Here is an excellent review of the corrections in this gold bull market by my friend Brian at ContraryInvestor.com.
01 January 2012
Corrections In The Gold Bull Market
Here is an excellent review of the corrections in this gold bull market by my friend Brian at ContraryInvestor.com.
31 December 2011
The Most Significant Developments of 2011 with Trends in 2012
As always the four great variables in human history are weather, disease, war, and religion. The first two are of God and the latter of men.
Weather spans a wide range of natural phenomenon including earthquakes, and similarly religion includes secular movements and philosophies such as fascism and communism, essentially godless religions that involve the ordering of the relationship of the individual with a higher power that is not supernatural.
I do not address stocks, including the miners, specifically as I see that investment sector as extraordinarily risky. Tell me what the Fed and ECB will do and I will tell you how stocks will perform. That is the nature of this market. The pricing of stocks remains largely inefficient, and often with a fraudulent intent.
As I am comfortable with stagflation as an economic forecast, stocks most likely will not perform well in real terms. However, they could be targeted by the Fed as they implement nominal GDP growth and it puts more weight on selective inflation within the stagnant real economy.
Stocks tend to play the role of a variable hedge in my forecast and my own portfolio. The bigger investments are bonds, including cash which is a bond of zero duration, and alternative currencies like gold and silver, oil and income producing physical assets.
The most significant development of the past year has been revelation of fraud and the growing power of the monied interests to subvert reform and the rule of law.
1. Wall Street dropped some of its pretense to fairness and softer forms of fraud and resorted to overt theft as MF Global stole significant sums of money, bonds, and bullion assets directly from customer accounts, under the eyes of the regulators, and transferred the money to its global bankers who refused to give it back.
Trend: Theft by the financiers will continue and intensify. The victims will be vilified to blunt public reaction.
2. The Eurozone came under unremitting assault by the ratings agencies and their associated banks and hedge funds. The Euro is an inherently 'difficult' currency to manage and has always been more susceptible to broad swings in value. This is because it is an economic union without a comprehensive political and financial union. It more closely resembles the original thirteen states of the US under the Articles of Confederation than it does a comprehensive Republic.
Trend: The Eurozone will continue to struggle to find a balance between political and financial factors, and will evolve into a stronger union of fewer members. Germany and France will continue to emerge as the great Western European power. The UK will be preoccupied by its own set of severe internal problems and regional unrest as austerity bites deeply. The UK will begin to act as more of an Anglo-American agent in the Eurozone. It may take on more of the character of an Orwellian state.
3. The Federal Reserve is expanding its power as a monetary authority and regulator of the financial system in an extra-Constitutional manner. The Fed is determined to fight the deflationary forces of global trade and credit contraction by expanding its balance sheet. They have little fear of inflation. Hyperinflation is highly unlikely in the absence of an exogenous shock. Stagflation is the new normal disguised somewhat by government statistics.
Trend: The Fed will start a new program of 'nominal GDP targeting' without stated limits in size of activity, as it will be defined by the scope of its objectives. The bond bubble will continue particularly in the long end of the curve. It will falter and breakdown at some point, but this is not likely in the near term unless some external standard is imposed or exogenous force intervenes.
4. A currency war is well underway in the aftermath of the closing of the gold window and the erosion of the Bretton Woods agreement, into an uneasy floating exchange rate system known informally as 'Bretton Woods II.' This currency war manifests in currency devaluations and pegs in support of mercantilism, particularly in the developing countries. It is a form of neo-colonialism supported by the great multinational corporations.
Trend: Global trade will begin to come under greater political assault as the exchange rate mechanism fails to impose a reasonable balance on the flows of goods and capital. The SDR is the most likely replacement for the US dollar as the world migrates towards a dual currency regime with one currency for domestic only use and an international unit for the settlement of world trade. The composition of the SDR will be a major point of contention between the BRICs and the Anglo-Americans.
5. The US political process is dominated by Big Money, a system in which a small number of people choose the candidates which will be allowed on the final ballot despite great pretense of a selection process and primaries. Despite the usual emotional heat expressed by a minority on each side in any competitive process, the end result is that no candidates can be chosen without being vetted and approved by the monied interests. This tends to continue to promote and support a status quo.
Trend: There may be a third party candidate, and perhaps one other fourth party of any real significance, but the end choice will be between Obama and Romney who are the corporate candidates. Strong voter dissatisfaction will cause minority parties to secede from the two major political parties, including at least one crypto-fascist movement and one progress movement. Watch for a rising current of racism, and attempts to make prejudice socially acceptable, and a growing class hatred. There will be major riots and demonstrations each summer from now until 2020 or a return to representative government.
6. As the global monetary regime continues its change, the US dollar continues to be stretched thinly. Despite all the odds and strong opposition from Western central banks and monetary authorities, gold has sustained an eleven year bull market.
Trend: Gold is in a bull market that will last until around 2020, or until the global monetary system reaches a sustainable equilibrium with a replacement for the US dollar as the reserve currency that is acceptable to the new economic powers. Silver and gold will continue to move with significant volatility as their prices increase. Bonds are the current asset bubble. At some point this may break as the housing market has done, and this will have a negative impact for gold if interest rates on the short end turn positive. This may not happen if inflation increases faster than interest rates rise.
7. China and Russia have replaced their command and control communist economies with command and control oligarchies. The power of China is the exploitation of labor, and of Russia, natural resources. Despite their calm outward appearance, there is significant turmoil beneath the surface, often regional in nature.
Trend: The governments of the world will continue to be shaken by the restructuring of the world economy. Change and calls for reform will most often be met by repression, often harsh. The world will continue to develop into three or four spheres of influence, with the greatest unrest and limited wars on the fringes of those spheres. The most frequent conflicts will be where Europe meets Asia, and Asia meets the subcontinent.
