The Silly Season: Why Economists Go Wrong...

While economics started its life as a branch of moral, and some would say managerial, philosophy, it has evolved these days into a somewhat technical, and too often rather narrow, area of specialization that focuses inwardly on itself and its semi-private, academic squabbles.

Not that this is all bad, because it does keep economists employed and out of other mischief, as John Galbraith had observed.

But it sometimes causes them to get things wrong, because they tend to lack the overall vision of how real things fit together. Incorrect assumptions that compress the life out of reality are the Achilles' heel of all models, especially when they become self-referential and self-perpetuating. One has only to look at Eugene Fama's efficient market hypothesis to see how far this can go, and how damaging it can become.  Well, at least he has recently obtained a consolation prize for establishing a 'benchmark.'

Granted, this is a monumental challenge because economics spans so many areas of life and commerce. But when economists weigh in on policy and moral issues, one would think that they might give an extra special effort to rise out of their own deep wells of subjectivity and models, and at least have a go at understanding the impacts that their thoughts may have on the broader discussion, especially if they hold a public platform.

As the regular reader may recall, I picked on Paul Krugman when he dismissed the ability of the futures markets to influence commodity prices, because as he postulated, those prices are really set on a 'spot market' which ignores the futures prices, which are solely about derivatives on the future.

Now anyone who has spent any time at all trading in commodity markets knows this to be utter nonsense. Price discovery is a much broader activity. The price of a commodity today does incorporate some intelligence about what the price might be next week, for example.

And in the specific case of the metals, the prices in the futures front month have an enormous impact on the going price of a metal. Although that does seem to be diminishing a bit these days, with premiums over 'spot' as set by the futures front month hitting all time high premiums of one hundred dollars. But that is a symptom of a long term abusive price rigging and an unfortunate market divergence, and certainly not the norm.  Although it is amazing how many economists cannot see it even as it is unfolding. 

Today James Kwak weighed in with a few thoughts from the liberal economist point of view.

"Why does anyone think that anyone cares about what a rating agency has to say about Treasury debt? Credit ratings matter for obscure companies because they represent new information that is not otherwise available to investors. In the case of the U.S. Treasury, all the information you need to know is plastered across the front page of the world’s newspapers, all the time. Your not going to change your opinion because of something that Fitch says."

The reason for this should be well known to anyone who might have traded in the bond markets. Certain institutions are required to buy only instruments rated at a certain level, by a consensus of a handful of ratings agencies:  Moody's, SP, and Fitch. 

If Moody's or Fitch were to join SP in downgrading US debt, I guarantee you that there were be a significant reaction in bond market prices, without regard to what any economist might think from their reading in the newspapers. Those institutions who are required to hold only AAA rated debt would be prohibited from buying, and might even become forced sellers.

Is the Ratings Agency system sound and efficient? Hardly. But that is not the point. We have to deal with what is, and then change it if it makes no sense. The sad truth is that the Ratings Agencies are not objective and serenely detached computers processing facts without bias, but instruments of people, with biases, that sometimes become instruments of policy and conflicts of interest.

But this is a little example, fairly straightforward, and one can hardly blame someone for getting it wrong. I can get things like this wrong more than I might like, and often depend on the good grace of expert readers to set me right.

In the next bullet point James says that a holder of Treasuries ought not to care if the interest payment is delayed, because the principal is secure. He may not care, but certain institutions have to care quite a bit about this sort of thing.  A missed interest payment is a consequential event.  But again, it is a detail.

The example that stirred me to write is the next one, which goes far beyond knowing some market rules.

"I am probably one of the few liberals who don’t think the Tea Party caucus is engaged in irresponsible hostage-taking. Sure, I disagree with their policy objectives, and they are risking economic catastrophe by trying to force the government into default. But they are also fighting for a principle, misguided as it may be: Obamacare is evil, and should be stopped. The debt ceiling is an absurdity that should not exist. But since it does exist, it is leverage that conservatives can use to try to achieve their policy goals."

