SP 500 and NDX Futures Daily Charts - Selling Freedom, Playing For Time

I picked up a little volatility insurance near the close today.  

My timeframe on this is to the end of March.

It was hard to miss the big non-confirmation in the NDX today.

"The woods decay, the woods decay and fall,
The vapours weep their burthen to the ground,
Man comes and tills the field and lies beneath,
And after many a summer dies the swan."

Alfred Lord Tennyson, Tithonus

I am curious to see which black swan comes home to roost first: Europe or China.

Ed Lazear, the distinguished economist from Stanford, formerly chief economic advisor for G.W. Bush, and now a Senior Fellow at the Hoover Institution, thinks a good approach to immigration reform would be for the US to sell its citizenship on the open market to the highest bidders. 

He was expounding this after the close on Bloomberg television, which is a bastion for all things of the swinish persuasion.  He calls it 'importing human capital.' It sounds remarkably like indentured servitude.

As related by the Wall Street Journal:

"To ensure that not only the wealthy could gain citizenship, the sale of immigration slots could be coupled with a loan program that allows people to borrow the fee and to pay it back out of their earnings over an extended period. To minimize default, the loan payments would be automatically withheld from their paycheck, just as income and payroll taxes are today."

In a similar vein the US could reinstitute a military draft, but sell exemptions to the highest bidder.  And in fairness the government could offer loans to cover the cost of course, adminstered by the Banks of course.  This would have the additional benefit of opening up slots in the National Guard which have formerly been taken up by the idle sons of the wealthy.

There are similar proposals for rationing life saving medical care that are already on the table.

Personal air and water meters implanted at birth?  Think of the possibilities. 

There was a movie written along these lines called In Time.  In it people are fixed with meters that measure out their life.  They are able to buy additional time to live, at market prices.  I wonder if Ed has seen it.  It is the perfect market-based, technological solution for maximizing the output of human capital.

"I have always thought that all men should be free; but if any should be slaves it should be first those who desire it for themselves, and secondly those who desire it for others."

Abraham Lincoln, "Speech to One Hundred Fortieth Indiana Regiment" March 17, 1865

See you on Sunday evening.

Today's Non-Farm Payrolls Report - The Good News, Bad News - Unadjusted Unemployment at 13%

Today's Non-Farm Payrolls report was encouraging despite the downward revision from last month's headline grabbing number, which in part helped make up today's headline grabbing number.

The seasonality adjustment used in this number was out of the normal bounds from past seasonality adjustments. And as one might have anticipated, the Birth Death model added its customary large number of estimated (imaginary) jobs into the mix.

As you know I prefer to look at the trends, rather than the month to month numbers which can be used to manage perception in the market and the public.

The overall trend shows that the US is not faring as badly as if it might have, at least in the short term, under an austerity regime such as that being followed in Europe.

The most encouraging statistics are the steady although somewhat anemic jobs growth, and the upturn, finally, in average pay. I could not find current median pay numbers in a chart, and this is what is most interesting to me as you know.

The Labor Participation Rate continues its decline.  It is a much more significant number than the 'headline' unemployment rate which fluctuates in whom it decides to count as employment-seeking.  

According to Bloomberg if the Labor Participation Rate was maintained as steady from before the financial collapse, and 'discouraged workers were not eliminated, the current unemployment rate in the US would be a little north of 13%.  But as workers get discouraged the government stops counting them as employment seeking, and the Labor Participation Rate falls.

And finally there is Real Disposable Personal Income Per Capita, which is as close to median as I could get.  And just for comparison, a chart showing Total Personal Disposable Income from 1921 to 1939, including the secondary recession of 1937 which was due to a policy error in premature Fed tightening from a fear of inflation. 

I think we learned in the 1930's that austerity after a credit bubble induced financial collapse is a destabilizing influence on civil governments.  Or at least that was the case in much of the world back then.  We seem to have forgotten quite a few lessons from history about regulation, reform, and the consequences of extremes in wealth inequality.

There is little doubt that if the nascent recovery falters, the 'sequester' will be blamed, and not the lack of reform and safeguards in the financial sector which caused the most recent financial crisis in the first place, although it was most certainly a key player in the tech bubble and collapse as well. 

One can only speculate that if genuine reform, including restraints on rampant deregulation, had been enacted after the stock market excess of the Tech Bubble, would the people and the world have been spared the Financial Collapse of 2008?  And what is yet to come, most likely out of Europe or China?

Elizabeth Warren: What Level of Criminality Will It Take to Shut Down a Bank, (Mr. President)?

"A court martial, under orders, has just dared to acquit a certain Esterhazy, a supreme insult to all truth and justice. And now the image of France is sullied by this filth, and history shall record that it was under your presidency that this crime against society was committed."

