(snip)"-- Jason Furman at CBPP.org is one the guys talking about the rise in the nominal Dow Industrial average, which conveniently neglects to adjust the Dow for the changes in the buying power of the dollar (inflation), or mention the other stock indexes.
Mr. Furman says "The Dow Jones Industrial Average, adjusted for inflation, is down 17 percent from its all-time high on January 14, 2000. It would need to rise another 2,378 points to set a new record, adjusted for inflation. The broader stock market is even further below its 2000 peak. The Dow Jones Wilshire 5000, which tracks more than 5,000 stocks and is the most comprehensive measure of the U.S. Stock Market, is 23 percent below its record close on March 24, 2000, after adjusting for inflation."
Peter Schiff of Euro Pacific Capital notes "Priced in British pounds, Canadian or Australian dollars, or euros, at 11,850 the Dow is still below its 2000 peak by approximately 25%, 26% and 32% respectively."
-- Michael Nystrom at BullNotBull.com is pretty hip to this black-box/computer program trading jazz, and says "So much of today's program-based trading keys off momentum. This creates a positive feedback loop that sends stocks to new highs and buys any dips before they materialize." So "After making a tentative new high on the Dow, phony or not, this market has the potential to move a lot higher." The lesson, he says, is "never argue with new highs! Phony or not, what we have are new highs. If you're a bear, get out of the way."
-- Biz.yahoo.com reports "Congressional estimators" saying that "The federal budget deficit estimate for the fiscal year just completed has dropped to $250 billion." Hahaha! Lies, smoke and mirrors is one thing, so let's take a look at the actual Gross National Debt. Instantly, you notice that we are, as a nation, thanks to Congress, $620 billion deeper in debt over same "fiscal year just completed". Hahaha! How in the hell can you be $620 billion deeper in debt and still say, without your tongue leaping out of your mouth in shame, that the "budget deficit" is only $250 billion? Do you mean that you meant to go into debt by $370 billion, and ended up borrowing $620 billion by accident or something? Hahaha!
But although they spent every dime and borrowed another $620 billion, tax receipts are up $253 billion, a big 12% over last year. But what a lousy return on investment!
The budget is now about $2.7 trillion dollars, and with a population of only 300 million, that comes to $9,000 per man, woman and child in the country. So, for every family of three, the federal government is spending $27,000! And this does not even include how much money each little town, city, county or state is spending per capita by issuing bonds! And somehow we American idiots think that we can continue this stupidity indefinitely? Hahaha! I reiterate "Americans are morons!"
Or, as Bill Buckler of the Privateer newsletter explains, with all the fudging, lying, and outright deceit running rampant today, "We are all in the middle of history's biggest ever 'Potemkin Village' - a prosperous looking facade designed and erected to disguise the financial ruins behind it."
-- For those who had the smarts to load up on gold in the recent downdraft, you did the right thing, as that trend will probably reverse, if I can surmise from Ambrose Evans-Pritchard of the Telegraph UK. He writes "Central banks may have dumped far more gold on the markets over the last three weeks than officially reported, accounting for the sudden plunge in prices that has stunned investors. Barclays Capital said Europe's banks had sold an extra 100 tonnes from reserves in a rush to meet a quota deadline on Sept 26, but had done so by selling through forward contracts that disguised the effect. The huge sales would help explain gold's brutal fall from $640 an ounce in early September to $559 this week, an effect compounded in recent days by hedge fund liquidation."
Philip Klapwijk, chairman of the precious metals group GFMS, has the opinion that bullion would soon resume its five-year bull market. "The game is not over for gold," he said. "We've still got a big dollar devaluation ahead."
Reader Larry J has been connecting dots, too, and says that he thinks that there is something weird involving Toronto Scotia Mocatta Bullion, the Bank of Nova Scotia, and Royal Bank, who are, he says, having a hard time getting, or filling, small investor's orders for silver. "The fact remains that when one of the world's largest bullion banks - on COMEX and the LBMA - cannot supply these small orders, then we can safely say that we are, to all intents and purposes, out of the metal."
-- Roger Wiegand Trader Tracks writes "The American stock markets are peaking for several reasons. First and foremost is the non-confirmation of the transportation index. If transports are lousy, the stuff they normally haul is not being hauled. If goods are not moved, this means no sales as buyers are gone. This is fact, not guessing. CNBS reported this morning Walmart was off 2%. Walmart is a retail sales proxy for all of America as they are the largest in the USA both for employment and retail sales. Trends are screaming stagflation as the economy stagnates while prices of food, energy, real estate taxes and services are racing higher."
-- SafeHaven.com gave us an "Interesting Picture of the US Bond Markets" by Pinank Mehta of Metier Capital Management. He says "The current Long 'Open' Interest in 10-year US treasury bonds is greater than SIX Standard Deviations (12 SIGMA)!!!!!!!" Please note the use of the extremely rare seven exclamation points, a literary device to denote particular emphasis, in this case to alert you to prepare for the next sentence, which was that "The odds of a 6-Sigma event are one in 500 million, or 1.37 million years, so it will be exponentially higher for a 12 Sigma event." I don't know about you, but when I read that, sphincters tightened up.
-- From John William's Shadow Government Statistics we learn that "The broad outlook for a deepening inflationary recession remains in place. Confirming the extremely bleak employment picture, the August help wanted advertising index dropped to 31, from 32 in July, and from 34 in June. The August level is the lowest reading since April 1961." I gasp! 1961?
-- "Risks of recession continuing to rise, economy is slowing, showing warning flags" says Will Deener of the Dallas Morning News. He reports that "new-car sales are down about 5 percent from a year ago. This has happened six times over the past 40 years, and in every instance the economy was either lapsing into recession or already in recession."
In a related story, reader Titus N. writes "I received an email from a friend whose friend works in a credit union and does car loans. She said that they do 15 applications per day on a normal day. Last week they did ZERO."
James Stack, a market historian and editor of InvesTech Research hears us talking about this recession stuff, and adds "Not one recession in the past 50 years was forecast in advance by a major poll of economic forecasters", but that the inversion of the yield curve did, and that "The yield curve shows an 88 percent probability of a recession beginning sometime between now and the end of next year."
-- Ted Butler of Investment Rarities "The total dealer net short position in gold and silver is low by any recent measurement, as the corresponding speculative (gross) long position, particularly in silver, is at lows not seen in years. The concentrated net short position in silver held by the largest dealers has never been greater, relative to the total net dealer short position."
Being kind of stupid and thinking mostly about lunch (I am considering pizza. Maybe tacos), so I can only stare at him blankly. After a few seconds, he tries to clarify things by saying "The latest COT indicated the 4 largest traders still hold almost 97% of the total commercial net short position on the COMEX." Again, I have to just look at him with the same dumbfounded, blank expression on my face. With some increasing exasperation, he helpfully explains "This situation, small total dealer overall short position, but super-extreme dealer concentrated short position is unprecedented."
Again he paused, obviously waiting for something important to sink in, but by this time I am secretly even more confused than ever, and I can actually feel a drop of drool forming in the corner of my mouth. Horrified, Mr. Butler hurriedly says "This short position is so large, relative to real world supplies, that it defies economic justification." Slobber is now running down my chin. "It is so concentrated, that it is impossible for it not to be manipulative!" he screams as he runs from the room.
After awhile, it sank in. Buy silver. Lots of it."(snip)
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