This surely sounds like a fine piece of liberal thought. Something exists, and someone is using it 'on principle.'  And while I may not agree, whom am I to judge in my fog of liberal relativism?  I admire their adherence to principle, in the same way that the diffident often admire the forceful.

Here is where I think James Kwak goes wrong in his moral reasoning.

Just because something exists does not mean that any use of it is a moral use, and one cannot blame or object to anyone's use of it as long as it is 'for principle.' I presume James would balk at the use of the debt ceiling to obtain large personal bonuses for the Congressmen for merely doing their jobs. After all, they are not completely like Wall Street, yet.

What if, in his angst over wanting to save the American people the painful experience of the Affordable Healthcare Act, Senator Ted Cruz were to stand on the roof of the Dirksen Senate Office Building, and vow not to get down from it until the ACA was repealed, eschewing all food and drink. We might question his frame of mind and judgement, but that might well be viewed as an act of principle, a symbolic action of great personal consequence and example.  Gandhi used the  principled hunger strike to influence political actions on several occasions and to great effect. 

But what if Senator Cruz used his office and influence to gather a group of hapless tourists, and hold them on the top of the building without food or nourishment, unless the ACA was repealed? And further, what if he set a date of October 17, and threatened to push them over the edge of the roof unless he was given his way?

Would that be an act of admirable adherence to principle?

No, of course it would not be.  

This relates to the long established moral principle that civil disobedience and demonstrations of principle are admirable if they are peaceful, and if those who take that action place themselves in the path of consequence, and accept that consequence for themselves.  More simply, an act that accepts negative consequences for oneself can be a commitment to principle.  An act that visits the negative consequences on an innocent third party is an act of extortion.

This is the difference between a hunger striker, a pepper-sprayed peaceful demonstrator, and a kidnapper or terrorist bomber.   Personal actions might have a broader consequence as well, as in the case of a transit strike, but I think the difference here is apparent.  The union strike is directly related to the activity, and is usually germane and proportionate.  And the strikers endure a shared hardship with the customers.  Although this too can be abused, obviously.

Now I would not want to engage in dark humour, but I will.   I suspect that if certain elements of the Congress or Wall Street were to gather on the tops of their office buildings and threaten to jump if they did not receive outsized personal bonuses and more power for merely doing their jobs, one might suspect that a less than insignificant element of the public would voice their encouragement, and urge them to go ahead. And the media would sell tickets.

This is the silly season. And people are saying lots of silly things. But there is some need to maintain our common sense, and view things as they are, and not where our and political enthusiasms might wish to take them.

I know, this is a bit of schadenfreude, and I do not wish to pick on James Kwak because I like this writings for the most part and often link to them.  And by comparison the 'liberal economists' are like Solons compared the more venal of the so called 'conservative economists' who will say anything for their employers.

But I mean, come on. Being a liberal does not require one to engage in I'm OK You're OK relativism so that we lose sight of the practical foundations of civic duty and moral behaviour.    This might be a difference between a liberal and a progressive but I have never cared enough to think about it much. 

The practice of Wall Street and the Congress in holding the nation hostage to dire economic consequences, just to get their way when they lack a democratic consensus, has gone too far for too long.  

If they wish to protest, they should place themselves at risk, peacefully, in demonstrating their commitment to their beliefs, and not hold the innocent public hostage by furloughing the government and impeding important civic functions while they continue to enjoy their gymnasium, draw their paychecks,  and enjoy their customary perks in comfort.

Gold Daily and Silver Weekly Charts - Cap, Cap, Cap...

There was very little movement in the Comex warehouses yesterday. The spreadsheet is included below.

This interview with Jim Rickards at Goldbroker is worth reading.

"The signs that the manipulation is coming to an end will include depletion of warehouses, price spikes and notifications from banks that they will no longer allow the conversion of gold forward contacts into physical gold."

The gold chart and silver charts are set up for a 'pop higher' if they can ever get some traction. That may not occur until the gold starts flowing out of the warehouses again. The registered (deliverable) inventories in the Comex warehouses are very thin. It will take higher prices to move more inventory out of storage and into the market.

Gold premiums in India have hit a record $100 per ounce this week. Nothing to see here, move along.

