17 January 2013

If You Remember Nothing Else About the Financial Crisis, Remember This


Few knowledgeable people talk about the need for financial reform anymore, just a few short years after the financial crisis and collapse.

The right talks about getting tough on the weak and settling old scores, and the left is losing its way in obtuse gimmickry and quack economics that promote their own statist agendas. Pile enough rancid margarine on the bread and you won't see its thinness or the mold.

The broad center, independents, and progressives are largely silent, having averted one almost certain disastrous choice in the most recent national election, only to find themselves still on unsteady ground with a weak and wavering 'champion' who may once more betray their trust for his own interests, and the deal.

And yet this is not nearly our darkest hour. That may be yet to come.

All the reform that has occurred so far has been largely window-dressing. Financial and political corruption is a tax that the real economy cannot support or endure while remaining free.

 Until there is substantial reform, there will be no sustainable recovery. This is only the appearance of recovery in the empire of illusion.

"From 1973 to 1985, the financial sector never earned more than 16 percent of domestic corporate profits. In 1986, that figure reached 19 percent. In the 1990s, it oscillated between 21 percent and 30 percent, higher than it had ever been in the postwar period. This decade, it reached 41 percent.

Simon Johnson, 13 Bankers


"The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises.

If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time."

Simon Johnson, The Quiet Coup


Gold Daily and Silver Weekly Charts


It is interesting to see stocks and the metals moving back together again.

I would very much like to see gold and silver return to and take out the pre-December levels. And if there is a stock market correction I would like even more to see a divergence and a flight to safety in the precious metals.

So far gold has made a bottom at a 60% correction off the prior range, aka the 'cup.' Yes, I am still keeping an eye on that one.

So let's see what happens.



SP 500 and NDX Futures Daily Charts - Managed Volatilty at Relative Complacency


Things were coming up rosy today as housing starts and new unemployment claims had the bulls snorting, even while they shook off the Philly Fed.

Intel turned in mediocre results after the close, except perhaps for gross margins.

Complacency is not quite the word for this market overall.

Take a look at the VIX chart at the bottom, and the Relative Strength Index which has flatlined since the first of the year.

Perceived volatility is well-managed, but for how long, by whom, and why?

I do tend to think this is a 'pool operation' as a set up for a takedown, but one cannot be sure. I don't think it is anything official or quasi-monetary, but time will tell.





The View of the US From Glennbeckistan


Or RushLimbonia for that matter.



And then there is the view from the borderless one percent.