I hesitate to put forward such a gloomy outlook, but this is in keeping with the forecast I put out in 2005 and it seems that most of the trends have occurred and even intensified. This is a period of great change, and this presents both risks and rewards.
And as always, against the backdrop of great events, while nations rise and fall, the life of the ordinary family goes on. 'There are these three things that endure: faith, hope and love, and the greatest of these is Love,' for it is the highest likeness to God in this world.
30 December 2011
Gold Daily and Silver Weekly Charts - Gold Finishes Eleventh Straight Year Higher
The metals bounced today, but were pushed down into the close on extremely light trading.
I am going to be busy preparing for New Year's Eve but I may post some thoughts on Sunday evening about the year ahead.
Have a Happy New Year everyone.
SP 500 and NDX Futures Daily Charts - SP Cash Finished Year Dead Even
Boring day overall, but the big excitement was that Wall Street was able to bring the cash SP 500 in at dead even for the year.
Have a Happy Holiday everyone. Keep in mind that the US markets are closed on Monday.
29 December 2011
Lawrence Lessig: Republic, Lost - The Quiet Coup D'etat
"Money Buys Results In Congress"
Summary: The reason for the failure of the American economy and the inability of the government to address it is because of the corruption and distortions inherent in a system where campaign contributions control the politicians and the policy, and less than one percent of the people control the vast majority of those campaign contributions and therefore the distribution of power.
Video presentation
Lawrence Lessig: Republic, Lost
"The liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than the democratic state itself. That in its essence is fascism: ownership of government by an individual, by a group, or any controlling private power.”
Franklin D. Roosevelt
This is the critical issue that will be addressed, one way or the other, across the developed world. The timing is difficult to judge because of the many exogenous factors. It could come quickly, or be over a longer period of time of many years. But in any case the result will be a mixed revival of democracy and the rapidly increasing repression of totalitarianism, in various countries at various times, similar to what the world had seen in the 1930's.
"If there must be trouble, let it be in my day, that my child may have peace.”The roles that the various countries and their alliances will play are not yet clear. But what seems likely is that the next great leader or antichrist will once again appear draped in a flag, but this time will be wearing business attire instead of jackboots.
Thomas Paine
Gold Daily and Silver Weekly Charts - Painting the Tape Red
There was intraday commentary here.
The thought is that the big metals shorts are hammering the paper prices in thin trading to 'paint the tape' for their year end mark-to-market.
It smelled like a capitulation today, but as the volumes were so thin I would not care to call it. But 1524 had the look of a bottom. Aggressive traders must be chomping at the bit.
Let's see how the year ends.
SP 500 and NDX Futues Daily Charts - Quiet Days Are Good for Painting
Very light volume day, and the tape was duly painted into the year end.
The commmentary on the financial news networks is so disassociated from reality it is almost like something out of Sunset Boulevard.
I'm ready for my closeup Mr. DeMille.
Five Charts Useful for Framing the Economic Debate in 2012
These charts are from a collection of favorite charts put together by Jared Bernstein from material put out by the Center on Budget and Policy Priorities.
The End of Year Precious Metal Bullion Bear Raid - Another Form of Window Dressing?
It could be explained by any number of economic developments including the decline of the Euro, but that does not really explain the downward market action which has been sporadic and not associated with news, moreso than fundamental.
One has to be a bit naive or disingenuous to ignore the blatant bombing of the market with large numbers of contracts for sale during thinly traded markets. This is the not the sort of trading that a profit seeking trader would do except under the duress of a margin call.
I admit this would be less likely if one has a high level of confidence in the CFTC. They have not done much to inspire such confidence in the public this year, particularly in light of their mishandling of the silver market investigation and of course MF Global.
Anyone who watches the tape, rather than waving their hands from the 50,000 feet level, can see this clearly.
From speaking with other traders, and based on my own thinking, I believe that what we are seeing is primarily a type of end of year window dressing supplemented by a broad desire to maintain 'orderly' prices by the central banks.
At the end of year an institution will mark positions to market. Granted, any number of institutions will have an off calendar fiscal year ending for example in October.
But many others observe the conventional calendar year ending in December as their fiscal year, among them JP Morgan and HSBC for example.
But what about firms that have very large short positions including naked short positions with leverage? Would they have an incentive to push prices lower into key events of mark to market?
The answer is yes, particularly if markets are thin and sentiment has been battered by repeated bear raids and commentary from their friends in the financial press. They also often spread the word, one way or another, amongst big traders and friends at funds that tend to follow price momentum to add more 'punch' to their efforts.
And of course it does not hurt if a major source of bullish trading amongst small speculators has been taken down into bankruptcy.
Is this why we are seeing this now? Few can know for sure, but if we see a sharp rally in January and resumption of the bull trend the answer is more probably 'yes.'
And if so, this is just another hidden price that is being paid by a nation that cannot bring itself to be free of a financial oligarchy and their corrupting influences.
Be careful of trying to get in front of this while the downtrend is intact. Short term greed is swimming in the water with the sharks. And they own the lifeguards. This downtrend is a good test of your ability to tolerate risk and execute a properly hedged trading strategy.
Better for most not to trade at all but to take a long term horizon and follow some investment plan, and do not change it unless something fundamental changes first.
28 December 2011
Gold Daily and Silver Weekly Charts - Dr. Bernanke's Imaginarium
They bombed the thin markets early on, running the stop loss orders and forcing liquidation not only in the futures but in the related markets like the miners and the ETFs.
The first chart shows this fairly well.
