On This Morning's Worse Than Expected Economic News...

It looks like those 'green shoots' which Bernanke saw were, in fact, merely fungus growing on the rot of the economy which the Federal Reserve has engineered through long term manipulation, mismanagement, and malinvestment.

People without jobs, and in particular jobs that pay well, are not able to buy consumables and take on additional credit, much less service the debt which they have on things which they have already consumed. Mirabile dictu!

U.S. stocks tumbled on Wednesday as worse-than-expected retail sales hurt shares in the sector, including Wal-Mart Stores Inc, and dampened recent enthusiasm over the economic outlook.

Government data showed sales at retailers fell for a second straight month in April, after a string of more upbeat reports suggested a turning point in the economic cycle.

And the prices of imports and 'real goods' are increasing as the dollar and financial assets continues to collapse.

We remember the stagflation of the 1970's very well. If you did not experience it as an adult with financial obligations it will be a new and instructive experience in monetary policy and the fallibility of economists and financial engineering.

The U.S. Import Price Index rose 1.6 percent in April. A 15.4 percent increase in import petroleum prices more than offset a 0.4 percent decline in the price index for nonpetroleum imports. Export prices also rose in April, increasing 0.5 percent.

Its too early to forecast for stagflation, but it remains a very realistic outcome.

The US Dollar Rally Will End in a Crisis of Confidence

The constraint on the monetization being done by the Fed and Treasury is the value and acceptibility of the US dollar and bonds.

Export dependent countries should begin to prepare for a collapse in the US import markets. We expect this to happen earlier than 2010.

The invisible hand of the market moves slowly, but inexorably.

We expect this crisis in the US will resemble the crises in Argentina and Russia rather than Japan. The pain will be distributed heavily to those countries dependent on US dollar debt and consumer markets.

Nassim Taleb likes the protection of gold and copper. We prefer gold and silver, as it will be more difficult to increase its supply in the short term.

There will be serious discussion with regard to the annexation of Canada and Mexico into a North American government as the crisis worsens. Mexico should adopt a silver monetary standard and Canada must find its own economic independence again as it did in the Great Depression.

There is a strong likelihood that Obama will be a one term president at most unless he acts quickly to reform the growing corruption in the Democratic Party and within his own Administration.

Dollar Rally Will End, Rogers Says; May Short Stocks
By Chen Shiyin and Haslinda Amin

May 12 (Bloomberg) -- The dollar’s rally is set to end in a “currency crisis,” investor Jim Rogers said, adding that he may bet on a slide in equities after nine weeks of gains.

The advance in the U.S. currency has been driven by investors covering their short sales, Rogers, 66, said in an interview with Bloomberg Television in Singapore. He may consider adding to his holdings of the yen and prefers the euro to the dollar or the pound, the investor added.

“We’re going to have a currency crisis, probably this fall or the fall of 2010,” Rogers said. “It’s been building up for a long time. We’ve had a huge rally in the dollar, an artificial rally in the dollar, so it’s time for a currency crisis.”

The dollar has climbed against all of the so-called Group of 10 currencies except the yen over the past 12 months, according to data compiled by Bloomberg. The U.S. currency was at $1.3592 per euro today from $1.3582.

Rogers joins “Black Swan” author Nassim Nicholas Taleb in avoiding the U.S. currency. Taleb told a May 7 conference in Singapore he preferred gold and copper to the dollar and the euro as the global economy faces a “big deflation.”

Gains in U.S. stocks also signal a “correction,” Rogers said. He’s avoiding equities for the next two to three years because prospects haven’t changed, he added.

Disclosure: Jesse is long gold and silver.

SP Futures Hourly Chart at 3:30 PM

Don't Ask Why, Just Buy

The message on Bloomberg Television this morning is loud and clear: "Don't ask why, just buy."

The chief message carrier was a Mr. Brian Belski of Oppenheimer, who suggested that trying to analyze the markets for yourself is a waste of time. Just listen to the experts.

We have a new bull market. Who cares whether it is cyclical or secular. Let's just be happy that the worst is now behind us, and frankly, just buy.

Brian is representing the notion that any sort of gain over 20% is a new bull market.

Well Brian, here's your new bull market. Maybe it will become one. But from this perspective it is just a typical bounce within a powerful bear market. It must prove itself.

So far this looks like hot money from the public (taxes) trying to push up the shell of the Ponzi credit bubble while the insiders continue to hit the exits.

And we do not care what anyone says, the fundamentals are rotten. They are just not falling apart as quickly now after a precipitous revelation of the truth behind the facade of statistical manipulation. There are no green shoots, and there is no recovery.

There has been little or no reform. Just a fresh smear of lipstick on the same old pig, applied by the swineherds of Wall Street and Washington.




And in the meantime, let's buy some gold, silver, food, critical supplies, and party on...








Burn your credit cards, honor your family and friends friends, give to God what is His, live within your means.