As a reminder this is a stock option expiration week.  The 28th is a Comex precious metals option expiration.

Until then, things are what they are.  Try not to allow the histrionics and hysteria to fill your sails.

After the bell Fitch put the US credit rating on negative watch.  tra la.

I spent the day straightening out some medical bills.  For those of you who are unfamiliar with its gorier details, the healthcare industry in the US is like a protection racket.  You have to pick some group to belong to, in order to obtain protection from financial ruin.

Forget paying the bill, the first benefit of health insurance here is that the specialist office visit that bills out at $550 gets reduced to $120, and then the insurance company pays some portion, and you pay the rest.  And when it comes to larger bills like hospital stays, the numbers get exponentially ridiculous.  And with certain pharmaceuticals, we enter the Land of Oz.

I think the only people who really like the US healthcare system are those who have rarely or only lightly used it, and who comfortably keep some ideologically based model of it in their heads.  Until they are old enough to have to use it and are covered by Medicare, and then they seem to love that.  But only for themselves, for they alone are the deserving and without sin.

The doctors and hospital people are fine and decent.  The financials of the system are barking mad. 

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Making Sausage

"Laws are like sausages, it is better not to see them being made."

Otto von Bismarck

The histrionics are flowing heavily from Washington. And the pity is that the 'news programs' do such a poor job of setting out the issues and the mechanics of what is going on.

Typically they set one talking head against another, who spin at each other while the 'moderator' chimes in as their own political bias may prompt them.

The markets will tend to follow this US budget news.

Have a pleasant evening.

The Plan for Conquest and Pacification: Hitler's Britain

"Patriotism is proud of a country's virtues and eager to correct its deficiencies; it also acknowledges the legitimate patriotism of other countries, with their own specific virtues. The pride of nationalism, however, trumpets its country's virtues and denies its deficiencies, while it is contemptuous toward the virtues of other countries. It wants to be, and proclaims itself to be, 'the greatest', but greatness is not required of a country; only goodness is."

Sydney J. Harris

This documentary is based on the written plan for the conquest and occupation of Britain.

I found it to be quite interesting. I do object to the naming of specific individuals, since no one really knows what they would have done, despite what the Germans thought they might do.

People who are entranced with exceptionalism will find this entire documentary unthinkable. I think that is a mistake, given the experience in so many other countries and the Channel Islands themselves.

If there had been resistance, the conquest could have been utterly ruthless and brutal as it was in Poland, for example.  I remember a lady telling me that the Poles welcomed the Nazis 'with open arms.'  Nothing could be further from the truth. 

But people get these thoughts and can become attached to them for various reasons.  Just as some might think that Britain, or the US for the matter, can never change what is perceived as its national and natural character. 

I hate to single out Britain here, but we do have the plan as it was written.  We do not have access to any similar plans as complete for the US, either by the Germans or the wealthy financiers who have sought to capture the government for their own ends.

The lack of knowledge of US history amongst some of its people is appalling.  The actions of the Ku Klux Klan in the 1920's, and the attempted coup d'état by wealthy financiers and industrialists in the 1930's, seems like a fiction to many, easily dismissed.   If only civilization was so robust and indestructible as that.  This complacency is often due to pride and ignorance, a sense of exceptionalism, rather than a sound understanding of human nature with both its strengths and weaknesses.

In his powerful documentaries done with the BBC, Laurence Rees outlines the charismatic power of an unscrupulous and fanatical leader, and how they can use exceptionalism and stereotypes of 'the other' to tap the inner darkness of an otherwise educated and civilized people, who view themselves as both good and practical.

The documentary below is instructive in general because it outlines how one might conquer a large and developed country either by exterior force or through an internal rising. 

I don't wish to alarm anyone.  What is possible is not inevitable.  But it is good to remember that possibility demands good sense and vigilance.   None are immune to evil that comes draped in the appearance of practicality and expediency.   I have seen this in otherwise good people I have known personally.  They can lose their way, and stop thinking in the face of uncertainty, and rationalize themselves into doing terrible things.   

