Stocks and Precious Metals Charts - The Fire Will Rain

 

"Looking at the world as a whole, the drift for many decades has been not towards anarchy but towards the reimposition of slavery.  We may be heading not for general breakdown but for an epoch as horribly stable as the slave empires of antiquity...  Few people have yet considered the kind of world-view, the kind of beliefs, and the social structure that would probably prevail in a state which was at once unconquerable and in a permanent state of cold war with its neighbors."

George Orwell, You and the Atomic Bomb, Tribune, October 19, 1945

"A credibility trap is a condition wherein the financial, political and informational functions of a society have been compromised by corruption and fraud, so that the leadership cannot effectively reform, or even honestly address, the problems of that system without impairing and implicating, at least incidentally, a broad swath of the power structure, including themselves.

The status quo tolerates the corruption and the fraud because they have profited at least indirectly from it, and would like to continue to do so. Even the impulse to reform within the power structure is susceptible to various forms of soft blackmail and coercion by the system that maintains and rewards.

And so a failed policy and its support system become self-sustaining, long after it is seen by objective observers to have failed. In its failure it is counterproductive, and an impediment to recovery in the real economy. Admitting failure is not an option for the thought leaders who receive their power from that system.

The continuity of the structural hierarchy must therefore be maintained at all costs, even to the point of becoming a painfully obvious, organized hypocrisy.

Jesse, What Is a Credibility Trap, 18 September 2013

“There is a lack of critical assessment of the past. But you have to understand that the current ruling elite is actually the old ruling elite. So they are incapable of a self-critical approach to the past.”

Ryszard Kapuściński, Writing About Suffering, Journal of the International Institute, Fall 1998

"What is truth? said jesting Pilate, and would not stay for an answer."

Francis Bacon, Of Truth, 1597

We had steep declines in the major stock indices today, taking back a small chunk of their recent outsized gains.

The Dollar gave up a similar piece of its recent gains from a fairly lofty valuation.

Gold and silver rallied sharply, breaking out of their recent price range.

But what was most remarkable about this day was the complete lack of a sense of risk involved in all this.

The VIX barely moved.

The broader index in the small cap Russell 2000 did not correct.

So let's just call this a rinse, following a thorough wash, following a benign CPI number.

PPI tomorrow.

Our political situation would be funny if it were happening somewhere else.

We get so caught up in it because if we step back and look at what we are doing it would be almost unbearable.

To paraphrase the American author James Baldwin, one of the reasons people cling to their hates so stubbornly is because they sense, once hate is gone, they will be forced to deal with the truth. 

And so we legislate absurdities, and fawn on those who prophesy illusions.

The fire next time.

Have a pleasant evening.

Stocks and Precious Metals Charts - Our Oligarchs and Their Enablers - Gold and Silver Rising

 

"Immediately upon departing her post as Chair of the Federal Reserve, but prior to getting the nod from the Biden administration to become U.S. Treasury Secretary, Janet Yellen engaged in what the courageous reporter at ProPublica, Jesse Eisinger, called a 'two-fisted money grab from banks.'   Yellen raked in more than $7 million in speaking fees with the bulk of that coming from Wall Street banks and trading houses, including JPMorgan Chase.”

Pam and Russ Martens, Yellen’s Treasury Hires 5-Count Felon JPM to Look for Fraud, October 11, 2023

"As a country becomes industrialized, its governance and corruption challenges do not disappear.  They simply morph and become more sophisticated: Transfer of a briefcase stashed with cash is less frequent.    Instead, subtler forms of capture and 'legal corruption' exist: an expectation of a future job for a regulator in a lobbying firm, or a campaign contribution with strings attached."

Daniel Kaufmann, Corruption And The Global Financial Crisis, Forbes, 27 January 2009

"A credibility trap is when the regulatory, political and/or informational functions of a society have been compromised by a corrupting influence and a fraud, so that they cannot address the situation without implicating, at least incidentally, a broad swath of the power structure including themselves.   The status quo has at least tolerated the corruption and the fraud, if not profited directly from it, and most likely continues to do so."

