List of Countries By Proven Oil Reserves

The Axis Of Those-Who-Have-Stuff-the-US-Wants

SP 500 and NDX March Futures Daily Charts

As a reminder, as skeptical as you might be, do not get in front of this market. If you cannot buy into it, wait for it, but do not short it with all the liquidity being provided directly to Wall Street from the Fed.

Having said that, this market is thin, and weakly held. On an event it could drop precipitously. It is giving off many topping signals, and signs of instability. Bernanke's Fed is fighting it with billions in liquidity given to the banking system. Unfortunately this money is not finding its way to the real economy, but is largely consumed in bonuses, lobbying, disguising corrupt balance sheets, and speculation.

Dangerous fast market conditions can develop quickly in response to some trigger event in these types of markets, as a result of the reckless and irresponsible fiscal and regulatory climate in the US.

Gold Daily and Silver Weekly Charts

Despite some calculated bear raids today, silver remains resilient based on sheer physical offtake.

Default seems to be in the cards for the paper mongers. But who can say when the reckoning will come.

About the Markets and That Orwellian Non Farm Payrolls Report...

The weather ate the recovery.

Now we know why the Wall Street demimonde had been pimping the unemployment number as 'the key number to watch' as compared to actual jobs added earlier this week.  Although at the time they never really said why.

The weather was too bad for people to go to work, but it didn't matter when it came to registering for unemployment benefits. And over 500,000 unemployed people apparently disappeared in snow drifts, and are no longer counted in the labor force, thereby improving the percentage of remaining people who do not have jobs.   It's a shrinking denominator thing.

So, there are plenty of new jobs out there. The people just could not get to them because of the snow.

Even J. Bradford DeLong,  stalwart Democonomist from Berkley, was a little put out by this report.

"I want a trained professional to analyze this. It is not unusual for the series to do something odd around Christmastide. It is not unusual for the series to diverge. Not this much."

And Brad is not the overly fussy sort, because a few years ago he said that Alan Greenspan had never made a policy decision with which he disagreed.

The trained professionals trotted out on financial television say that this means that the recovery is here. Wait until you see next month's numbers. Yada-yada. And it is time to buy stocks.

Here is my own trained professional opinion of how to analyze this report, and Obama's economic policies in general.   We can't stop here. This is bat country!

O tempora. O mores. O Bernanke. O Bama.

From the Cafe commentary on 2 Feb:

"Now it is fairly well known that the unemployment rate is a less important metric, since people stop being counted as unemployed when no longer receiving unemployment benefits, or when they take a menial low paying job. And in a prolonged downturn you can therefore have improvements in the unemployment rate without any real improvement in overall unemployment like the labor participation rate and the median wage, which are the key indicators of a sustainable recovery.

So it makes me wonder what antics the government and the pigmen might have up their sleeve to rattle the swill bucket for mom and pop to get back into stocks, and most likely once again at a top."

Here is another trained professional opinion from another era:

"...there must be an end to a conduct in banking and in business which too often has given to a sacred trust the likeness of callous and selfish wrongdoing. Small wonder that confidence languishes, for it thrives only on honesty, on honor, on the sacredness of obligations, on faithful protection, and on unselfish performance; without them it cannot live. Restoration calls, however, not for changes in ethics alone. This nation is asking for action, and action now."

Franklin Delano Roosevelt, First Inaugural Address, 1933

Gold Daily Silver Weekly Charts - Panic Hits the Money Printers As Benny Signals QE -> infinitum

It will be interesting to see how the Non Farm Payrolls report comes out tomorrow.

I am starting to feel a little more comfortable with this chart formation, but follow through is confirmation. 1375 is a key overhead resistance. Don't expect Benny and the Banks to roll over too easily.

One of the Federales put out a Buiter-like commentary Is Gold Money?. No, it is not legal tender these days, but it is an almost universally recognized store of value now as it has been for about the last 6,000 years. Sometimes enlightened, well-disciplined regimes have sanctioned it as official 'money.' But certainly not those inward looking bureacracies who could not find with both hands the bubble(s) they have recklessly created out of you know where.