None are exceptional except as individuals, and only to the extent that they can grasp something greater than their own needs and desires in order to save themselves from becoming hopelessly lost.

Gold Daily and Silver Weekly Charts - Through the Looking Glass

"A rogue does not laugh in the same way that an honest man does; a hypocrite does not shed the tears of a man of good faith. All falsehood is a mask; and however well made the mask may be, with a little attention we may always succeed in distinguishing it from the true face."

Alexandre Dumas

It was capping all the way today as stocks rallied back from overnight lows to close on the highs, while gold and silver were pushed down and went out near the lows.

It is most likely that the ongoing opera buffo in the Congress will tend to overshadow the real economy for the duration. I provided a brief explanation of the Senate and House particular procedures in the stock commentary for my non-American readers. And probably quite a few American readers as well. The 'news' does not cast much light. They mostly offer spin, and opposing parties with agendas spinning at each other with all the indignation and prevarication they can muster.

There is a soft deadline of October 17th as put forward by the Treasury Secretary for a 'default' as the line in the sand by which the government in no longer to pay its bills.

Interestingly enough this is also a stock option expiration week.

The markets are acting as though a last minute deal will occur as it did the last time the government ran into such an impasse in 2011.

The question of a default is almost silly since the debt is all denominated in dollars, and the Fed does own a printing press. This is default, as opposed to a devaluation which is a more real possibility. What this utterly political 'default threat' affects is the full faith and credit of the government that provides the essential backing for any fiat currency. It is human nature to lack confidence in the obsessed, the ignorant, and the incompetent.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Antics Abounding in an Option Expiration Week

I think that this is an option expiration week for stocks, as this Friday will be the 3rd Friday in October.

Stocks went out on their highs today on optimism that a debt ceiling deal will be reached in the Senate and will be accepted by the House.

Just a quick note for our non-US readers. A bill has to be passed by both bodies of the Congress: the House of Representatives and the Senate.

A simple majority does not suffice. In the Senate, because of a rule called the 'filibuster,' a party can demand a 60 vote out of 100 members 'super majority' to override their filibuster which is a means of delaying Senate action on any bill indefinitely. Normally a majority would be 51 votes. The Vice President can vote in case of a tie. There is a so-called 'nuclear option' which would be a rule change that would limit the power of a filibuster to block a vote. Neither party in the Senate favors this, but the use of the filibuster has become controversial because of much more frequent use these days as the politics have become more polarized.

In the House of Representatives it is always a simple majority and no filibuster rule applies there. HOWEVER, the Speaker of the House, who is the head of the majority party, exercises control over any bills which can come to the floor for a vote.

A recent innovation was called 'the Hastert Rule.' Republican House Speaker Dennis Hastert established the political principal that he would not allow any bill to come to the floor for a vote unless there was a simple majority of people from within his own Party (the Republicans) who could pass it without any votes from the opposing party (the Democrats). This is not a law, but a practice within the Republican party in the House. And that practice was tightened just before the government shutdown with a rule change that prohibited a little used exception allowing any member to bring certain categories of bills to the floor. See here.

In the case of the debt ceiling and the government continuing resolution, Speaker Boehner has determined that he will not allow a 'clean bill' to come to the floor for a vote because of the objections of a minority of his party, known as 'the Tea Party.' It is thought that a bill acceptable to both bodies could pass if brought to a House vote because it would gain most if not all of the Democratic votes, and the votes of moderate Republicans.

I just wanted to clarify this impasse for those not familiar with American political customs.  The polarization of the parties, together with the abolishment of 'earmarks' which were particular addendums for special state projects which had been used to entice individual Congressional votes, are diminishing the ability of the Congress to gain the consensus to pass laws and budgets.

And it has to be said that although he may be a very nice man, Speaker Boehner has a very tenuous position within his party, and faces a kind of ongoing insurrection by the more vocal minority of conservatives. 

Have a pleasant evening.

The Last Full Measure of Devotion: And Why the US Congress Should Be Ashamed

As Hero Finally Gets Medal of Honour, Some Question the Delay

Wall Street has infested the country with the spirit of reckless greed and the gospel of pride and selfishness. And the government provides the example for the people.

