE POLITICS OF DECEPTION

I've been thinking about the following topic for about three weeks now and the discovery of the following video from FOX NEWS spurred me to actually put my thoughts down here.  Before you roll your eyes and click over to some other blog because I'm going to go deep into my political rants, stop, wait, and hear me out.  I'm going to briefly highlight this because it is important and is going to help us today and in the future.

Watch a few minutes of Fox here where they put together two years worth of video and created the illusion that Ron Paul is booed vehemently as he is announced the winner in 2011.  The only problem with the video is that he wasn't booed in 2011, the boos were provided in 2010!  Fast forward to 4:45 in the video to see the actual reaction to the announcement at the 2011 convention.



The  CPAC attack on Ron Paul by Fox News is just an example of how we live in a world where "what they show us" becomes reality.  This is why state run media in Russia, China,  Iran, and North Korea is so effective at framing a picture of reality for their people.  After viewing the video you walk away with the idea that Ron Paul may have won, but he sure is a poor candidate because he has a lot of people that are not supporters.

Readers of the Goatmug Blog know that as a history buff I relish the views of thinkers like J.R. Nyquist who writes on the geopolitical landscape with an emphasis on Russia, the plague of Communism, and the tactics used by them to obtain power and achieve their goals.  Mr. Nyquist's latest offering provides details about the possibility that the Egyptian revolution may have been hijacked or at least sponsored by people that didn't have a genuine quest for liberty.

http://www.financialsense.com/contributors/jr-nyquist/egypt-and-the-muslim-brotherhood

In his post, Nyquist reveals that bloggers from the Ukraine couldn't find a majority of people that supported the uprising and in fact could find many Coptic Christians that felt a transition could be a bad thing.

I've found the original blog post he referenced from the Ukranian bloggers and have translated the text with the help of a translator (it's still a bit rough).

"Domestic and international media broadcast the one-sided interpretation of the U.S. government concerning the events in Cairo. Most reporters in the hotel for security reasons, and looks at what is happening through the eyes of CNN and the BBC.
We visited Egypt and study in detail the situation on the ground. Having talked with hundreds of residents of Cairo and other Egyptian cities came to a single conclusion: a nationwide uprising against President Mubarak does not exist.

Most of the population, even if it does not support the current government, a negative attitude toward anti-presidential parties shares. In particular, the Copts, are the largest Christian community in the Middle East believe that, if successful coup significantly worsen the situation of Egyptian Christians. And why the Copts are not allowed the protesters to their quarters.

In fact, the Egyptian rebellion is limited to one area of Cairo. Statements made in Tahrir Square can not be considered massive - they account for up to twenty thousand members, but for the millions of Cairo is extremely small.

The Egyptian army is not against the protesters, not because Mubarak has lost his grip on power but because the position of Mubarak - not to irritate the Americans. Participants in the uprising - nice people, but their protest, they rely solely on the support of the U.S. government."

What if this was true, that the revolt was led by a small group of minorities that had more sinister reasons yet were championed by naive reporters in the media?  We need to keep in mind that the reporters want and need juicy stories that play well for the camera.  The need for a good story line is why you kept hearing that these were "youths" rallying for freedom.  Where was the coverage of the Muslim Brotherhood that cried for an Islamic state for Egypt that could unite all Muslims under one rule?  That is what we heard from the Muslim Brotherhood leader Monday.  Interesting that we didn't hear that before the fall of Egypt's leader.  We wouldn't want the global media machine to let facts get in the way of an inspiring story would we?

What were the angles we received in the reporting?  We consumed lots of the following;
Egyptians were casting off the yoke of economic hardship
The youth were breaking the chains of those that are heartless leaders

While there is truth to this, think deeply, these portraits seem to have been constructed for our eyes, ears, and hearts to compel us to support this version instinctively.
Given the fact that we see a rumored "conservative" media outlet splicing video and creating their own version of an event we must question what that means for us as investors and participants in this "democratic" country. 