This sort of rhetoric is sometimes an indicator that the Fed is getting nervous because the Asian and Latin American puppies are not eating their latest brand of ersatz puppy chow, preferring red meat to waste paper. 

I do not support the gold standard for the US because the system is too weak and corrupt to bear it at this time.  As long as gold and silver trade freely those who have a mind to it can use it to protect themselves against devaluation if they wish.

But if one is on some standard, it forces you to be more transparent and overtly devalue your currency, should you wish to do things like bail out your friends on Wall Street.   Electronic digits on the other hand are much more amenable to a bureaucracy which prefers to conduct its business using opaque financial transactions in a self-serving manner,  lacking in sufficient independent oversight.

Oh I see where Benny came out today and signalled QE to the limit, and gold and silver spiked higher.  Now it all seems more clear to me.

A nice fade.  Thanks.  And let's hope Ron Paul gets that audit soon.

As Matt Damon said in one of the best poker movies, Rounders:

Mike McDermott to Teddy KGB: "Well you feelin' satisfied now Teddy? Because I can go on bustin' you up all night."

Caution: language

Oh by the way, JPM Hid Doubts On Madoff Fraud - NYT

And there will be more.

Let Gold and Silver Rally, Jamie - Leave Blythe Alone!

SP 500 and NDX March Futures Daily Charts

Tomorrow is the US Non-Farm Payrolls report.

This ought to be interesting.

SP 500 and NDX March Futures Daily Charts - Non Farm Payrolls on Friday

"It was possible, no doubt, to imagine a society in which wealth, in the sense of personal possessions and luxuries, should be evenly distributed, while power remained in the hands of a small privileged caste.

But in practice such a society could not remain stable. For if leisure and security were enjoyed by all alike, the great mass of human beings who are normally stupified by poverty would become literate and would learn to think for themselves; and when once they had done this, they would sooner or later realise that the privileged minority had no function, and they would sweep it away. In the long run, a hierarchical society was only possible on a basis of poverty and ignorance."

George Orwell, 1984

This is the ultimate failure of oligarchical, crony capitalism, as it is being trumpeted today from several diverse circles of thought as the new thing with China as its model. Oligarchies can not allow for the rise of a thriving middle class, with decent education, substantial wages, and rising standards of living, because that is a threat to their power. The fascists were much admired for their economic recovery from the Depression, but they maintained their control of the people through the iron grip of fear and terror, even while the East coast establishment lionized Mussolini and Hitler as economic miracle workers.

And this is why the oligarchical classes even in the US and the UK favor austerity over reform. Reform diminishes their illicit access to unproductive wealth and power, and austerity hammers the middle class into submission.

On a lighter note, Wall Street has decided that Egypt is really not all that important, with the likely passage of power to another puppet if Mubarak should fall. So the big tickle will be the Jobs Report on Friday. The key metric for them is the anticipated unemployment rate which is expected to be 9.5% or thereabouts.

"Now it is fairly well known that the unemployment rate is a less important metric, since people stop being counted as unemployed when no longer receiving unemployment benefits, or when they take a menial low paying job. And in a prolonged downturn you can therefore have improvements in the unemployment rate without any real improvement in overall unemployment like the labor participation rate and the median wage, which are the key indicators of a sustainable recovery.

So it makes me wonder what antics the government and the pigmen might have up their sleeve to rattle the swill bucket for mom and pop to get back into stocks, and most likely once again at a top."

Gold Daily and Silver Weekly Charts - Hyperinflation vs. Deflation Debate

Just another day with the money makers.

I wanted to bring your attention to the Deflation vs. Hyperinflation debate coming up between Stoneleigh and Lira. I respect both of the participants so I am sure it will be interesting. 

I ought to note that, alas, I disagree with both of them I think. As you know my forecast has, for quite some time, been for stagflation. I consider both deflation and hyperinflation to be on the tails of probability and less likely excepting policy error in a purely fiat currency. With a fiat currency the outcome is most likely to be the result of a policy decision, tying in both the fiscal and monetary authorities.  By pure I mean not encumbered by external forces such as the gold standard or a dollar peg.