NAV Premiums of Certain Precious Metal Trusts and Funds

Aktion T4: The Disabled, the Different, and the Other

“Each day we are becoming a creature of splendid glory or one of unthinkable horror.”

C. S. Lewis

China Has Some Pointedly Hard Words For the US and the Dollar

Surely this is nothing new. China and the BRICs have been calling for a change in the US dollar reserve currency regime since at least 2009.

The problem with abusing a long standing arrangement is that it takes quite a bit of energy to fray such a relationship, given its momentum. And the US has risen to unipolar superpower status over the past twenty years with the fall of the Soviet Union.

A fiat currency exists on a combination of faith and force, with faith being by far the preferable and least expensive aspect.  

But full faith and credit in a currency or in any type of relationship is not inexhaustible. It may stand for quite a time, but once it begins to falter the failure can often come fairly quickly, so that many participants are caught by surprise, mouths agape, saying 'what happened?'

This is the currency war.  

"What may also be included as a key part of an effective reform is the introduction of a new international reserve currency that is to be created to replace the dominant U.S. dollar, so that the international community could permanently stay away from the spillover of the intensifying domestic political turmoil in the United States."

Xinhua
Commentary: U.S. fiscal failure warrants a de-Americanized world
By Xinhua Liu Chang

BEIJING, Oct. 13 (Xinhua) -- As U.S. politicians of both political parties are still shuffling back and forth between the White House and the Capitol Hill without striking a viable deal to bring normality to the body politic they brag about, it is perhaps a good time for the befuddled world to start considering building a de-Americanized world.

Emerging from the bloodshed of the Second World War as the world's most powerful nation, the United States has since then been trying to build a global empire by imposing a postwar world order, fueling recovery in Europe, and encouraging regime-change in nations that it deems hardly Washington-friendly.

With its seemingly unrivaled economic and military might, the United States has declared that it has vital national interests to protect in nearly every corner of the globe, and been habituated to meddling in the business of other countries and regions far away from its shores.

Meanwhile, the U.S. government has gone to all lengths to appear before the world as the one that claims the moral high ground, yet covertly doing things that are as audacious as torturing prisoners of war, slaying civilians in drone attacks, and spying on world leaders.

Under what is known as the Pax-Americana, we fail to see a world where the United States is helping to defuse violence and conflicts, reduce poor and displaced population, and bring about real, lasting peace.

Moreover, instead of honoring its duties as a responsible leading power, a self-serving Washington has abused its superpower status and introduced even more chaos into the world by shifting financial risks overseas, instigating regional tensions amid territorial disputes, and fighting unwarranted wars under the cover of outright lies.

As a result, the world is still crawling its way out of an economic disaster thanks to the voracious Wall Street elites, while bombings and killings have become virtually daily routines in Iraq years after Washington claimed it has liberated its people from tyrannical rule.

Most recently, the cyclical stagnation in Washington for a viable bipartisan solution over a federal budget and an approval for raising debt ceiling has again left many nations' tremendous dollar assets in jeopardy and the international community highly agonized.

Such alarming days when the destinies of others are in the hands of a hypocritical nation have to be terminated, and a new world order should be put in place, according to which all nations, big or small, poor or rich, can have their key interests respected and protected on an equal footing.

To that end, several corner stones should be laid to underpin a de-Americanized world.

For starters, all nations need to hew to the basic principles of the international law, including respect for sovereignty, and keeping hands off domestic affairs of others.

Furthermore, the authority of the United Nations in handling global hotspot issues has to be recognized. That means no one has the right to wage any form of military action against others without a UN mandate.

Apart from that, the world's financial system also has to embrace some substantial reforms.

The developing and emerging market economies need to have more say in major international financial institutions including the World Bank and the International Monetary Fund, so that they could better reflect the transformations of the global economic and political landscape.

What may also be included as a key part of an effective reform is the introduction of a new international reserve currency that is to be created to replace the dominant U.S. dollar, so that the international community could permanently stay away from the spillover of the intensifying domestic political turmoil in the United States.