This permits a liquidation of certain assets to occur, profits on related plays and short positions and of course the obtaining of key assets on the cheap for the next ride up.
I hate to be a spoil sport but position limits will not really solve this. It would cramp their style of course, but it takes something like an uptick rule and market vigilance against throwing large orders into thin markets to prevent it.
I am sorry for those who are experiencing pain here. This will help you to assess any leverage you are using, which should be none. Also if you have a trading or short term focus and you have the latitude, eg. you are not a long only fund, you should be hedged or out of this until the downtrend breaks.
I have a loss on my bullion positions of about 4.6% thanks to hedging and holding no miners. I did have a few I picked up on a whim on Friday, but there were cut loose early today.
Wait for it. And never add to a losing position during a short term trend that is running against you. 'Averaging down' is for those who do not wish to remain in the game unless it is part of a hedging strategy.
I saw some definite signs of capitulation by the bulls today, but if Europe remains troubled we may not find a bottom until after the end of the year. Let's see how the overnight buying in Asia is going.
SP 500 and NDX Futures Daily Charts - Light Volumes
Watch for window dressing at the end of week unless Europe blows up.
These are just the preliminary portfolio adjustments no matter how much 'analysis' they may wish to wrap around this dead fish.
History Lesson
History Lesson by Arthur C. Clarke has been one of my favorite short stories since boyhood. It contains an allegorical lesson about the importance of context and assumptions in scientific and historical study. It has served me well throughout the years.
The story is of course an intellectual descendant of Plato's Allegory of the Cave, from Book VII of The Republic, which I also enjoyed as a boy, if you prefer to use a reference with a more high brow pedigree.
And now I would like to share an excerpt from it with you.
As the story begins, the cooling of the sun has turned the Earth into a cold world covered by ice, effectively destroying all life and preserving only a few remnants of human civilization.
But this cooling has had a beneficial effect on Venus, turning a once harsh world into a lush plant. After thousands of years, a reptilian race had arisen, and eventually become capable of interplanetary flight.
This race was intrigued by their sister planet, the Earth. A number of expeditions had retrieved fragments that showed intelligent life, but their understanding was still very limited.
As the story begins here, a recent expedition has retrieved several key artifacts, including one that is utterly unique, holding great promise.
...The warm ocean that still bore most of the young planet's life rolled its breakers languidly againstArthur C. Clarke, History Lesson
the sandy shore. So new was this continent that the very sands were coarse and gritty. There had not
yet been time enough for the sea to wear them smooth.
The scientists lay half in the water, their beautiful reptilian bodies gleaming in the sunlight. The
greatest minds of Venus had gathered on this shore from all the islands of the planet. What they were
going to hear they did not know, except that it concerned the Third World and the mysterious race that
had peopled it before the coming of the ice.
The Historian was standing on the land, for the instruments he wished to use had no love of water.
By his side was a large machine which attracted many curious glances from his colleagues. It was
clearly concerned with optics, for a lens system projected from it toward a screen of white material a
dozen yards away.
The Historian began to speak. Briefly he recapitulated what little had been discovered concerning the
Third Planet and its people.
He mentioned the centuries of fruitless research that had failed to interpret a single word of the
writings of Earth. The planet had been inhabited by a race of great technical ability. That, at least,
was proved by the few pieces of machinery that had been found in the cairn upon the mountain.
"We do not know why so advanced a civilization came to an end," he observed. "Almost certainly, it had
sufficient knowledge to survive an ice Age. There must have been some other factor of which we know
nothing. Possibly disease or racial degeneration may have been responsible. It has even been suggested
that the tribal conflicts endemic to our own species in prehistoric times may have continued on the
Third Planet after the coming of technology.
Some philosophers maintain that knowledge of machinery does not necessarily imply a high degree of
civilization, and it is theoretically possible to have wars in a society possessing mechanical power,
flight, and even radio. Such a conception is alien to our thoughts, but we must admit its possibility.
It would certainly account for the downfall of the lost race.
It has always been assumed that we should never know anything of the physical form of the creatures
who lived on Planet Three. For centuries our artists have been depicting scenes from the history of
the dead world, peopling it with all manner of fantastic beings. Most of these creations have
resembled us more or less closely, though it has often been pointed out that because we are reptiles
it does not follow that all intelligent life must necessarily be reptilian.
We now know the answer to one of the most baffling problems of history. At last, after hundreds of
years of research, we have discovered the exact form and nature of the ruling life on the Third
Planet."
There was a murmur of astonishment from the assembled scientists. Some were so taken aback that they
disappeared for a while into the comfort of the ocean, as all Venusians were apt to do in moments of
stress. The Historian waited until his colleagues reemerged into the element they so disliked. He
himself was quite comfortable, thanks to the tiny sprays that were continually playing over his body.
With their help he could live on land for many hours before having to return to the ocean.
The excitement slowly subsided and the lecturer continued:
"One of the most puzzling of the objects found on Planet Three was a flat metal container holding a
great length of transparent plastic material, perforated at the edges and wound tightly into a spool.
This transparent tape at first seemed quite featureless, but an examination with the new subelectronic
microscope has shown that this is not the case. Along the surface of the material, invisible to our
eyes but perfectly clear under the correct radiation, are literally thousands of tiny pictures. It is
believed that they were imprinted on the material by some chemical means, and have faded with the
passage of time.
These pictures apparently form a record of life as it was on the Third Planet at the height of its
civilization. They are not independent. Consecutive pictures are almost identical, differing only in
the detail of movement. The purpose of such a record is obvious. It is only necessary to project the
scenes in rapid succession to give an illusion of continuous movement. We have made a machine to do
this, and I have here an exact reproduction of the picture sequence.
