03 August 2012

SP 500 and NDX Futures Daily Charts - Rally On the Technicals


'Better than expected' Non-Farm Payrolls number, but meaningless in itself, except as another data point in a weak recovery and a sideways trend in jobs after an initial recovery from a horrendous loss of employment a few years ago.

But today's rally did provide the jokers an excuse to rally the markets and hammer those who took shorts ahead of the number expecting something worse.

This market is heavy with technical action and being hollowed out by lack of genuine investor participation. It will end badly, and everyone will be surprised. The only question is how many times Ben will feed it with monetary subsidies.

See you Sunday evening.



Net Asset Value Premiums of Certain Precious Metal Trusts and Funds


The premiums on silver, especially on PSLV, remain modest by historical standards.

The Gold/Silver ratio remains somewhat high at about 58.

This 'lean' towards gold suggests that the markets see rough monetary and overall market waters ahead.

Let's see if this trend continues and obtains more validity.

Chris Hedges On the Current State Of Journalism and Post-Literate Society - The Age of Spectacle


"In our age, the idea of intellectual liberty is under attack from two directions. On the one side are its theoretical enemies, the apologists of totalitarianism, and on the other its immediate, practical enemies, monopoly and bureaucracy. Any writer or journalist who wants to retain his integrity finds himself thwarted by the general drift of society rather than by active persecution. The sort of things that are working against him are the concentration of the press in the hands of a few rich men, the grip of monopoly on radio and the films, the unwillingness of the public to spend money on books...

Wherever there is an enforced orthodoxy — or even two orthodoxies, as often happens — good writing stops. This was well illustrated by the Spanish civil war. To many English intellectuals the war was a deeply moving experience, but not an experience about which they could write sincerely. There were only two things that you were allowed to say, and both of them were palpable lies: as a result, the war produced acres of print but almost nothing worth reading...

The enemies of intellectual liberty always try to present their case as a plea for discipline versus individualism. The issue truth-versus-untruth is as far as possible kept in the background...

The organized lying practiced by totalitarian states is not, as is sometimes claimed, a temporary expedient of the same nature as military deception. It is something integral to totalitarianism, something that would still continue even if concentration camps and secret police forces had ceased to be necessary...

Totalitarianism, however, does not so much promise an age of faith as an age of schizophrenia. A society becomes totalitarian when its structure becomes flagrantly artificial: that is, when its ruling class has lost its function but succeeds in clinging to power by force or fraud. Such a society, no matter how long it persists, can never afford to become either tolerant or intellectually stable.

It can never permit either the truthful recording of facts or the emotional sincerity that literary creation demands. But to be corrupted by totalitarianism one does not have to live in a totalitarian country. The mere prevalence of certain ideas can spread a kind of poison that makes one subject after another impossible for literary purposes.

Totalitarianism demands, in fact, the continuous alteration of the past, and in the long run probably demands a disbelief in the very existence of objective truth. (cf. truthiness - Jesse)

Meanwhile, totalitarianism has not fully triumphed everywhere. Our own society is still, broadly speaking, liberal. To exercise your right of free speech you have to fight against economic pressure and against strong sections of public opinion, but not, as yet, against a secret police force. You can say or print almost anything so long as you are willing to do it in a hole-and-corner way.

But what is sinister, as I said at the beginning of this essay, is that the conscious enemies of liberty are those to whom liberty ought to mean most. The big public do not care about the matter one way or the other. They are not in favour of persecuting the heretic, and they will not exert themselves to defend him. They are at once too sane and too stupid to acquire the totalitarian outlook. The direct, conscious attack on intellectual decency comes from the intellectuals themselves."

George Orwell, The Prevention of Literature, 1946

I feel compelled to say an explanatory word or two about Chris Hedges at this point, about what it is that I 'like' about him, and to answer a couple of inquiries about why some others prefer to ignore him, besides the usual suspects as they say.

As I have said previously, politically I am almost a perfect centrist, in the classical sense of the term. I say this after having taken yet another 'objective test' to place myself on the political spectrum. I do not hold this out as anything of significance other than to say, this is pretty much where I come out, where I am in my thinking at this stage in my life. It is a hard place to be, because one sees the world in shades of grays, in all its complexity, without the comfort of easy forms in black and white. It requires quite a bit more thought and effort than most can afford.

Hedges is a socialist, self-admittedly. And I am not. I am a believer in markets, but in sound regulation of them by an objective, publicly controlled organization, much like a referee or umpire, who transparently enforces the rules which are clear and fair to all. Why? Because people always and everywhere will cheat, some much more readily than others. The meme of naturally efficient markets is a classic 'big lie.'

I believe that widely dispersed, practical rules of organization and decision making within a greater context of general principles are far superior in their effectiveness in the distribution of resources that any sort of central planning, of the right or of the left. As Acton once said, 'no class is fit to govern.' So I like decision making that is broadly based, and subject to compromise. I think the rewards and punishments of the market are an effective stimulus to productive behaviour, provided that the rules do not become slanted by the power of an inequality propagated by cheating.

But I also see that rules alone cannot embody wisdom. There is a need for the conscious hand of humanity to guide the legendary 'invisible hand of the market.'

So I like Hedges, because what he says brings me back to center, even though he is further left. That is how bad things have become in this age of austerity, the willfully immature, and the false bravado of the destructively greedy and ideologically irrational. The western nations have moved and are still moving to the Right, as they did in the 1930's. As corruption enervates the old order, as empires once again crumble, we are re-entering the Age of Spectacle, the time of fire.