Of course, the purpose of promoting these changes is not to completely toss the United States aside, which is also impossible. Rather, it is to encourage Washington to play a much more constructive role in addressing global affairs.

And among all options, it is suggested that the beltway politicians first begin with ending the pernicious impasse.

US Senate Chaplain: Save Us From the Madness

Amen.

On June 27, 2003, Rear Admiral Barry C. Black (Ret.) was elected the 62nd Chaplain of the United States Senate. He began working in the Senate on July 7, 2003. Prior to coming to Capitol Hill, Chaplain Black served in the U.S. Navy for over twenty-seven years, ending his distinguished career as the Chief of Navy Chaplains. The Senate elected its first chaplain in 1789.

As Rear Admiral, his personal decorations included the Navy Distinguished Service Medal, the Legion of Merit Medal, Defense Meritorious Service Medal (two medals), Meritorious Service Medals (two awards), Navy and Marine Corps Commendation Medals (two awards), and numerous unit awards, campaign, and service medals.

Moyers: Wendell Berry On Peaceful Resistance To the Savaging of Life By Reckess Greed

I finally had the time and opportunity to see this interview, and enjoyed it more than I thought I might.

Wendell Berry is a very interesting person, a 'poet farmer.' And he has a fascinating, holistic view of life.

This week on Moyers & Company in a rare television interview, Bill talks to visionary, author and farmer Wendell Berry to discuss a sensible, but no-compromise plan to save the Earth. We also examine the critical role of honey bees in our food supply and the threats they face in The Dance of the Honey Bee. And after the antics in Washington this week, Bill shares his views on the government shutdown.

"To make a living doesn't mean to make a killing, it means to have enough."

The Peace of Wild Things

When despair for the world grows in me
and I wake in the night at the least sound
in fear of what my life and my children's lives may be,
I go and lie down where the wood drake
rests in his beauty on the water, and the great heron feeds.
I come into the peace of wild things
who do not tax their lives with forethought
of grief. I come into the presence of still water.
And I feel above me the day-blind stars
waiting with their light. For a time
I rest in the grace of the world, and am free.

Gold Daily and Silver Weekly Charts - Fear and Loathing on the Comex

The hit on gold in particular today was just blatant and obvious, as a large number of paper gold ounces were dumped on the Comex, causing the 'stop logic' to halt the trade.

Apparently Bart Chilton meant it when he said that no one would be watching the markets. As if that makes any real difference.

There was quite a bit of activity in the Scotia Mocatta warehouse yesterday, and I have included the spreadsheet below.

The net is that a little over 9,000 ounces left the dealer eligible category and the Comex warehouse complex.

These jokers are obliged for what they cannot deliver. And so they will keep doubling down until they break something I fear.

Let's see what happens.

Have a pleasant weekend.

SP 500 and NDX Futures Daily Charts - Wash and Rinse

VIX took a dive as Wall Street celebrated the end to the debt ceiling crisis in advance.

Actually, taking a peak at what the little people were doing, the wiseguys saw a great opportunity for a wash and rinse. Plus the private word out of Washington is that the debt ceiling fight will come to nothing, never fear. Is that just a false optimism? Things have gone awry in past times.

Everything is short term with this government. Nothing lasts, and justice is left battered on the floor.

Still, the things that count remain, and love abides outside amongst the people.

Gold Daily and Silver Weekly Charts - My Queen and Her Way of the Cross

"For I behold the heavens, the works of your fingers: the moon and the stars which you have made.  What is man that you are mindful of him? or the Son of Man that you dwell with him?
You have made us a little less than the angels, and you have crowned Him with glory and honour, And have set Him over all the works of your hands."

Late breaking news says that President Obama has refused the offer of a six week extension of the debt ceiling.

The precious metals, especially gold, were under pressure and being capped all day, with silver holding its own a little better.

Once the day session ended and we went into electronic after hours trading the algos came out and starting hitting gold and silver fairly steady, along with the related products like the Funds, ETFs and miners. If you were looking on Level 2 tradebook you saw a steady stream of sell 100, sell 100, sell 100 transactions nibbling away at the bid positions.