The scenes you are now going to witness take us back many thousands of years, to the great days of
our sister planet. They show a complex civilization, many of whose activities we can only dimly
understand. Life seems to have been very violent and energetic, and much that you will see is quite
baffling.
It is clear that the Third Planet was inhabited by a number of different species, none of them
reptilian. That is a blow to our pride, but the conclusion is inescapable. The dominant type of life
appears to have been a two-armed biped. It walked upright and covered its body with some flexible
material, possibly for protection against the cold, since even before the Ice Age the planet was at a
much lower temperature than our own world. But I will not try your patience any further. You will now
see the record of which I have been speaking."
A brilliant light flashed from the projector. There was a gentle whirring, and on the screen appeared
hundreds of strange beings moving rather jerkily to and fro. The picture expanded to embrace one of
the creatures, and the scientists could see that the Historian's description had been correct.
The creature possessed two eyes, set rather close together, but the other facial adornments were a
little obscure. There was a large orifice in the lower portion of the head that was continually
opening and closing. Possibly it had something to do with the creature's breathing.
The scientists watched spellbound as the strange being became involved in a series of fantastic
adventures. There was an incredibly violent conflict with another, slightly different creature. It seemed
certain that they must both be killed, but when it was all over neither seemed any the worse.
Then came a furious drive over miles of country in a four wheeled mechanical device which was capable
of extraordinary feats of locomotion. The ride ended in a city packed with other vehicles moving in
all directions at breathtaking speeds. No one was surprised to see two of the machines meet head-on
with devastating results.
After that, events became even more complicated. It was now quite obvious that it would take many
years of research to analyze and understand all that was happening. It was also clear that the record
was a work of art, somewhat stylized, rather than an exact reproduction of life as it actually had
been on the Third Planet.
Most of the scientists felt themselves completely dazed when the sequence of pictures came to an end.
There was a final flurry of motion, in which the creature that had been the center of interest became
involved in some tremendous but incomprehensible catastrophe. The picture contracted to a circle,
centered on the creature's head.
The last scene of all was an expanded view of its face, obviously expressing some powerful emotion.
But whether it was rage, grief, defiance, resignation or some other feeling could not be guessed. The
picture vanished. For a moment some lettering appeared on the screen, then it was all over.
For several minutes there was complete silence, save for the lapping of the waves upon the sand. The
scientists were too stunned to speak. The fleeting glimpse of Earth's civilization had had a
shattering effect on their minds. Then little groups began to start talking together, first in
whispers and then more and more loudly as the implications of what they had seen became clearer.
Presently the Historian called for attention and addressed the meeting again.
"We are now planning," he said, "a vast program of research to extract all available knowledge from
this record. Thousands of copies are being made for distribution to all workers. You win appreciate
the problems involved. The psychologists in particular have an immense task confronting them.
"But I do not doubt that we shall succeed. In another generation, who can say what we may not have
learned of this wonderful race? Before we leave, let us look again at our remote cousins,
whose wisdom may have surpassed our own but of whom so little has survived."
Once more the final picture flashed on the screen, motionless this time, for the projector had been
stopped. With something like awe, the scientists gazed at the stiff figure from the past, while in
turn the little biped stared back at them with its characteristic expression of arrogant bad temper.
For the rest of time it would symbolize the human race. The psychologists of Venus would analyze its
actions and watch its every movement until they could reconstruct its mind. Thousands of books would
be written about it. Intricate philosophies would be contrived to account for its behavior.
But all. this labor, all this research, would be utterly in vain. Perhaps the proud and lonely figure
on the screen was smiling sardonically at the scientists who were starting on their age-long fruitless
quest.
Its secret would be safe as long as the universe endured, for no one now would ever read the lost
language of Earth. Millions of times in the ages to come those last few words would flash across the
screen, and none could ever guess their meaning:
A Walt Disney Production.
Whole pyramids of learned understanding, highly structured laws, and academic rules can be built on a set of false assumptions, or some principle or premise based not on context but in some intellectual misapprehension.
So it is with the efficient market theory or trickle down economics, for example. Or the idea that by feeding the 'job creators' until they are stuffed one might eventually improve the condition of the many by trickling down.
Granted, all too often these misconceptions of reality are by intent, just another facet in a general campaign of propaganda and deception. But their acceptance by the public still proves the danger of untested and unproven assumptions and building even highly ordered and intricate structures on false premises.
Whether it is in your study of the stock market, money, and economics, or of some translation and interpretation of an antique work, or in reading an essay about an idea or person in history, you may wish to keep this little story in mind.
All too often someone will make an outlandish assertion, and upon questioning it appears that their primary knowledge of the subject at hand is based upon the reading, or more likely viewing, of an essay or video by some individual or group promoting that particular interpretation of reality. They have nothing else to judge it by, given their lack of investigation and knowledge, but it is duly enshrined in the pantheon of human thought as 'their opinion,' their private judgement.
And their position is often unassailable by reason, because it is not based in thought but in a system of belief. But it is not safeguarded by the intellectual constraints and dignified distance one must place on a religion as inherently a leap of faith beyond the limits of science. Science and the supernatural are by definition not the same, but complementary.
When someone says, 'I do not believe that I have a soul or that there is a God,' I may pay attention on the most particular and technical of information, but how can one take someone seriously on philosophical and higher matters who is so dull and unfeeling as to consider themselves and their fellows to be apes?
One could spend a lifetime studying the stock markets trying to make sense of them and their movements, and build an impressive body of study and rules, but fail miserably despite all that work, because one has built upon the false premise that the game was honest and subject to natural laws, and not often rigged and controlled by insiders to the very extent that they can get away with it.