Jesse, Financial Coup d'Etat and a Credibility Trap, 28 September 2012

"And in some ways, it creates this false illusion that there are people out there looking out for the interest of taxpayers, the checks and balances that are built into the system are operational, when in fact they're not. And what you're going to see and what we are seeing is it'll be a breakdown of those governmental institutions. And you'll see governments that continue to have policies that feed the interests of -- and I don't want to get clichéd, but the one percent or the .1 percent -- to the detriment of everyone else.

Neil Barofsky, Interview with Bill Moyers, 27 October 2012

 

Here are the updated charts.

Gold and silver put in another solid performance.

The Dollar slid a little lower.

VIX declined further showing the almost complacent optimism in the equity markets.

Earlier today the doctor gave me a green light on the recovery of my eye.    The improvement in the last week has been heartening.  

Have a pleasant evening.

Stocks and Precious Metals Charts - Malignant Narcissism of the Plutocracy

 

"This elite-generated social control maintains the status quo because the status quo benefits and validates those who created and sit atop it.  People rise to prominence when they parrot the orthodoxy rather than critically analyze it.  Real change in politics or society cannot occur under the orthodoxy because it would threaten the legitimacy of the professional class and the systems that helped them achieve their status."

Kristine Mattis, The Cult of the Professional Class, April 2016

"Our plutocracy now lives like the British did in colonial India:  ruling the place but not of it."

Mike Lofgren, The Deep State, 5 January 2016

"The American economy increasingly serves only a narrow part of society.  Too many of America's elites-among the super-rich, the CEOs, and many of my colleagues in academia chase wealth and power, and the rest of society be damned."

Jeffrey Sachs, The Price of Civilization, 2011

"If there are damned souls in Hell, it is because men blind themselves."

E. A. Bucchianeri, Faust: My Soul Be Damned for the World, 2010

"Most of them became wealthy by being well connected and crooked.  And they are creating a society in which they can commit hugely damaging economic crimes with impunity, and in which only children of the wealthy have the opportunity to become successful.  That’s what I have a problem with.  And I think most people agree with me."

Charles Ferguson, Predator Nation, 2012


Happy Hunger Games!  And may the odds be ever in your favor.

Stocks tried to rally it up into the green today but alas, they were hammered right down into the close.

The VIX rose.

Yields on Treasuries rose.

This provided some lift for the Dollar.

Gold and silver were sold, right down into the close.

Stock option expiration on Friday.

As Rutger Bregman observed, the Machiavellis have the ultimate secret weapon: they’re shameless.

Wash rinse repeat.

Works just as well for politics as in finance, as long as most people are sleep-walking amnesiacs.

How come no one is talking about blockchain anymore?   Now its AI, all the time.  What will they think of next. 

It will be interesting to see if a US President can run the country from a jail cell.  It worked for Lucky Luciano. 

On a positive note, the sunglasses they give to eye surgery patients are pretty snappy these days.  A heck of a lot better than the boxy pair of plastic punchouts that my father-in-law was sporting.

Great success.

Have a pleasant evening.

Thomas Frank on The Credibilty Trap

 

The Baffler
Too Smart to Fail: Notes on an Age of Folly
By Thomas Frank
Mar 26, 2012

The "sound" banker, alas! is not one who sees danger and avoids it, but one who, when he is ruined, is ruined in a conventional and orthodox way along with his fellows so that no one can really blame him.  - John Maynard Keynes

In the twelve hapless years of the present millennium, we have looked on as three great bubbles of consensus vanity have inflated and burst, each with consequences more dire than the last. But what rankles now is our failure to come to terms with how we were played.

In the twelve hapless years of the present millennium, we have looked on as three great bubbles of consensus vanity have inflated and burst, each with consequences more dire than the last.

First there was the "New Economy," a millennial fever dream predicated on the twin ideas of a people's stock market and an eternal silicon prosperity; it collapsed eventually under the weight of its own fatuousness.

Second was the war in Iraq, an endeavor whose launch depended for its success on the turpitude of virtually every class of elite in Washington, particularly the tough-minded men of the media; an enterprise that destroyed the country it aimed to save and that helped to bankrupt our nation as well.