But nothing is pure in this world especially when it comes to politics and money.  Much of what happens depends on many exogenous actions from counter parties overseas, as well as the rise of a third party or some political element that is less hospitable to the financial oligarchs.

My goal is not to predict what will happen, but to know enough to be able to see it coming, if the outcome deviates from stagflation. And so I am always grateful to hear a reasoned debate on the subject since there are always aspects of this I might have missed. I am also wondering what this potential for civil disorder will do to the economic landscape.  War trumps other policy inputs almost every time.

As an aside, I have been wondering if hyperinflation is even possible in the absence of some external standard, some peg to something, whether it be a metal or a currency. I think the major cause of a hyperinflation in a fiat currency could only be triggered by a bond default, or an utter rejection of the bonds by exterior parties.

I have also been rereading some books from the 1990's regarding Japan, and remembering things that I have not considered in some time. It is still remarkable how few Westerners really understand how things work in Japan, and the origins of their protracted economic malaise. The lack of other instances of a protracted deflation following a credit incident in a fiat regime should provide a clue that there was something particular going on. Japan is a very highly managed, hierarchical, oligarchical and conservative society dominated by its business interests.

There is no doubt in my mind that their deflation is the result of a policy decision by the keiretsu and their friends in the government, particularly in MITI. Most people do not even understand that Japan was essentially a one party system after the Liberal and Democratic parties merged in 1955. This is only recently changing.

With the Fed now owning more Treasuries than even China, it appears that Benny *could* have a go at it, although technically he can raise short rates overnight, if the government is prepared to live with the consequences.

Best to keep an open mind, because the holder of a reserve currency in a largely fiat regime has, to my knowledge, never failed before. I don't think even Rome qualifies for this, and certainly despite their wonderful system of roads the decline would have seemed as in slow motion compared to the information age we are in today.

So let's hear it for civil discourse and fact based discussions. What I find most disheartening is those few bloggers and analysts who, for the lack of a proper argument or a better alternative, quickly resort to throwing their feces in the manner of chimps, in what they seem to perceive to be some power struggle for the hearts and minds of followers and obedient devotees. What a presumption if you think about it, as if our opinions will affect in any way what is coming down the path, with the inevitability of history behind it.

I suspect that agility, flexibility, and the ability to learn and adapt are critical skills if not requirements for the next step in the evolution of this crisis.

SP 500 and NDX March Futures Daily Charts

"People can foresee the future only when it coincides with their own wishes, and the most grossly obvious facts can be ignored when they are unwelcome. Advertising [perception management] is the rattling of a stick inside a swill bucket."

George Orwell

Watching the commentary on the stock market and Egypt on US financial television today was an exercise in cognitive dissonance.

See, there are no problems in the world, because the Dow has hit 12,000.  All is well,  and now is the time to buy these shares from us, so that we can unload this misvalued paper just like we sold slop buckets full of collateralized debt obligations to the institutions and foreign banks, in celebration of the deregulation which we bought from the politicians, causing this financial crisis in the first place.

The hubris and arrogance of Wall Street is almost shocking if one does not realize that these fellows are very afraid, and probably trying to bluff their way out of this latest crisis. They are whistling past the graveyard, treading lightly over the bodies of their victims, keeping one eye on the exit and one hand on your wallet.

There may be a bull market in Swiss chalets and South American villas coming, depending on how steadily the winds of change sweep across the globe.

Gold Daily and Silver Weekly Charts

"It is not necessary for the politician to be the slave of the public's group prejudices, if he can learn how to mold the mind of the voters in conformity with his own ideas of public welfare and public service. The important thing for the statesman of our age is not so much to know how to please the public, but to know how to sway the public. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country."

Edward Bernays

"Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one."

Charles Mackay

US Dollar Index Is At Key Support

This index is particularly odd, if you take a look at the weighting of it as shown by the graphic on the chart.

It is difficult to imagine the euro continuing to strengthen against the dollar without howls from the German exporting companies. And the same can be said of the Yen.

FX trends often notoriously overshoot targets, since trading in forex, like so many other financial asset markets, a matter of the biggest boys sloshing the water around in the tub.

However, a break of this support could trigger another leg down. It will be interesting to watch the existing negative correlation between the dollar and US equities.