Or perhaps there is a belief in some economic system like 'market capitalism' controlled by an oligarchy through the manipulation of money and information for their own ends in the name of freedom, for example.
It may be summed up in the familiar saying, 'A little learning is a dangerous thing' and perhaps, 'Beware of wolves in sheep's clothing.'
"Whereas the truth is that the State in which the rulers are most reluctant to govern is always the best and most quietly governed, and the State in which they are most eager, the worst...You must contrive for your future rulers another and a better life than that of a ruler, and then you may have a well-ordered State; for only in the State which offers this, will they rule who are truly rich, not in silver and gold, but in virtue and wisdom, which are the true blessings of life.
Whereas if they go to the administration of public affairs, poor and hungering after their own private advantage, thinking that hence they are to snatch the chief good, order there can never be; for they will be fighting about office, and the civil and domestic broils which thus arise will be the ruin of the rulers themselves and of the whole State."
Plato, The Republic
As with men and rulers, so with markets and money.
Greed is an excess of desire and lack of empathy and judgement, outside of the virtues, and is therefore most decidedly not 'good.' A system built predominantly upon unrestrained greed, anger, envy, and pride will not, by definition, be virtuous but degenerative, unstable, and ultimately self-destructive if not put down by its victims first.
"The sad duty of government is to establish justice in a sinful world."
Reinhold Niebuhr
And I suspect that history will see our generation as deluded fools for having believed otherwise, forsaking a Constitution and a legacy that is based upon first principles, actively promoting the virtues of goodness, equality, moderation, the careful distribution of power, and both freedom and justice for all.
27 December 2011
Gold Daily and Silver Weekly Charts - Comex, What Is It Good For?
The Comex. What is it good for?
Originally it provided a useful platform for buyers and producers to hedge their risks and set markets based on supply and demand.
Now it seems to have degenerated into a platform for fraudulent price manipulation and the confiscation of productive capital by those who neither buy nor produce, but merely game the system and break the rules, simply because they can.
What is it good for? About this much.
SP 500 and NDX Futures Daily Charts - Much Ado About Nothing
Very light volumes.
Lack of interest? Apparently so.
And it looked like most of that thin volume was just the wiseguys tossing the hot potatoes around.
26 December 2011
Franklin Roosevelt's 1936 Address
Campaign Address at Madison Square Garden, New York City.
"We Have Only Just Begun to Fight."
October 31, 1936
Senator Wagner, Governor Lehman, ladies and gentlemen:
ON THE eve of a national election, it is well for us to stop for a moment and analyze calmly and without prejudice the effect on our Nation of a victory by either of the major political parties.
The problem of the electorate is far deeper, far more vital than the continuance in the Presidency of any individual. For the greater issue goes beyond units of humanity-it goes to humanity itself.
In 1932 the issue was the restoration of American democracy; and the American people were in a mood to win. They did win. In 1936 the issue is the preservation of their victory. Again they are in a mood to win. Again they will win.
More than four years ago in accepting the Democratic nomination in Chicago, I said: "Give me your help not to win votes alone, but to win in this crusade to restore America to its own people."
The banners of that crusade still fly in the van of a Nation that is on the march.
It is needless to repeat the details of the program which this Administration has been hammering out on the anvils of experience. No amount of misrepresentation or statistical contortion can conceal or blur or smear that record. Neither the attacks of unscrupulous enemies nor the exaggerations of over-zealous friends will serve to mislead the American people.
What was our hope in 1932? Above all other things the American people wanted peace. They wanted peace of mind instead of gnawing fear.
First, they sought escape from the personal terror which had stalked them for three years. They wanted the peace that comes from security in their homes: safety for their savings, permanence in their jobs, a fair profit from their enterprise.
Next, they wanted peace in the community, the peace that springs from the ability to meet the needs of community life: schools, playgrounds, parks, sanitation, highways- those things which are expected of solvent local government. They sought escape from disintegration and bankruptcy in local and state affairs.
They also sought peace within the Nation: protection of their currency, fairer wages, the ending of long hours of toil, the abolition of child labor, the elimination of wild-cat speculation, the safety of their children from kidnappers.
And, finally, they sought peace with other Nations-peace in a world of unrest. The Nation knows that I hate war, and I know that the Nation hates war.
I submit to you a record of peace; and on that record a well-founded expectation for future peace—peace for the individual, peace for the community, peace for the Nation, and peace with the world.
Tonight I call the roll—the roll of honor of those who stood with us in 1932 and still stand with us today.
Written on it are the names of millions who never had a chance—men at starvation wages, women in sweatshops, children at looms.
Written on it are the names of those who despaired, young men and young women for whom opportunity had become a will-o'-the-wisp.
Written on it are the names of farmers whose acres yielded only bitterness, business men whose books were portents of disaster, home owners who were faced with eviction, frugal citizens whose savings were insecure.
Written there in large letters are the names of countless other
Americans of all parties and all faiths, Americans who had eyes to see and hearts to understand, whose consciences were burdened because too many of their fellows were burdened, who looked on these things four years ago and said, "This can be changed. We will change it."
We still lead that army in 1936. They stood with us then because in 1932 they believed. They stand with us today because in 1 936 they know. And with them stand millions of new recruits who have come to know.
Their hopes have become our record.
We have not come this far without a struggle and I assure you we cannot go further without a struggle.
For twelve years this Nation was afflicted with hear-nothing, see-nothing, do-nothing Government. The Nation looked to Government but the Government looked away. Nine mocking years with the golden calf and three long years of the scourge! Nine crazy years at the ticker and three long years in the breadlines! Nine mad years of mirage and three long years of despair! Powerful influences strive today to restore that kind of government with its doctrine that that Government is best which is most indifferent.
