Gold Daily and Silver Weekly Chart - The Vicious Cycle of Fraud and Corruption

A virtuous cycle and a vicious cycle (also referred to as virtuous circle and vicious circle) are economic terms. They refer to a complex chain of events that reinforces itself through a feedback loop. A virtuous circle has favorable results, while a vicious circle has detrimental results.

Both circles are complexes of events with no tendency towards equilibrium, at least in the short run. Both systems of events have feedback loops in which each iteration of the cycle reinforces the previous one.

These cycles will continue in the direction of their momentum until an external factor intervenes and breaks the cycle.

Rather than a virtuous cycle, which is what was being touted as the new thing on financial TV today, after six long years of stagnation after the financial crisis, I think we are in a vicious cycle. Or perhaps, given the times, a malignant cycle. 

This is because of, and one of the reasons for, the lack of reform in the political and financial systems. The corruption is propagating itself. I am not sure the ruling elite understand what they are doing, or even care. 

The Fed is giving boatloads of low cost money to their well-heeled cronies, who are using it to buy up assets, continue to fund their control frauds, and raise prices on select necessities like housing, medicine, energy and food.

The one percent are having a good time, and live relatively insular lives.  Careerism and the credibility trap keep them and their servants silent on the things that matter.

As confidence fades, force will increase, until something eventually changes.

And the love of many will grow cold.

Have a pleasant evening.

Related: We Are Seeing An All-Out Defense of the Status Quo

"The great danger in today’s world, pervaded as it is by consumerism, is the desolation and anguish born of a complacent yet covetous heart, the feverish pursuit of frivolous pleasures, and a blunted conscience. Whenever our interior life becomes caught up in its own interests and concerns, there is no longer room for others, no place for the poor. God’s voice is no longer heard, the quiet joy of his love is no longer felt, and the desire to do good fades.

This is a very real danger for believers too. Many fall prey to it, and end up resentful, angry and listless. That is no way to live a dignified and fulfilled life; it is not God’s will for us, nor is it the life in the Spirit which has its source in the heart of the risen Christ.

There are Christians whose lives seem like Lent without Easter. I realize of course that joy is not expressed the same way at all times in life, especially at moments of great difficulty. Joy adapts and changes, but it always endures, even as a flicker of light born of our personal certainty that, when everything is said and done, we are infinitely loved.

I understand the grief of people who have to endure great suffering, yet slowly but surely we all have to let the joy of faith slowly revive as a quiet yet firm trust, even amid the greatest distress: “My soul is bereft of peace; I have forgotten what happiness is… But this I call to mind, and therefore I have hope: the steadfast love of the Lord never ceases, his mercies never come to an end; they are new every morning. Great is your faithfulness… It is good that one should wait quietly for the salvation of the Lord.”

Jorge Mario Bergoglio, Francis I, Evangelli Gaudium

SP 500 and NDX Futures Daily Charts - Not Such a Terrific Tuesday - Hello Alibaba

“Our lives begin to end the day we become silent about things that matter.”

Martin Luther King

The usual 'Terrific Tuesday' equity pattern for 2014 did not work out today, as stocks sold off on widespread weakness.

David Einhorn provided some of the more insightful and intelligent comments on the markets today that I have heard from Wall Street in some time. 

The big tickle after hours is the news that the Alibaba IPO is ready to be shoved out the door.  This ought to provide plenty of incentive for the underwriters to prop up the markets, and make hay while the sun shines.   The lipstick is being applied, and the sales pads are open.

The US financial system is a house built on sand. 

Have a pleasant evening.

Gold Daily and Silver Weekly Charts - Morgan Stanley's Premature Capitulation - Fashionable Fraud

"Defenseless under the night
Our world in stupor lies;
Yet, dotted everywhere,
Ironic points of light
Flash out wherever the Just
Exchange their messages:
May I, composed like them
Of Eros and of dust,
Beleaguered by the same
Negation and despair,
Show an affirming flame.”

W.H. Auden, September 1, 1939 


"You should thank God for bank bailouts. Now, if you talk about bailouts for everybody else, there comes a place where if you just start bailing out all the individuals instead of telling them to adapt, the culture dies...

There's danger in just shoveling out money to people who say, 'My life is a little harder than it used to be.' At a certain place you've got to say to the people, 'Suck it in and cope, buddy. Suck it in and cope.'"

Charlie Munger

As you may recall it was reported last week that Morgan Stanley was predicting that gold would never see $1300 again, having failed to take out that level so many times and then fallen back to 1280. That is the headline that Mining.com was carrying at least, although that is not exactly what they said according to the quotes, which were still rather bearish to say the least.

I am waiting for a breakout and confirmation from what is an obviously tight range around the 100 and 200 DMAs.  Since I believe that gold and silver are very manipulated markets these days, with semi-official sanction at the least, I am not willing to place any faith yet in the technicals that seem to indicate a bottom has been made.

Silver is struggling in particular, and gold gets batted around on the Comex in the off hours with almost reckless abandon, or audacious arrogance if you prefer. 

The divergence and manipulation between the paper markets and the physical markets is real, obvious to anyone who has eyes to see, and more widespread than the media will seemingly admit.  from energy to interest rates, from currencies to precious metals.

And that will end, badly.  It will hasten the demise of the existing financial order.  And there is both risk and opportunity in this change.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Earnings, Geo-politicals, Median Wage and Demand

“I live in the Managerial Age, in a world of Admin. The greatest evil is not now done in those sordid 'dens of crime' that Dickens loved to paint. It is not done even in concentration camps and labour camps. In those we see its final result.

But it is conceived and ordered (moved, seconded, carried, and minuted) in clean, carpeted, warmed and well-lighted offices, by quiet men with white collars and cut fingernails and smooth-shaven cheeks who do not need to raise their voices.

Hence, naturally enough, my symbol for Hell is something like the bureaucracy of a police state or the office of a thoroughly nasty business concern."

C.S. Lewis, The Screwtape Letters, Preface

The CEO types who make up the managerial elite do not have enough substance to be called 'evil.' We live in an age of greedy, morally ambivalent Eichmanns, and so fraud and lies and a carelessness of character are the fashion at the top.

The big drivers of the market right now are the geopolitical issues, especially the Nato-Ukraine-Russia unrest, the individual earnings of companies, and for the longer term the median wage and the growth and stability of aggregate demand.

And underlying all this is a pool of liquidity that the Fed is handing out at virtually no cost to their friends in the financial sector.

That pretty much states the outlines of the field, and the line markers.

I see quite a few risks to the markets, and to the economy of the world overall. We seem to be reaching the extremes of the longer trend in crony capitalism that obtained traction during the 1980's, in the US and in England in particular.

This is the big 'ebb and flow' underlying current events. The turning point is a long time coming, but once it comes it may happen more quickly than we might otherwise expect, given the long, slow lead time to change. This is why it will catch so many unawares, like the tsunami that never seems to actually come despite warnings, but when it does, surprises many.

Have a pleasant evening.