Stocks and Precious Metals Charts - Images and Shadows - Dueling Jawbones

 

"And must there not be some art which will effect conversion in the easiest and quickest manner; not implanting the faculty of sight, for that exists already, but has been turned in the wrong direction, and is looking away from the truth?"

Plato, Republic: Allegory of the Cave

"To reduce a complex argument to its bare bones, [Sheldon Wolin, 'Inverted Totalitarianism'] since the Depression, the twin forces of managed democracy and superpower have opened the way for something new under the sun: 'inverted totalitarianism,' a form every bit as totalistic as the classical version but one based on internalized co-optation, the appearance of freedom, political disengagement rather than mass mobilization, and relying more on 'private media' than on public agencies to disseminate propaganda that reinforces the official version of events.

It is inverted because it does not require the use of coercion, police power and a messianic ideology as in the Nazi, Fascist and Stalinist versions (although note that the United States has the highest percentage of its citizens in prison of any nation on Earth).

The main social sectors promoting and reinforcing this modern Shangri-La are corporate power, which is in charge of managed democracy, and the military-industrial complex, which is in charge of superpower. 

The main objectives of managed democracy are to increase the profits of large corporations, dismantle the institutions of social democracy (Social Security, unions, welfare, public health services, public housing and so forth), and roll back the social and political ideals of the New Deal.  Its primary tool is privatization [and deregulation].

One other subordinate task of managed democracy is to keep the citizenry preoccupied with peripheral and/or private conditions of human life [culture wars] so that they fail to focus on the widespread corruption and betrayal of the public trust.

Among the commonplace fables of our society are hero worship and tales of individual prowess, eternal youthfulness, beauty through surgery, action measured in nanoseconds, and a dream-laden culture of ever-expanding control and possibility, whose adepts are prone to fantasies because the vast majority have imagination but little scientific knowledge.  Masters of this world are masters of images and their manipulation.

Toward the end of his study he [Wolin] produces a wish list of things that should be done to ward off the disaster of inverted totalitarianism:  'rolling back the empire, rolling back the practices of managed democracy; returning to the idea and practices of international cooperation rather than the dogmas of globalization and preemptive strikes; restoring and strengthening environmental protections; reinvigorating populist politics; undoing the damage to our system of individual rights; restoring the institutions of an independent judiciary, separation of powers, and checks and balances; reinstating the integrity of the independent regulatory agencies and of scientific advisory processes; reviving representative systems responsive to popular needs for health care, education, guaranteed pensions, and an honorable minimum wage; restoring governmental regulatory authority over the economy; and rolling back the distortions of a tax code that toadies to the wealthy and corporate power.'

It is extremely unlikely that our party apparatus will work to bring the military-industrial complex and the 16 secret intelligence agencies under democratic control. Nonetheless, once the United States has followed the classical totalitarianisms into the dustbin of history, Wolin’s analysis will stand as one of the best discourses on where we went wrong."

Chalmers Johnson, A New Way of Understanding How the U.S. Is Controlled, May 16, 2008

Today's market action just made me laugh.

Fed Chairman Jay Powell and His Merry Pranksters did good work to soothe the risk markets today, doing their required 25 bp rate increase, but wrapping it well and tenderly with whispers of all the right dovish nothings.

But alas Yellen, the Iron Banker, responded to the Congress today that there were no formal plans to backstop the entire banking system by insuring all deposits fully.

Which by the way would require an Act of Congress, as if.  

These jokers are too busy trying to take away food relief for the hungry and any hopes for decent healthcare at affordable prices. 

And so after the warm Fed afterglow, the risk markets headed south in what might be termed as a 'fit of pique.'   Or  a 'hissy fit.'

Les enfants terribles of the financial system, the Banks, led stocks lower.

The Dollar dropped.

Gold and silver rallied higher.

VIX rebounded.

Let's see what tomorrow may bring.

Have a pleasant evening.

 

Stocks and Precious Metals Charts - Organized Indifference and Managed Discontent

 

"In particular, over a protracted period of good times, capitalist economies tend to move from a financial structure dominated by hedge finance units to a structure in which there is large weight to units engaged in speculative and Ponzi finance."

Hyman Minsky, The Financial Instability Hypothesis

"As Hyman Minsky once said, and the moderns seem to have forgotten, 'Anyone can create money; the problem is in getting it accepted.'   He should have added, except by force [force is bad monetary policy by other means].  Reform goes hand in hand with recovery."

Jesse, Moral Hazard of the Fed's Current Policy, 24 January 2013

"Twenty-five years ago, when most economists were extolling the virtues of financial deregulation and innovation, a maverick named Hyman P. Minsky maintained a more negative view of Wall Street; in fact, he noted that bankers, traders, and other financiers periodically played the role of arsonists, setting the entire economy ablaze. Wall Street encouraged businesses and individuals to take on too much risk, he believed, generating ruinous boom-and-bust cycles.  The only way to break this pattern was for the government to step in and regulate the moneymen."