It may just be a coincidence, but once the stats are known for the daily Comex warehouse transactions it seems as though the action picks up a bit.

Yesterday we saw little movement on the warehouses. Typically we do not see a lot of deliveries in the first half of an active month, except perhaps in the first few days.

As you know the central bankers and finance ministers of the G20 are meeting in Washington DC today and tomorrow.  There was an old story about China calling for a new world reserve currency that went around but I am pretty sure it was an old story that reappeared on a web site without a date. 

China has been making high level public calls like this since at least 2009.  The progress of great events seems painfully slow to those involved in them.  In the history books it would be compressed to a few pages or paragraphs.

One thing that hardship and experience teach is patience, and an appreciation of the little things in life, if we are but open to learning those lessons.  I was very happy today that my wife was feeling well enough to go out for a simple Japanese lunch and a little light shopping.  She is in the middle of her chemo treatment cycle again, although I have to say that the last scan was clear, so that in itself makes everything one endures much better. This kind of treatment is all about waiting, and hoping.  Although there is no cure, they consider these things to be 'chronic illnesses' that can be treated for quite some time.   They have made progress but there is still so much to be learned, so much that they cannot do and do not know yet.   But there is much room for hope.

It is funny to see her getting out the wig again, so that the little old housebound ladies she visits and helps each week will not know that she is sick, although they don't seem to notice the portable pump she wears for a few days during the week as a fanny pack. They live from day to day, and almost any change seems to frighten them. I help deliver the groceries, and fix the little things around their homes, and look in on them when the weather is bad. I get a kick out of their adherence to 'name brands' when we buy them food and medicine and personal things.

Even if something is exactly the same thing and less expensive it seems as though any change is too much for them to bear. These are people in their late 90's who are well enough and stubborn enough to wish to live at home, but who are 'fragile' and whose families are at a distance from them.  They cling to their homes. It is a common enough thing from what I have seen.

It seems as though I have spent quite a bit of time in hospitals these past three years. One gets to know the staff, and the hours that the cafeteria is open, and the best place to sit and have a cup of coffee while using your laptop with access to a power outlet.   There are the familiar faces, and the opportunities in crowded waiting rooms to comfort people whose loved one is in for surgery.

And everywhere there is a depth of humanness and kindness, a forebearance for one another and a common sympathy that is all too rare in the hustle and bustle of life. There are the angels who help the disabled to make their visits for some meager payment, many of them from the Caribbean. It is interesting to speak with them and to hear their stories, and to learn about their families back home.  And to thank them for what they are doing for 'the least of these.'

In its sadness even such trials impart their beauty, and show the resilience of faith and creation. 

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Rally Time For the Doomed

Stocks popped hard from a relative extreme of VIX riskiness, as a new offer from the House Republicans gave the markets hope that the debt ceiling on October 17 may be deferred for six weeks.

Let's see how this works out. All the other problems and fundamentals remain, but it is perilous to trade thin volume markets that are running on event driven news.

One day its all gloom and doom, and the next day its all coming up roses and blue skies again.

The pros like volatility and the brokerage houses like transactions and leverage.   Its a fraud thing.

P.S. I hear that President Obama has turned down the offer of a six week extension on the debt ceiling.

Have a pleasant evening.

NAV Premiums Of Certain Precious Metal Trusts and Funds

Tough hit on the PM's today, especially in the thinner after hours trade.

Matières à Réflexion For Tuesday 9 October

Google has repaired the problem with the sidebar, so its back to the usual format.

"He who makes a beast of himself gets rid of the pain of being a man."

Samuel Johnson


“Truly, this earth is a trophy cup for the industrious man. And this rightly so, in the service of natural selection. He who does not possess the force to secure his Lebensraum in this world, and, if necessary, to enlarge it, does not deserve to possess the necessities of life. He must step aside and allow stronger peoples to pass him by.”

Adolf Hitler

For Wednesday, 9 October

Fiscal Talks Set; Republican Approval Rating Falls To Lowest In History

Twitter's Shady Accounting (Anything else would have made them the oddball in the crowd.)