For nearly four years you have had an Administration which instead of twirling its thumbs has rolled up its sleeves. We will keep our sleeves rolled up.
We had to struggle with the old enemies of peace— business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.
They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.
Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me—and I welcome their hatred.
I should like to have it said of my first Administration that in it the forces of selfishness and of lust for power met their match. I should like to have it said of my second Administration that in it these forces met their master.
The American people know from a four-year record that today there is only one entrance to the White House—by the front door. Since March 4, 1933, there has been only one pass-key to the White House. I have carried that key in my pocket. It is there tonight. So long as I am President, it will remain in my pocket.
Those who used to have pass-keys are not happy. Some of them are desperate. Only desperate men with their backs to the wall would descend so far below the level of decent citizenship as to foster the current pay-envelope campaign against America's working people. Only reckless men, heedless of consequences, would risk the disruption of the hope for a new peace between worker and employer by returning to the tactics of the labor spy.
Here is an amazing paradox! The very employers and politicians and publishers who talk most loudly of class antagonism and the destruction of the American system now undermine that system by this attempt to coerce the votes of the wage earners of this country. It is the 1936 version of the old threat to close down the factory or the office if a particular candidate does not win. It is an old strategy of tyrants to delude their victims into fighting their battles for them.
Every message in a pay envelope, even if it is the truth, is a command to vote according to the will of the employer. But this propaganda is worse—it is deceit.
They tell the worker his wage will be reduced by a contribution to some vague form of old-age insurance. They carefully conceal from him the fact that for every dollar of premium he pays for that insurance, the employer pays another dollar. That omission is deceit.
They carefully conceal from him the fact that under the federal law, he receives another insurance policy to help him if he loses his job, and that the premium of that policy is paid 100 percent by the employer and not one cent by the worker. They do not tell him that the insurance policy that is bought for him is far more favorable to him than any policy that any private insurance company could afford to issue. That omission is deceit.
They imply to him that he pays all the cost of both forms of insurance. They carefully conceal from him the fact that for every dollar put up by him his employer puts up three dollars—three for one. And that omission is deceit.
But they are guilty of more than deceit. When they imply that the reserves thus created against both these policies will be stolen by some future Congress, diverted to some wholly foreign purpose, they attack the integrity and honor of American Government itself. Those who suggest that, are already aliens to the spirit of American democracy. Let them emigrate and try their lot under some foreign flag in which they have more confidence.
The fraudulent nature of this attempt is well shown by the record of votes on the passage of the Social Security Act. In addition to an overwhelming majority of Democrats in both Houses, seventy-seven Republican Representatives voted for it and only eighteen against it and fifteen Republican Senators voted for it and only five against it. Where does this last-minute drive of the Republican leadership leave these Republican Representatives and Senators who helped enact this law?
I am sure the vast majority of law-abiding businessmen who are not parties to this propaganda fully appreciate the extent of the threat to honest business contained in this coercion.
I have expressed indignation at this form of campaigning and I am confident that the overwhelming majority of employers, workers and the general public share that indignation and will show it at the polls on Tuesday next.
Aside from this phase of it, I prefer to remember this campaign not as bitter but only as hard-fought. There should be no bitterness or hate where the sole thought is the welfare of the United States of America. No man can occupy the office of President without realizing that he is President of all the people.
It is because I have sought to think in terms of the whole Nation that I am confident that today, just as four years ago, the people want more than promises.
Our vision for the future contains more than promises.
This is our answer to those who, silent about their own plans, ask us to state our objectives.
Of course we will continue to seek to improve working conditions for the workers of America—to reduce hours over-long, to increase wages that spell starvation, to end the labor of children, to wipe out sweatshops. Of course we will continue every effort to end monopoly in business, to support collective bargaining, to stop unfair competition, to abolish dishonorable trade practices. For all these we have only just begun to fight.
Of course we will continue to work for cheaper electricity in the homes and on the farms of America, for better and cheaper transportation, for low interest rates, for sounder home financing, for better banking, for the regulation of security issues, for reciprocal trade among nations, for the wiping out of slums. For all these we have only just begun to fight.
Of course we will continue our efforts in behalf of the farmers of America. With their continued cooperation we will do all in our power to end the piling up of huge surpluses which spelled ruinous prices for their crops. We will persist in successful action for better land use, for reforestation, for the conservation of water all the way from its source to the sea, for drought and flood control, for better marketing facilities for farm commodities, for a definite reduction of farm tenancy, for encouragement of farmer cooperatives, for crop insurance and a stable food supply. For all these we have only just begun to fight.
Of course we will provide useful work for the needy unemployed; we prefer useful work to the pauperism of a dole.
Here and now I want to make myself clear about those who disparage their fellow citizens on the relief rolls. They say that those on relief are not merely jobless—that they are worthless. Their solution for the relief problem is to end relief—to purge the rolls by starvation. To use the language of the stock broker, our needy unemployed would be cared for when, as, and if some fairy godmother should happen on the scene.
You and I will continue to refuse to accept that estimate of our unemployed fellow Americans. Your Government is still on the same side of the street with the Good Samaritan and not with those who pass by on the other side.
Again—what of our objectives?
Of course we will continue our efforts for young men and women so that they may obtain an education and an opportunity to put it to use. Of course we will continue our help for the crippled, for the blind, for the mothers, our insurance for the unemployed, our security for the aged. Of course we will continue to protect the consumer against unnecessary price spreads, against the costs that are added by monopoly and speculation. We will continue our successful efforts to increase his purchasing power and to keep it constant.