And then, Wall Street blew up the global economy.  Empowered by bank deregulation and regulatory capture, Wall Street enlisted those tough-minded men of the media again to sell the world on the idea that financial innovations were making the global economy more stable by the minute.  Central banks puffed an asset bubble like the world had never seen before, even if every journalist worth his byline was obliged to deny its existence until it was too late.

These episodes were costly and even disastrous, and after each one had run its course and duly exploded, I expected some sort of day of reckoning for their promoters.  And, indeed, the last two disasters combined to force the Republican Party from its stranglehold on American government-- for a time.

But what rankles now is our failure, after each of these disasters, to come to terms with how we were played.  Each separate catastrophe should have been followed by a wave of apologies and resignations. Taken together--and given that a good percentage of the pundit corps signed on to two or even three of these idiotic storylines--they mandated mass firings in the newsrooms and op-ed pages of the nation. Quicker than you could say "Ahmed Chalabi," an entire generation of newsroom fools should have lost their jobs.

But that's not what happened.  Plenty of journalists have been pushed out of late, but the ones responsible for deluding the public are not among them. Neocon extraordinaire Bill Kristol won a berth at the New York Times (before losing it again), Charles Krauthammer is still the thinking conservative's favorite, George Will drones crankily on, Thomas Friedman remains our leading dispenser of nonsense neologisms, and Niall Ferguson wipes his feet on a welcome mat that will never wear out. 

The day Larry Kudlow apologizes for slagging bubble-doubters as part of a sinister left-wing trick is the day the world will start spinning in reverse. Standard & Poor's first leads the parade of folly (triple-A's for everyone!), then decides to downgrade U.S. government debt, and is taken seriously in both endeavors. And the prospect of Fox News or CNBC apologizing for their role in puffing war bubbles and financial bubbles is no better than a punch line: what they do is the opposite, launching new movements that stamp their crumbled fables "true" by popular demand.

The real mistake was my own.  I believed that our public intelligentsia had succumbed to an amazing series of cognitive failures; that time after time they had gotten the facts wrong, ignored the clanging bullshit detector, made the sort of mistakes that would disqualify them from publishing in The Baffler, let alone the Washington Post.

What I didn't understand was that these weren't cognitive failures at all; they were moral failures, mistakes that were hard-wired into the belief systems of the organizations and professions and social classes in question.  As such they were mistakes that-- from the point of view of those organizations or professions or classes-- shed no discredit on the individual chowderheads who made them. 

Holding them accountable was out of the question, and it remains off the table to- day. These people ignored every flashing red signal, refused to listen to the whistleblowers, blew off the obvious screaming indicators that something was going wrong in the boardrooms of the nation, even talked us into an unnecessary war, for chrissake, and the bailout apparatus still stands ready should they fuck things up again.

[big snip]

'The main lesson we should take away from the Efficient Market Hypothesis for policymaking purposes is the futility of trying to deal with crises and recessions by finding central bankers and regulators who can identify and puncture bubbles,' announced Chicago school economist Robert Lucas from amid the ruins in 2009. 'If these people exist, we will not be able to afford them.'

And the main lesson we should take away from the Efficient Market Hypothesis for our purposes is the utter futility of economics departments like the one that employs Robert Lucas.

A second lesson: if economists— and journalists, and bankers, and bond analysts, and accountants— don’t pay some price for egregious and repeated misrepresentations of reality, then markets aren’t efficient after all. Either the gentlemen of the consensus must go, or their cherished hypothesis must be abandoned. The world isn’t gullible enough to believe both of them any longer.

 Read the entire article here.

Stocks and Precious Metals Charts - The Sick Rose - Wash and Rinse Continues

 

"America is caught in a confidence or credibility trap, in which the changes, investigations, and reforms necessary to restore trust to an economy or market are rendered unlikely because doing so would expose a pervasive corruption that the principals fear would destroy any remaining trust.  It could also endanger the careers of politicians and business people who may have permitted and even appeared to facilitate the control fraud that caused the financial crisis in the first place.  Personal risk trumps public stewardship.