As Amerikans are pushed to the brink in the near term and the future don't be deluded to believe that all of them are violent terrorists.  Many folks like you and me will be forced to stand up against financial tyranny and the lack of representative government in the office of the President, the Senate, and Congress.  The disconnect between our "leadership" and the desires of the people is growing, not shrinking.  When Amerikans simply cannot stand it any longer you can expect to see edited videos and disinformation about their actions and their message.  Amerikans won't riot because they see an erosion of their personal liberties and a decay in their ability to protect and express themselves, no, we are fat sheep.  Amerikans will watch idly by as the poor waste away, but citizens will finally rise up when the middle class cannot afford food and gas or something terribly essential like cable or cell phones.  When Amerikans do come to their senses and stand up, you can be sure to find the media reporting that these people are trouble makers, quacks, and opposition forces rather than freedom fighters demanding that their government listen.  Sounds like how the Tea Party has been characterized doesn't it?

Second, our own government will use the media to continue to lie to us.  Ben Bernanke lied right in our face with his testimony that attempted to claim responsibility for the "asset price increases" in stock markets, but dispel any notion that he has the power to lift commodity prices and food prices around the world.  How is the Fed all powerful in the one situation but entirely powerless in the other?  Doublespeak at its finest!  I haven't read 1984 by George Orwell since high school, but I will read it again because these are the days we are living in. 



Here are a list of the lies I could find just in this testimony and a quick listening while I was typing.
1:10 in the video -  We are not monetizing our debt because it is temporary (there is no way they can reverse this)
3:30 in the video -  The US is not responsible for inflation worldwide. 
5:25 in the video -  We have 1% inflation in the US

In conclusion, I want you to know that I am not a conspiracy theory junky who sees attacks coming from everywhere and evil plots lurking around each corner.  I do believe that Amerikans believe what we are presented and we cannot continue to consume the political and economic gruel that is being served.  The Fox News story absolutely worries me as Ron Paul is someone who is an enemy of the Fed (at least in the way he speaks, let's see some action), and it is clear that editors at Fox News purposefully framed this to hurt his political support and momentum.  I would expect those actions from MSNBC and even Dan Rather with CBS, but it simply puts me on alert to question everything.  We already question every statistic released from China, why don't we do the same for statistics from the US?

If everything we see from the media is true, it is a certainty that US citizens will act like these peaceful Iranians starting at :50 in the final video clip where clerics demand the death of imprisoned leaders that called for uprisings in Iran.



Be careful!

GOATMUG

NOVEMBER UPDATE - MAN DO I FEEL RICHER!

IN FED LANGUAGE, PRICE STABILITY MEANS A BLOW OFF TOP

Call it QE II, monetization, printing, or the precursor to QE III, call it what you like but just don't fight it.  The FED's overt action to inflate asset prices at any cost have trumped all market fundamentals and created an asset price surge into the stratosphere.  Chairman Bernanke states that he wants price stability, yet his definition of price stability must not include a normal ebb and flow, it must only include a moonshot ramp job.  I would contend that we have anything but price stability at the current moment.

I've captured a few sentences from Fed Governor Mishkin in a 2007 speech.  In this message he highlights the dual mandate that the Federal Reserve has in its role. 

"According to this legislation, the Federal Reserve's mandate is "to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates." Because long-term interest rates can remain low only in a stable macroeconomic environment, these goals are often referred to as the dual mandate; that is, the Federal Reserve seeks to promote the two coequal objectives of maximum employment and price stability. In the remainder of my remarks today, I will describe how these two objectives are consistent with our ultimate purpose of fostering economic prosperity and social welfare. I will then talk about some important practical challenges in implementing these goals. "

Let's examine how we are doing with those goals?  Maximum employment --- QEII and low interest rates have done nothing for this goal.  Stable prices?  We'll dig more into this, but this is absolutely false and prices are getting more out of whack.  How about moderate long-term interest rates?  I'm going to suggest that this is also missing the mark.  QEII is about reducing interest rates so the US can meet its debt obligations and keep the illusion of US solvency intact.  If and when there is a rationalization to normal interest rates there will be no such thing as moderating interest rates.  Strike three in my opinion on the mandates and target goals of the Federal Reserve.