For these things, too, and for a multitude of others like them, we have only just begun to fight.
All this—all these objectives—spell peace at home. All our actions, all our ideals, spell also peace with other nations.
Today there is war and rumor of war. We want none of it. But while we guard our shores against threats of war, we will continue to remove the causes of unrest and antagonism at home which might make our people easier victims to those for whom foreign war is profitable. You know well that those who stand to profit by war are not on our side in this campaign.
"Peace on earth, good will toward men"—democracy must cling to that message. For it is my deep conviction that democracy cannot live without that true religion which gives a nation a sense of justice and of moral purpose. Above our political forums, above our market places stand the altars of our faith—altars on which burn the fires of devotion that maintain all that is best in us and all that is best in our Nation.
We have need of that devotion today. It is that which makes it possible for government to persuade those who are mentally prepared to fight each other to go on instead, to work for and to sacrifice for each other. That is why we need to say with the Prophet: "What doth the Lord require of thee—but to do justly, to love mercy and to walk humbly with thy God." That is why the recovery we seek, the recovery we are winning, is more than economic. In it are included justice and love and humility, not for ourselves as individuals alone, but for our Nation.
That is the road to peace.
23 December 2011
Gold Daily and Silver Weekly Charts
Today was hardly worth the time and energy expended to watch them fluff the markets to suit their year end bonuses.
Have a Merry Christmas everyone.
22 December 2011
Gold Daily and Silver Weekly Charts
The long only funds were promoting their end of year stock results today on very light volumes. Miners and metals are such a slight holding amongst them that they are easily ignored in favor of a paper-only policy.
The market sat on the price of gold and silver all day throughout the paper rally to keep a lid on them. It could be getting easier in the short term as individual investors shun the Comex.
There is no additional commentary that is required: pure unadulterated market manipulation of the real world by the paper markets. It will have its time, and then it will fail.
SP 500 and NDX Futures Daily Charts
Like watching paint dry on a virtual house in Farmville.
The only real excitement was an announcement that SP had cut Goldman's debt rating from their web site that took the stock down. That was a disavowed a few hours later and the stock rebounded.
The NDX is lagging from the SP which has been leading the rally higher. This sort of 'broad rally' is often driven by the buying of the SP futures to drive the market higher on light volumes, a patented ploy of Robert Rubin when he was running the Exchange Stabilization Fund as Treasury Secretary.
This rally would inspire more confidence if we all did not know that it is insubstantial, like cotton candy, and that a single headline could send it all tumbling lower rather quickly.
Tomorrow will be even slower, with the action all but over once they strike a level they wish to hit by around noon NYC time.
21 December 2011
Gold Daily and Silver Weekly Charts - 2012: The Year of Living Dangerously
It is in the nature of a Ponzi scheme. As long as its sphere of influence can keep expanding, and the force by which people are compelled to accept it is maintained, a fiat currency will 'work.' But as its expansion slows, as outlying regions begin to resist it, the currency begins a slow but deadly spiral of collapse that accelerates into a final reckoning and reissuance.
Fiat currencies *can* work well in theory, but in reality they require the indefatigable dedication of people of extraordinary virtue, courage, and wisdom. And so they have failed. Always.
And it most certainly will not work with the craven and self-serving leadership which the Anglo-Americans have today. It is almost a cruel joke to promote such a system. And yet there it is and here we are. What comes next will be interesting.
SP 500 and NDX Futures Daily Charts - Light Volume, Phony Action
Richard Russell says what is on my mind quite well.
The outlier is the Fed, and a willingness to print to nominal results without regard to the value at risk of the currency.
“I talked with my good friend, Joe Granville, over the weekend, and Joe is as bearish as I’ve ever seen or heard him, based on his OBV volume figures. This checks with my own work and studies.
While fundamentalists scour the news for indications of bullish news, the internals of the stock market continue to deteriorate. Even the action of the stock market is bearish as the market rallies on dull volume but declines on higher volume. Furthermore, rising breadth is narrow on rallies while declining breadth is broad when the market heads down.
I don’t know what more I can do or say to convinced subscribers that we are seeing the resumption of the bear market. This means that we should be OUT of all stocks. As for gold mining stocks, this is a personal choice. In due time, I expect gold to fully express itself with a huge upside blow-off. At that time I expect gold mining stocks to follow, but between now and then gold mining shares will probably be hit like every thing else by the fury of the bear market.
I should add that I am expecting this bear market to be far worse than most people expect or are prepared for. The fact is that I don’t believe that Americans expect any thing more than a temporary spate of difficult times, an annoying patch that should be over in a year or so. This is not what I am expecting or predicting.
Once the Dow breaks under 10,000, I believe that the analysts and the PUBLIC will become frightened and start to cut back on their buying. The newspapers will halt their bullish stance, and a great stillness will envelope that land. That stillness will be the result of shock as it dawns on Americans that they are seeing something far different than what they were expecting.
By the way, the Dow is now trading below its 200-day moving average, which stands at 11,938. The 50-day MA is bearishly below the 200-day MA (50-day is 11,811)."
Richard Russell, Dow Theory Letters
JP Morgan's 'Suspicious Involvement' in the Collapse of MF Global
James Koutoulas on JP Morgan's involvement in the MF Global collapse:
"[JP Morgan] wears way too many hats in this situation. Their fingers are all over this. They were a custodian of customer segregated funds, they were a primary lender to MF Global,...they were head of the creditors' committee in bankruptcy court, they're buying customer claims for pennies on the dollar—vulture claims, and it appears that they just may have gotten favorable treatment by purchasing LME stock from MF Global...as well as buying these sovereign debt positions that have turned out to be profitable trades."