Émile François Zola

How far above the law can Banks and their management go before they will be brought to account, besides a fine that is considered a cost of doing business?

It's a good question asked in the most straight faced, almost naively innocent, manner by Senator Elizabeth Warren.

Apparently amongst the Washington bureaucrats, with regard to any indictments and prosecution of financial matter 'the buck stops' with Eric Holder and his Justice Department.  Without that tool, the regulators can only levy civil fines, although often those fines are only wristslaps.

And the other day Mr. Attorney General Holder said that considerations other than criminality, including instances of brazen and repeated offenses, inhibit the Justice Department from doing their jobs in prosecuting financial crimes. 

Those considerations are the importance of that institution to the economy and the systemic threat that a loss of confidence might provoke.  In other words, size and power, and the fear of the consequences of enforcing the existing laws, much less reform, are at the heart of the Administration's policy towards prosecuting significant financial crimes at the highest levels.   And that policy sets the tone for the economy, and the market's attitudes towards regulation and reform. 

But since Eric Holder is Obama's personal representative, almost certainly acting in consultation on financial matters with the Treasury Secretary, the offensive corruption in the financial sector is the result of the President's policies.   That is also known as moral hazard.  And at this point he has no one else to blame. 

And so Senator Warren might as well ask: "Mr. President, to what level of criminality must a Bank, and its management, rise before you would be willing to allow your Justice Department to indict and prosecute it?  And as an aside, why are you so zealous in prosecuting whistleblowers and reformers, but so tolerant of even extreme examples of white collar financial crime that abets unrelated, non-financial felonies?"

It is doubtful that the mainstream Republicans and Democrats will ever bring anyone to account, because they are as, or even more, complicit in this web of corruption, having been given enormous amounts of money by the Banks in speaking fees and campaign contributions, with the promise of greater amounts for consulting after their terms in office.

And there it is: the credibility trap.   Justice for some. However one wishes to rationalize it, but always in order to preserve it.

Senator Warren may as well have asked, like the childlike innocent, "Why is the Emperor naked?" 

C'est la mode du temps, cherie, c'est la mode.

"A credibility trap is a condition wherein the financial, political and informational functions of a society have been compromised by corruption and fraud, so that the leadership cannot effectively reform, or even honestly address, the problems of that system without impairing and implicating, at least incidentally, a broad swath of the power structure, including themselves.

The status quo tolerates the corruption and the fraud because they have profited at least indirectly from it, and would like to continue to do so. Even the impulse to reform within the power structure is susceptible to various forms of soft blackmail and coercion by the system that maintains and rewards.

And so a failed policy and its support system become self-sustaining, long after it is seen by objective observers to have failed. In its failure it is counterproductive, and an impediment to recovery in the real economy. Admitting failure is not an option for the thought leaders who receive their power from that system.

The continuity of the structural hierarchy must therefore be maintained at all costs, even to the point of becoming a painfully obvious, organized hypocrisy.

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery."

Related:

Treasury and Fed Officials Prevaricate Before Elizabeth Warren - Yves Smith
Failure to Prosecute Is Killing the Economy - Washington's Blog
Drug Possession Warrants Jail Time, But Laundering Billions of Drug Money Doesn't? - Raw Story

Gold Daily and Silver Weekly Charts - A Jekyll & Hyde Market - SP/Gold Ratio

They said on financial TV today that "Bernanke is in control of this market."  Europe does not matter, and the dollar will provide its faithful servants with permanent prosperity.

Stress test results for the Big Banks will be coming.

This is a Jekyll/Hyde market, with Hyde exhibiting complacency, greed, and a brutal arrogance.   But occasionally the market reverts to a timid Jekyll driven primarily by self-loathing and a wanton fear.

Let's see what pops out of the box tomorrow.

The SP/Gold ratio is updated in the last chart.

SP 500 and NDX Futures Daily Charts - Better Than Blue Skies

The Street is looking for a 'better than expected' Jobs Report tomorrow and a tick down in unemployment.

The Middle Class: Death By a Thousand Cuts - Is Nothing Sacred?

"The corporate right and the political right declared class warfare on working people a quarter of a century ago and they've won... Take the paradox of Rush Limbaugh, ensconced in a Palm Beach mansion massaging the resentments across the country of white-knuckled wage earners, who are barely making ends meet in no small part because of the corporate and ideological forces for whom Rush has been a hero."

Bill Moyers


"The escalation of the class war against the poor and the working class is intense. More and more working people are beaten down. They are world-weary. They are into self-medication. They are turning on each other. They are scapegoating the most vulnerable rather than confronting the most powerful. It is a profoundly human response to panic and catastrophe. I thought Barack Obama could have provided some way out. But he lacks backbone.