What's the purpose of all the QE?  You must know that Chairman Bernanke and former Chairman Alan Greenspan believe that greater stock prices will lead consumers to buy more and borrow more as the "wealth effect" creates in their mind a sense of having more money.  The notion that asset prices are increasing caused many in the early 2000's to lose all sense of rational expectations and believe that housing prices would always go up, that houses were the equivalent of ATM machines, that living off of one's credit cards is ok, and that all people deserve and are capable of being rich.  While the mistakes and poor thinking in the 2000's were quite real, I am optimistic that Amerikans have learned some lessons and won't fall for the old asset price wealth effect trick again.  Perhaps I'm naive, but I think many are now focused on living within their means and paying off debt, not incurring new and larger obligations.

September and October have provided almost all markets with out sized gains and have posted record results.  Clearly the economic fundamentals must reinforce and justify the rocket launch right?  Let's dig in and see where we are at.



RAILS - http://railfax.transmatch.com/  and http://www.aar.org/NewsAndEvents/~/media/aar/railtimeindicators/2010-11-rti.ashx


Total Rail Traffic continues to outpace 2009 levels for the current week.  We are about 10% higher than those levels, yet are still down 4.2% from 2008 numbers.

RECESSION INDICATORS
Waste and Scrap shipments are on par with last years levels.  These shipments don't give us a clear indication of strength or weakness.  Motor vehicle shipments are greater than 2009's dismal levels, but this should give us reason to pause and temper our elation.

Food Stamps - SNAP PROGRAM - http://www.fns.usda.gov/pd/34SNAPmonthly.htm

As I mentioned an earlier post this week, the Food Stamps Program continues to see greater and greater participation.  The SNAP data continues to highlight how bad things have been on mainstreet.  More families are drawing on the resources of the federal government and taxpayer for their food needs.

COMMERCIAL REAL ESTATE DATA - http://web.mit.edu/cre/research/credl/rca.html

Moody's MIT Transaction Report - Commercial Real Estate
The CPPI continues to decline and show an erosion of value in the national commercial property price index.  The figures released for August show another 3.3% decline in values in actual transactions.


 

HOME PRICE INFORMATION / LEADING INDICATORS - ECRI - http://www.businesscycle.com/resources/

The ECRI data on home prices continues to show no improvement in this critical area of the economy.  Real prices continue to reel and go lower through the August data release while leading indicators suggest that the pricing is simply flat.

MONSTER EMPLOYMENT INDEX REPORT - http://about-monster.com/employment-index
Jobs reports last week were surprisingly good and we see improvements in the weekly data.  Unfortunately we are not seeing an improvement in the unemployment rate at more workers that just gave up are now coming back in search of job opportunities.  Our unemployment rate is still at 9.6% and is quite sticky at that level.
Despite the good release, the Monster.com Employment Index dropped from a level of 138 to 136 in October.  Why new job listings on the web would decline here is actually interesting.  This is a really good report to watch and get some indication of where we are going. 

On a separate note, Monster reported excellent earnings a couple of weeks ago.  I should have been on this as an investment possibility as the huge surge in the index would and should have been a tip off to the potential rebound in earnings for the company.  I'll continue to keep that in mind as I track this and highlight it as a potential trade in the future.

6 MONTH EURIBOR - Euribor rates continue to climb.  Some of this increase is a result of the European nations holding firm and refusing to follow the stupid policies of our Federal Reserve.  The lack of "relative" stimulus provided in Europe is marked by higher interest rates.  Having said that, there are still real problems in Europe with countries like Ireland and Portugal, and don't forget our old friend Greece.

No matter what, it is unmistakable that there are "interesting" things going on in the last month as the 6 month Euribor rates have climbed about 15 bps or 10%.  This is an inexact gauge but it is an item I watch every day in an attempt to measure stress in the banking system worldwide.