The fraudulent activity is covered up and therefore continues or at the very least appears to continue, crowding out most productive business investment and activity which cannot possibly hope to compete with the highly profitable fraudulent activity and asset bubbles under such opaque and uncertain circumstances.  Informed market participants are unwilling to invest their liquid assets in a system which they suspect is riddled with accounting fraud, insider trading, and regulatory weaknesses, except of course in a few situations and somewhat ironically in some existing frauds which they think they understand."

Jesse, America Is Caught in a Credibility Trap, 22 January 2011

"Those who plot impossible upheavals among us are either young and do not know our people, or are hard-hearted men who do not care a bit about their own lives or those of others.”

Alexander Pushkin

“'Is it lawful to do good on the sabbath rather than to do evil, to save life rather than to destroy it?', he asked.  But they remained silent.  Looking at them with anger, and saddened by the hardness of their hearts, he said to the man, 'Stretch out your hand.'  The man stretched out his hand and was healed.  The Pharisees went out and that same day began to plot with the Herodians to put him to death."

Mark 3:4-6

 

A week ago the risk markets were rallying heedless and hard on storied expectations of an 'immaculate disinflation.'

The Wall Street storytellers were spreading this fantasy aggressively.   For that is what they do.

But alas, this week the belief in a painless soft landing has dissipated, and the markets fell, hard.

And so rinse follows wash.  And the capital of a nation continues to be transferred.

It's just how things are. And questioning the narrative is disloyal to the status quo, the privileged few, and their cadres of sock puppets, breathless boobs, political Pharisees, and compromised deniers.

This is how entire nations have been transformed into war-scarred wastelands.

And the Lord looks on in anger.

So stocks fell, hard, and went out near the lows.

Gold and silver even moreso were hit a bit, as risk perceptions reverted to the mean.

The Dollar chopped sideways.

There will be a stock index option expiration on Friday.

Have a pleasant evening.

Stocks and Precious Metals Charts - Unsteady As She Goes - Non-Farm Payrolls on Friday

 

"The failure of the central bankers and economists to 'manage the economy' is nothing new. One only has to look at the mainstream economic 'forecasts' in 1929 and 1930 to realize that not only is economics not a precise science, but too often economists are nothing more than mouthpieces for vested interests, and dabbling in politics and public policy in the guise of science.

A new school of economics will likely rise out of the coming financial collapse of the US, as it did in the 1930s. Perhaps this one will be more scientific, less subservient to private business interests and political objectives. 

But until that time it is good to realize that much of the discussion of macro-economics is nothing more than public policy and personal philosophy, with a strong dose of financial bias.  

For the sake of our country, we need to stop the Fed from increasing its opaque power to regulate and control our economy.  They have made a botched job of it, and show no signs of improvement beyond serving the needs of their special interests and the wealthy elite. 

Jesse, Economics in Disrepute as the Economy Tumbles, 9 July 2008


"How can a society which defines its first principle, the ultimate good, as greed be anything but what it is? Cruel, self-absorbed, shallow, unjust, delusional and imbalanced. Fear is the tool of a tyranny, and greed is a horse to be harnessed, not the measure of policy or an administrator of justice to run maximized, or even unchecked.

Why the lack of self-recrimination among the economists? Because they are no different than anyone else who failed to exercise their stewardship and basic human obligation to protect the innocent and to stand for justice, and uphold the standards of their profession. In this they are no different than politicians and lawyers and accountants and the mainstream media, although we foolishly expected more."

Jesse, In Defense of Economics, 12 January 2009

Nothing will change while the system continues to reward malfeasance and faisl to stop pervasive corruption by a self-serving elite.

This is the oft-cited credibility trap.

Stocks slumped this morning, but managed to come back to almost unchanged after Europe went home to bed.

Gold was mostly unchanged along with the Dollar.

Silver lost a little ground along with stocks.

The VIX was higher.

There will be a Non-Farm Payrolls report on Friday.

Have a pleasant evening.