John Cassidy, The Minsky Moment, The New Yorker, 4 February 2008

“In order that a select few might live in great opulence, millions of people work hard for an entire lifetime, never free from financial insecurity, and at great cost to the quality of their lives. The complaint is not that the very rich have so much more than everyone else but that their superabundance and endless accumulation comes at the expense of everyone and everything else, including our communities and our environment.”

Michael Parenti

"If we are indeed in a Minsky Moment, which we think we are, then monetary inflation by the Fed and government intervention without reform will most likely increase the probability of a protracted stagflationary repression in the United States, and possibly lead to civil unrest and an exogenous [compelled] reform of the system.  An abandonment of the system as it is with a turn to fascism has been the historic choice of Wall Street.  The political lobbying against systemic reform by the Bankers and their sycophants will be intense and as persuasive to the many as most appeals to fear.  However, their reckless advice leads to a trip to the brink of the abyss."

Jesse, Which Way Out of the Minsky Moment, 23 March 2008

Below is a video of a recent talk by Thomas Frank, one of the best historical analysts of contemporary American politics and economics.

I recommend you watch it, with the caveat that he begins by characterizing the Republican party in fairly blunt and unattractive terms.  But then he turns and savages the Clinton - Obama wing of the Democratic Party. 

Frank is a centrist.  That means in this polarized environment and partisan hysteria he probably upsets most everyone who holds to strong and implacable positions on the left and the right.

But it important to at least consider our current social and economic troubles in a new way, from a new perspective, since the old model has been consistently failing most Americans for the past 30 years.

You may not agree with it, but you can at least have it as a way of organizing your thoughts about what is happening during those idle moments when hating the 'other side' and big label boogeymen grows old.

Stocks were bubbling higher, floating up ahead of the FOMC decision tomorrow.

The Dollar chopped sideways.

VIX plummeted.

And gold and silver were nailed from first thing in the morning.

Given their recent gains a stiff correction was probably well in the cards, especially with a Fed Day approaching.

But still, it underscores the problem with applying the rules of bull stock markets and market driven commodities to the precious metals markets, which is a rat's nest of hidden leverage and manipulation of prices more in keeping with a currency.   

I expect the Fed to raise 25 bp tomorrow, but then to potentially say something idiotic and self-serving to the favored few.

So let's see what happens.

Have a pleasant evening.

Stocks and Precious Metals Charts - The Seething Brew of History in the Making

 

"When what remained of the German Republic was about to collapse, Fritz Lang made Das Testament Des Dr. Mabuse, a sort of last-ditch stand against impending disaster.  But the curtain fell before this Nero production could be released, and no sooner did the Nazis take over than Dr. Goebbels banned it. 

In his subsequent talk with Lang he expressed his delight in Metropolis, without so much as mentioning his disapproval of the new Mabuse film; whereupon Lang deemed it wise to leave Germany.  An uncut print of the film's French version, made simultaneously with the German original, was smuggled across the border and edited in France.

In 1943, when the film reached New York audiences, Lang wrote a 'Screen Foreword,' expounding his original intentions: 'This film was made as an allegory to show Hitler's processes of terrorism.   Slogans and doctrines of the Third Reich have been put into the mouths of criminals in the film. 

Thus I hoped to expose the masked Nazi theory of the necessity to deliberately destroy everything which is precious to a people.  Then, when everything collapsed and they were thrown into utter despair, they would try to find help in the 'new order.'"

Siegfried Kracauer, From Caligari to Hitler, 1947

"Is this a sign that the Germans are brutalized in their simplest human feelings, that no chord within them cries out at the sight of such deeds, that they have sunk into a fatal consciencelessness from which they may never, never awake?"

Sophie Scholl, The White Rose, Second Leaflet, Munich 1942

"The totalitarian doctrine of the state thus satisfied the various traditional partisans of German reaction: university professors, bureaucrats, army officers, and big industrialists.  It was also acceptable to the western world in general.  The situation was difficult and Hitler was prompt to use the weapon of the totalitarian doctrine. The revolution was to proceed in an orderly fashion—in so far as property, the civil service, and the army were concerned."

Franz Neumann, Behemoth: The Structure And Practice Of National Socialism 1933-1944

"When humanity, subjugated by the terror of crime, has been driven mad by fear and horror, and when chaos has become the supreme law, then the time for the empire of lawlessness will have come."

Friedrich Rudolf Klein-Rogge, Das Testament des Dr. Mabuse

The FOMC will be announcing its rate decision on Wednesday, and that may move markets.

For now expectations are for a 25 bp increase, and that is a fairly reasonable bet given the alternative downsides.

However, what the Fed and the Chairman may choose to say about the banking system, and the recent bank runs, is another potential for exogenous market impact.

Stocks had another wide ranging day, with a finish unchanged to slightly green.

VIX is a yo-yo and today it fell.

Gold and silver went out mostly unchanged.

The Dollar fell a little.

We think we are something grander than ourselves.

Soon enough we will find out where things really stand, as the tides recede.

Have a pleasant evening.