CDS SPREADS -  http://www.markit.com/cds/cds-page.html


To continue on the thread that sovereign debt is still an issue, I wanted to include some data related to the CDS (Credit Default Swaps) pricing to offer protection against a default of one of these countries.  You must recall that earlier this year CDS prices exploded as the European debt crisis was unfolding again.  I am absolutely certain this will happen again just about the time when everyone forgets that these countries are really insolvent (like the US and every large bank).  For those that aren't accustom to looking at these, note that the spread is 992 which means that a person would pay 992 basis points (bps) for protection against a default in a specific bond issued by the Venezuelan government.  992 bps is 9.92% a year!  I personally never traded country specific CDS, but did do significant amounts of CDS in your investment grade corporate bond environment.  Back in the early 2000's we would write protection on names like General Mills and Kraft for around 40bps (for very short time frames (1 year).  While Venezuela is improving over the last week and month, Ireland, Spain, and Portugal CDS spreads are going nuts.  Increases of 25% are an indication of stress in the system!  DO NOT GO TO SLEEP ON THIS!  Remember April, when every thought we were going to keep going higher and then we hit this little debt crisis?  Can you say "DO OVER?"

Venezuela
Spread  992
Daily Change  28.55
Weekly Change -91.92
28 Day Change -24.08

Ireland 
Spread - 607
Daily Change  17.69
Weekly Change 109.17
28 Day Change  182.55

Spain
Spread 264
Daily Change  15.98
Weekly Change  39.83
28 Day Change  56.18

Portugal 
Spread   464
Daily Change  14.89
Weekly Change  70.65
28 Day Change  78.57


WLI DATA - FROM ECRI -  http://www.businesscycle.com/resources/Last week's WLI Data shows continued improvement in the leading indicators.  As I examine this data I find that since June 18th of this year the actual WLI data is showing a change of around 1% from that time.  At the same time though, the S and P 500 is up more than 6% from those levels.  It is clear that there might be improvement here in as shown by the WLI, but the market's rally may be ahead of itself.

 
COPPOCK TURN INDICATOR
The Coppock Turn Data continues to signal a turn south in the markets despite the exponential run in markets.  The turn indicator has been wrong for two months now, but since it is a lagging indicator we must expect that and use this as just another warning.  As usual I've tried to project levels in which it would actually signal a continuation of the positive trend, that level is at 12,300 on the Dow.  I don't put much weight on this indicator, but include it as another data point.

 
FINANCIAL CONDITIONS INDEX- http://www.bloomberg.com/apps/quote?ticker=BFCIUS:IND
As you all know, I like the Financial Conditions Index provided by Bloomberg because it is a composite of many fixed income and monetary (liquidity) measures.  The FCI is showing a value today of .15 which is once again over the critical 0 level.  This is an indication that there is an expansion in the economy, but probably more accurately there is a huge expansion in the amount of liquidity in markets.  We are nearing the  0.5 level we saw in April and this is going to either be a level of strong resistance coupled by the resurgence in a market correction, or it will give us an indication that the economy is truly recovering and going to be the basis for even greater levels in the stock and "asset" markets. 

 
BALTIC DRY GOODS INDEX - http://www.bloomberg.com/apps/quote?ticker=BDIY:IND
With the ever-increasing prices for copper and other commodities, one would think that spot rates for transporting these goods around the world would also be increasing.  In this case, that is actually not happening.  As I've posted many times, the BDI is subject to many issues other than simply that commodity prices are going higher.  First and foremost, I think the issue is that there is a ton of supply of ships available to move this cargo as shipping companies continued to order ships several years ago.  I have seen a few comments about purchasing some of the dry bulk shippers like DRYS.  Based on the chart I'm seeing, the thought of picking up a few shares might not be a bad one considering that there has been a recent breakout and it was confirmed with the move above $5.00 as I type.  I also like that the increase has come on increasing volume.  A very conservative trade could call for a stop to be placed at $4.90 and an upside target of $5.70.

DRYS CHART

USD INDEX - http://www.bloomberg.com/apps/quote?ticker=DXY:IND
The USD index continues its assault on lower levels despite 2 days in a row now of being up.  Since the May/June peak around $88, we've seen an almost uninterrupted dive to $76.  Imagine that, a 13% drop in the value of the dollar and a move up in the overall markets of around 16%!  Clearly the move higher in the markets is not due to improving economic fundamentals and a healthier environment.  The unsustainable recovery in index asset levels is purely a move derived from US dollar debasement.