Read the rest here at BusinessInsider.
Also Dear Jamie Dimon at Reformed Broker.
20 December 2011
Guess Where a Big Chunk of MF Global Customer Money Just Turned Up? At JPM London
And allegedly at the time JPM London suspected that the money might be coming from the customer accounts. I wonder why that would occur to them?
Read this carefully. The spin is there but the truth is beneath the surface of sugar frosting and distracting swirls of fluff, and the decorations carved from baloney that have marked this story from day one.
This could be a misdirection. I wondered if this was money to cover the bonuses to the London MF staff, but they were paid the day before the bankruptcy. Nothing like making a find and then being able to dismiss it.
At the end of the day, I think the regulators have known where the money went for some time now. The problem is that the parties who received it won't admit it and give it back, and they have powerful friends. And there is a greater scandal floating beneath the surface. Maybe involving someone big enough to rig a global market or two.
I enjoyed the 'report' saying that George Soros had received the funds and assets. As if he was engaged in margin calls with MF Global prior to bankruptcy. He might have bought something in the aftermarket peddled to him by the original recipient who held MF Global testicular-wise before they went under. That was the most likely reason the firm would take the risk and dip into customer funds in desperation to maintain their 'winning positions.'
It is also credible that MFG was 'set up' by a company with an inside knowledge of their financial condition and cash flows.
When will they roll out the rest of the story, Christmas Eve or New Year's day? And in what year?
Wall Street Journal
MF Global Transfer Draws Scrutiny
By Scott Patterson And Aaron Lucchetti
December 21, 2011
Investigators on the hunt for missing customer money from MF Global Holdings Ltd. are scrutinizing about $200 million moved to a company account at J.P. Morgan Chase & Co. three days before the securities firm filed for bankruptcy protection, according to people familiar with the matter.
The transfer has drawn interest from investigators partly because J.P. Morgan asked MF Global in a letter the following day to attest that the Oct. 28 shift of funds didn't violate regulations designed to protect customer money.
The letter suggests that officials at J.P. Morgan, which cleared some trades for MF Global, had become concerned that the securities firm might have gotten the money by dipping into customer funds. Commodity Futures Trading Commission rules prohibit futures brokers from using customer money for their own trading purposes.
J.P. Morgan accepted the roughly $200 million transfer, using it to help cover an overdraft in MF Global's proprietary-trading account at the bank. It isn't clear if J.P. Morgan still has the money.
The transfer was small compared with the estimated $1.2 billion in customer funds still unaccounted for more than seven weeks after MF Global collapsed. The bankruptcy trustee for MF Global's U.S. brokerage unit has said recovering money from the company's trading partners would be easier if counterparties knew they were accepting funds belonging to customers. (Or how about everyone who received a transfer from MFG of greater than $100 million in the week before bankrupcy please raise their hand?)
It isn't clear how MF Global responded to J.P. Morgan's Oct. 29 letter. The letter hasn't been publicly released by regulators or investigators. (And it isn't clear if they even received this letter, or that it was sent.)
The letter indicates that J.P. Morgan officials knew the money came from segregated customer accounts, because it specifically asked whether the transfer of funds from customer accounts was compliant with regulations. Customer accounts can contain both customer and firm funds. On Oct. 30, or the day after the letter was sent, MF Global alerted regulators to a shortfall in customer funds. It filed for bankruptcy protection on Oct. 31.
A person familiar with J.P. Morgan's thinking said the bank wouldn't normally ask for assurances about such a withdrawal, but decided it was "prudent and sensible" when MF Global's problems deepened...
Records indicate that by the time MF Global transferred the funds, there already was a shortfall in customer accounts. As of Oct. 27, MF Global had a $213 million deficit in customer accounts, according to a statement the company provided to the CME after the Chapter 11 bankruptcy-protection filing.
The transfer of about $200 million to the account at J.P. Morgan occurred Oct. 28. The money was moved to a U.K. account for MF Global from a customer-segregated account, passing through another trading account on its way, people familiar with the matter said.
To be sure, it is possible that company officials mistakenly (sic) dipped into customer-segregated funds as MF Global scrambled to meet margin calls and other demands after MF Global debt was downgraded in late October...
DealBook
E-Mail Clues in Tracking MF Global Client Funds
By Ben Protess and Azam Ahmed
December 20, 2011, 9:00 PM
Federal authorities investigating the collapse of MF Global have uncovered e-mails that detail the transfers of money in the firm’s last days, including transfers that contained customer money, according to people close to the investigation.
One e-mail chain refers to the transfer of roughly $200 million that MF Global owed JPMorgan Chase on Oct. 28 — the firm’s last business day before it filed for bankruptcy. In that chain, a senior official in the firm’s Chicago office was told to make the transfer, said the people close to the investigation who requested anonymity because the inquiry was still open.
That official, Edith O’Brien, a treasurer at MF Global, is considered a “person of interest” in the investigation, said two of the people, who added that authorities expected to interview her in the coming days. It was not clear who had directed Ms. O’Brien, whose job was to oversee the customer money, to make the Oct. 28 transfer. The roughly $200 million that JPMorgan Chase received is said to be entirely customer money...
Income Inequality in Post-War America
Regarding Occupy Wall Street and voices protesting the widespread fraud and inequity in the US financial system, Home Depot co-founder Bernard Marcus said, "Who gives a crap about some imbeciles? Are you kidding me?”
JPMorgan Chase & Co. CEO Jamie Dimon, whose 2010 income was $23 million, talked about hostility toward bankers. “Sometimes there’s a bad apple, yet we denigrate the whole.”
Bankers Join Billionaires
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