SP 500 and NDX Futures Daily Charts - Low Volume Jibber Jabber

Most of the action in the equity markets was a 'technical trade' because the punters are edgy to take serious positions while the US government's sovereign debt is being held in what is essentially a hostage situation by a minority in government, that does not like the existing healthcare law, but does not have the votes and the sanction of the people to do anything about it other than threaten the US credit rating.

Like a lot of people I thought that a single payer system made much more sense than an extension of the private healthcare insurance monopolies.  But that was not in the cards, and so a compromise was reached.  And now the parties who don't like the compromise which to hold the government debt hostage while they try to get their way.  This is not government.  One could accept civil disobedience amongst private citizens, but in lawmakers it is embarrassing and unseemly.

And I do not believe for one minute that this hostage taking is in the genuine interest because they believe that the law will harm the country. Think about it. They are saying that we think this is going to harm the country, so we will harm the country first, and in a potentially more substantial way. How nuts is that?

No, they are afraid that the law will work, and people will come to accept it. If they really thought it would fail, they should allow it to go forward, with protests, and then use it as a bludgeon on the Democrats in the 2016 election. That is a more usual course of political strategy.

The Banks do the same thing. Regulate us, pass laws that we do not like, and we will crash again and take the system down. That is what comes of a period when the government sets a bad example and its light regard for the law begins to promote anarchy.

Let's be clear on this. No one in Washington is looking particularly good these days. None of them save a few and they face a formidable task, with harsh criticisms rather than support coming from those who would most likely be their supporters, but have given themselves over to lashing out in their frustration.

So let's see how this plays out, as it comes to a head next Tuesday. We will likely see the adults enforce some rational outcome after the players have played their histrionic tune on television for their base.

Have a pleasant evening.

The Financial States of America and Why the European Union Is Inherently Unstable

I am including this because it shows the economic diversity in growth and wealth amongst the States.

And they all function under a common currency. Why does this work whereas the Eurozone is having such problems?

That is because with a common currency union, a political and fiscal union are required as well. This is a hard lesson from monetary theory and history.

When you have a fiat system with a central authority setting policy according to economic conditions over a geographic area in which there is diversity, there must be fiscal policy and transfer payments to 'even out' the effects of that monetary policy.

That is why the European Union is inherently unsustainable, because it is a monetary union without a public policy and fiscal union.

The EU cannot possibly create the appropriate single government, without undue hardship. So they must consider allowing the individual countries or regions to conduct their own monetary policy and have their own currency and exchange rates.


Source: Financial States of America

This chart is from Moneychoice.org.  They are responsible for the data and the figures. 

Gold Daily and Silver Weekly Charts - CFTC Sees Nothing and Moves Along

As you most likely have already heard, the CFTC announced today that they have closed their five year investigation into manipulation in the silver market without further comment except that they have seen nothing.

I was disappointed but not surprised, since the regulators and politicians in the US and the UK are deeply wound in a credibility trap. Intraday commentary on that here.

It appears that JP Morgan is embroiled in a settlement over mortgage debt antics that is now rumoured to be in the $11 billion range for this one investigation alone.

As you know, September is considered a non-active delivery month, even though there is the usual delivery schedule as I have posted it below.    Can anyone tell me exactly why it is that some months, like August, October, and December are active delivery months and September and November are not?  I am quite curious.  I doubt it is just custom, and must have some basis in the rules. 

I asked several old gold hands today who certainly know more about the gritty details and they could not say, other than that some months are active in the futures, and others are more active in delivery.  The exception is December which is active in both.  If you know of some specific reason I should like to hear it.

Note: Since no one responded I spent some time and found the answer on the CME site here:

"Trading is conducted for futures contracts with delivery in February, April, June, August, October and December, falling within a 24-month period."

So let's see this last week of September pass, and look forward to October, wherein the rather thin inventory at the COMEX may be in for another run through the gauntlet of real things.

Speaking of real activity in real things, there was little activity in the COMEX bullion warehouses yesterday, with just 30 bars of customer gold being received at the Scotia Mocatta warehouse. 

It appears that the five tonnes withdrawal from the day before has not shifted to another COMEX domain but has said sayonara, and gone to other climes, perhaps not to return for some time and higher prices.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Marking Time Before the Budget Showdown

Stocks were meandering around today, without much conviction, as the comedy of modern government played out in the US capitol.

I expect that the budget showdown will come to little or nothing, more symbolic than substantial, but it might not. And so like the markets I sit and wait, hoping for the best but prepared for the worst.

But the same can be said of so many more important things that the bloviated egos of pompous and distant men and women.

Have a pleasant evening.