Can you imagine if Barack Obama had taken office and deliberately educated and taught the American people about the nature of the financial catastrophe and what greed was really taking place? If he had told us what kind of mechanisms of accountability needed to be in place, if he had focused on homeowners rather than investment banks for bailouts and engaged in massive job creation he could have nipped in the bud the right-wing populism of the tea party folk. The tea party folk are right when they say the government is corrupt. It is corrupt. Big business and banks have taken over government and corrupted it in deep ways.

We have got to attempt to tell the truth, and that truth is painful. It is a truth that is against the thick lies of the mainstream. In telling that truth we become so maladjusted to the prevailing injustice that the Democratic Party, more and more, is not just milquetoast and spineless, as it was before, but thoroughly complicitous with some of the worst things in the American empire."

Cornel West


"Politicians are the public face of corporate power. They are corporate employees. Their personal narratives, their promises, their rhetoric and their idiosyncrasies are meaningless. And that, perhaps, is why the cost of the two presidential campaigns is estimated to reach an obscene $2.5 billion. The corporate state does not produce a product that is different. It produces brands that are different. And brands cost a lot of money to sell...

Unfettered capitalism is a revolutionary force which turns everything into a commodity. Human beings become commodities, the natural world becomes a commodity, that you exploit until exhaustion or collapse...

You can dismiss those of us who will in protest vote for a third-party candidate and invest our time and energy in acts of civil disobedience. You can pride yourself on being practical. You can swallow the false argument of the lesser of two evils.

But ask yourself, once this nightmare starts kicking in, who the real sucker is."

Chris Hedges


"The most sacred of the duties of government is to do equal and impartial justice to all its citizens.”

Thomas Jefferson

Nihilne sanctum est?

Politicians from both sides of the aisle will swear pious oaths to protect and foster the well being of the middle class.  They will say that their policies and proposals are all designed for its betterment.  And yet the state of the middle class continues to dwindle into despair and disrepair. Why is this?

It is not because of the predominance of a right or left ideology, of taxation and deficits and austerity. It is not because of the re-emergence of a perversion of the gospel, in the predestination of prosperity. We have seen all this before. It is not because in our comfort we have lost the sense of the imperative of common cause.

It is because of the overwhelming corruption of power, and of the cynical amorality of thoroughly modern political managers who worship power and personal wealth as ends unto themselves.   They distract the people with artificially divisive social issues and crises, while robbing them blind.

It is driven by the allure of the cartels, monopolies, and  monied interests, and their corrupt political bargains.  It is a child of the subornation of perjury on a massive scale. It is the unscrupulous servility to power of those who have sworn to uphold and protect the law.   What is truth?  Whatever suits us, whatever we say it is, by whoever has the power and the craft to define 'we.'  It is not the triumph of evil so much as the absence of any sense of the good, of honor, honesty, and of simple common decency.

And it is marked by the daily subverting of the law as a matter of convenience and comfort to the insatiable few, and the cravenness of their enablers, driven by personal ambition, ignorance, and fear.  It is the will to power, the elevation of the ascendant self and the system that supports it, above all else.  Greed is good.  Whatever works.  And the enemy is all that is not the self, which is the other.

And where there is nothing sacred, the people perish.

Gold Daily and Silver Weekly Charts - Bounce Led By Silver

"Besides the Bank's money, the Bank holds the Title Deeds, and the houses and hotels prior to purchase by the players. The Bank pays salaries and bonuses. It sells and auctions properties and hands out the proper Title Deed cards when purchased by a player, it also sells houses and hotels to the players and loans money when required on mortgages.

The Bank collects all taxes, fines, loans and interest, and the price of all properties which it sells and auctions.

The Bank 'never goes broke.' If the Bank runs out of money, the Banker may issue as much as needed by writing on any ordinary paper."

Official Monopoly® Game Rules, The Bank

Sounds like the spirit of modern fiat money to me.

Despite an intraday 'gut check' of selling that came out of nowhere, the precious metals finished higher, as stocks faded.

Non-Farm Payrolls on Friday.

I cannot help but notice that Harvey Organ has not updated his site since Saturday. I hope that this is just a work respite, and that he has not encountered any health or personal troubles. His comments are missed, and he is in our thoughts.

SP 500 and NDX Futures Daily Charts

The SP March futures failed at their second attempt today to take out the intermediate measuring objective of 1540, as the tech NDX was a weight on the market.

The Fed Beige book today indicated that QE is failing to stimulate commercial activity and lending. Given that the hot money is being packed in the reserve of the biggest Banks, and used for speculation and bonuses, that is not surprising. Let's call that 'trickle down stimulus.'

Non-Farm Payrolls on Friday.