The FED's announcement last week of the use of $600 Billion of newly minted QEII to "stabilize" our economy has essentially created an environment where everything simply goes up.  As the dollar goes down, asset prices in stocks, commodities, and everything else have simply risen to keep value somewhat constant.   And if you didn't believe that Bernanke and the FED were serious, there is the overt threat that there is even more liquidity behind the $600 Billion in case it is needed. 

While there is no proof that any of the QE will actually provide sustainable jobs or expansion in the economy, that doesn't mean that we won't have the facade of growth by way of ever increasing valuations of stocks.  Of course when you value those stocks in terms of foreign currencies or in hard assets you find that we are getting nowhere.

The area we are in is pretty critical and the $76.00 level must hold or else we will see a real fall in the USD and a tremendous surge (even greater than we've seen) in gold and silver and other anti-US currencies.  As stated previously, the gold and silver trades are now more than just commodities, they are trading as their own safe haven currencies and have taken on a life of their own.  Yesterday the dollar was actually up and we saw silver go nuts.  It is on days like these that I wish there was an easy and quick way to sell my physical silver as we've seen an almost 20% move in silver in two or three days.  I've heard several stories as to what is going on with these moves from a massive short squeeze to the filing of inquiries and court actions against JPM for silver market manipulation.  No matter what the cause, it is almost enough for me to want to exit.  I simply haven't due to the trouble associated with packing it up and sending it out for sale.  (Anyone want to buy some silver?)

NOVEMBER TRADING UPDATE
As much as the broader economy's recovery is still in doubt for me, there is little doubt that the FED is acting to not only buoy this market but to attach a rocket pack to its back and propel it to the loftiest levels.  The policies that are being executed are making it impossible for one to remain in less risky assets like money markets and also makes one very cautious to hold on to other fixed income type holdings as the specter of run away pricing erosion becomes more real.  What I mean here is that despite the notion that I still believe that we do not have inflation, there is rampant asset speculation in all the old standbys.  Oil, copper, wheat and grains, sugar, coffee, cotton, and more all are going parabolic.  I will say it again that this doesn't mean we have inflation, but it does mean that we have speculation like we did in June/July of 2008 where oil reached $147 a barrel.  No one can suggest that that price in oil was caused by actual demand, but it was caused by loose monetary policies that brought our economy to its knees.  It blows me away that we can have a FED that will sit idly by and allow it to happen again.  What kind of recovery will we have if my $100 a barrel target for oil is hit?

Despite my protests, the FED has promised QEII and will promise more of QEIII as the second version fails.  As a result our old trades are extremely profitable and are still ones that I highlight as winners.  We need to remain in commodities like DBA, DBC, JJG, SLV, GLD, and more.  We need to continue to trust in emerging markets for the reason that they are ACTUALLY growing at a pace well beyond the US's 2% AND are investments that are outside of the USD.  Countries like Chile,  Singapore, Malaysia, and Brazil have been my favorites.  They have been winners for me for sometime and that trend has not been stopped.  While there is every temptation to harvest gains, the real question needs to be....."And go where?" 

As we have discussed, the potential canary in the coal mine here is the stress in the European countries as measured by Euribor and also by the sovereign debt CDS that I pictured above.  If these continue to blow out this could derail the heroin induced rally the Fed has us on, just like what happened in April of this year.  I don't want to get too excited about any drop in the market though because we have rallied so much in such a little time with NO pullback.  We must expect some drop simply to digest the recent gains.  WATCH THESE CDS AND WATCH THE EURIBOR RATES THEY WILL BE THE INDICATION THAT SANITY IS RETURNING TO THE MARKETS!

Given the tsunami of liquidity and threats of more liquidity we will continue to see more of the same for the next month as the FED continues to debase and devalue our currency in an attempt to make us all feel richer.   Man, do I feel richer, don't you?

Be Careful!

GOATMUG



"MR. CHO KNOWS" - HOUSING FRAUD RAMIFICATIONS

More housing discussion.  Mr. Cho is the one who really gets it in this discussion.  It was intentional and outright fraud from the beginning and it was all going good until you had to foreclose on people.




This will be interesting even if it gets papered over in the end.