And if you stay in place, at the center, you have the false feeling of 'moving left,' relatively speaking. It has become noticeable especially when one compares the Right to their forbears of even ten years ago.

Hedges irritates some of the sacred orthodoxies of the Right without a doubt and to say the least since they are the epitome of intolerance. But he also disturbs the Left, who can be as inflexible and censorious as the Right which they hold in utter disdain for those very qualities. And he tweaks their nose on it, which is doubly irritating for those who are currently not in power.

Hedges has an absolutely wonderful description of this phenomenon of the unseeable center in describing the debates he had with both the new religious right, and the irreligious neo-atheists. The relativity of their extreme views distorts all of their perceptions, so that to both groups, Hedges the religious moderate becomes anathema, for similar reasons of intolerance and vanity.

I think that western society has gone off the tracks, in a loosely cyclical manner, by adopting an unsustainable set of priorities. Rather than forming policies to support the general good of the people, they have instead adopted the objective of the 'greatest good' where that implies the maximization of profit, but for a select few. That was a fateful decision, and I mark it somewhat loosely from 1987 for a number of reasons, not the least of which was the bailout of Wall Street by Alan Greenspan. It had its cultural resonance in the theaters.
"The richest one percent of this country owns half our country's wealth, five trillion dollars. One third of that comes from hard work, two thirds comes from inheritance, interest on interest accumulating to widows and idiot sons and what I do, stock and real estate speculation. It's bullshit. You got ninety percent of the American public out there with little or no net worth.

I create nothing. I own. We make the rules, pal. The news, war, peace, famine, upheaval, the price per paper clip. We pick that rabbit out of the hat while everybody sits out there wondering how the hell we did it. Now you're not naive enough to think we're living in a democracy, are you buddy? It's the free market. And you're a part of it. You've got that killer instinct. Stick around pal, I've still got a lot to teach you."

Gordon Gekko, Wall Street, 1987
This situation, and history, has a lot to teach us indeed, and I think those lessons have only just begun in earnest.

This historically recurrent principle of the greatest greed rather than the greatest good is killing us. There should be no doubt that it will revert to the mean, a balanced society, once again, but that reversion may be painful, and bloody, if history is any guide. But this too shall pass.

I like to include historical quotes in these pieces, like the extended Orwell quote above, not only to illustrate the situation using powerfully resonant words from greater writers than myself, but also, in a Socratic way, to infuse the quiet understanding that every generation fights perhaps not the same, but similar, battles against ignorance, greed, intolerance, mean-spiritedness, carelessness, lawlessness, fear, hysteria, betrayal, hatred, and apathy.

And so there is hope, always.

We are not facing anything new, anything insurmountable,  but rather the same old enemy, the principalities and powers, the rulers of the darkness of this world, and the ancient spiritual wickedness in high places.  And that is the basic plot line of all human history.

And so we will write our own particular chapter in human history and the book of life, and thereby be remembered by our children and our grandchildren, and perhaps by those who interest themselves in all things human, for all time.





I have to note, most strongly, that the same principle of objectifying the other as a prelude to oppression and the language of violence is a tool of both the extreme right and the extreme left.  Their inflexibility and intolerance of differences in the individual virtually indistinguishable, and in every case is used to justify violence and murder.



I include this clip below in particular because he is describing 'the economic hitmen coming home to roost' which has been a forecast and an image I have used for quite a few years.  And it is happening now, predominantly in parts of Europe, but very much in the US and the UK.  The move on from victim to victim, their ravening hunger insatiable.



As they become more extreme, belief systems tend to resemble their putative opposites more closely, and the center becomes almost imperceptible, if noticed at all and not merely held in complete disdain.



02 August 2012

Word For the Day: Modalities


"The adherence of governments to their commitments and the fulfilment by the EFSF/ESM of their role are necessary conditions. The Governing Council, within its mandate to maintain price stability over the medium term and in observance of its independence in determining monetary policy, may undertake outright open market operations of a size adequate to reach its objective.

In this context, the concerns of private investors about seniority will be addressed. Furthermore, the Governing Council may consider undertaking further non-standard monetary policy measures according to what is required to repair monetary policy transmission. Over the coming weeks, we will design the appropriate modalities for such policy measures."

The folks at Bloomberg TV apparently were dumbfounded about the meaning of the word 'modalities' in this sentence. The closing hour anchor, an affable Princetonian, complained that he had called around and could not 'find anyone who understands what this means.'

Modalities means procedures, the processes by which things are done in a more than casual arrangement. It is more commonly used in a medical or official diplomatic context.

So in this case, Monsieur Draghi was saying that 'over the coming weeks, we will hammer out all the processes and procedures and agreements to support a plan.'

They may not GET those agreements, but that is all a part of the hammering process I would imagine. But they did not say that they did not believe him, or doubted his ability to accomplish this, but rather, they just did not know what the word meant which was a little embarrassing for a major US news outlet that is presumably English speaking.

I hope this helps to promote higher quality in broadcast journalism. The word is not all that obscure. The print (read literate) portion of the Bloomberg organisation used it in a headline not all that long ago. India, Pakistan Agree on Modalities for Border Trade in Kashmir. And closer to home, there is an actual stock named "Modern Medical Modalities."

Now I suppose it is likely the young man was coyly playing ignorant to make a point, since he is generally one of the more intelligent commentators on American financial television, and one of the few at Bloomberg TV who can form a declarative sentence without aggressively prefacing it with the word, "Look."

Still, it sounded a sour note to plead such ignorance after an entire day in which one could have used a tool that is now widely available and quite often a great help. It is known as 'google.'