The Default Deniers (In fairness there is a lot of goofiness being tossed around by people with no sense of what 'full faith and credit' means, especially to those not under their control.)

Single Payer Prescription For What Ails Obamacare - Amy Goodman (I think Obama et al understand this. I think the chances of getting it into law and accepted was about zero. Notice the grief the country is getting for a compromise that was previously generated by a conservative think tank Heritage House.)

Chicago Trader Mosley Enters Plea Deal For Ten Years In Prison

Grayson Says Fed Should Simply Monetize US Debt By Cancelling It (Gee, now why didn't anyone else ever think of such a clever solution, John Law edition)

Imports from US and Switzerland to Hong Kong 300 tonnes In August

India Gold Refineries Shutting Bulk Operations Due to Lack of Supply

Hank Greenberg: Notes from the Fully Entitled Pigosphere

Who Might Benefit From a US Credit Default? - Tavakoli

Stevie Cohen Weighs Plea Deal in Insider Trading Case

Goldman Buys Gold After Panicking Speculators - TFerguson

Ecuador May Take Assange Case to World Court

Experiment Puts Auditing Model Under Scrutiny - MIT (What a surprise. And how about those Ratings Agencies.)

Why the War On Poor People? (Why do self-entitled sociopaths and narcissists pick on the weak?)

Hedge Funds Dumping Mispriced Credit Risks and Dodgy Debt on Small Investors

Republican Crazy Talk About the Debt Ceiling - Reich (I include this not because I think it likely or even agree, but it does point out that this *could* end in a Constitutional crisis that few anticipate. But few anticipated WW I or the mass murder of 'unworthy lives' even as it unfolded. Part of the problem is that in times of stress, people retreat into the self-defining worlds of Fox News and MSNBC in order to stop the pain of thinking.)

Cameron Backs MI5 Chief That Snowden Aids Terrorists (Be afraid, be very afraid)

Greenwald: Canada's Spying 'Aggressive and Insidious'

Gold Daily and Silver Weekly Charts - G20 Central Bank/Finance Meeting in Washington Tomorrow

“Above all, don't lie to yourself. The man who lies to himself and listens to his own lie comes to a point that he cannot distinguish the truth within him, or around him, and so loses all respect for himself and for others. And having no respect he ceases to love.”

Fyodor Dostoyevsky, The Brothers Karamazov

As a reminder, the G20 finance ministers and central bankers will be meeting in Washington DC starting tomorrow 10 October for a two day meeting.  They will be continuing the discussions of changes to the international financial architecture and banking system.

There was a 31,000 oz. deposit made to customer storage at HSBC yesterday, and one bar of bullion was moved from customer to deliverable status at JPM.

Today was the usual slap and cap, wherein gold is hit early and then held down for the rest of the NY trading day, rebounding a bit in the afternoon.

It turns out that in August there were 300 tonnes of gold bullion shipped to Hong Kong from the US and Switzerland. The game is afoot.

Let's see how the debt ceiling discussion fares as it seems to be the big market driver now. Expect the lies and hysteria to get thicker as the date grows closer. There is a slim chance that this amounts to a serious crisis other than the usual deterioration of nearly everything from systemic corruption, but there is a chance.  

People offer their fears to all the wrong things, to their false gods.  They live in constant fear of phantoms, in service to their pettiest vanities.  If we only knew.  But we don't, we don't open our minds and hearts, even though God has sent Moses and the prophets to warn us.

How terrible it would be, to hear those awful words.

Weighed, and found wanting.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Edgy Trade, Light Volume, As Usual

I think the slogan for the US might become 'we reject your reality and substitute our own.'

At least I heard that expressed about twenty or thirty times on Bloomberg television today, and too often from the mouths of guest economists.

Is there something in the water, or the phases of the moon? While driving to and from the hospital today I saw more foolishly aggressive driving from people than I have seen in some time. And I am not fussy or unused to busy roads. This was almost gratuitous aggression, speeding up to cut other people off and gain nothing, and I am not even counting those who were obviously texting.

Have a pleasant evening.