The US Is In a Societal Panic: Why Our Tax and Economic Debates Are Irrational

David Cay Johnston is an excellent lecturer, who can address economics and public policy in clear and simple statements.

This is one of most informative talks I have heard about where we are, and how we got here, what the crony kleptocracy is, and how it works.

Johnston's concept of a societal panic corresponds to the notion of national hysteria which I have expressed on a number of occasions.  But he fills out the idea more fluently and fully.   It is a dangerous period of time which can yield new ideas and concepts, depending on how well we survive it.

It is a must watch, and I rarely say that.

Chris Hedges: The Rise of the Corporate Class and the Triumph of Managerial Malfeasance

“Antidemocracy, executive predominance, and elite rule are basic elements of inverted totalitarianism. Antidemocracy does not take the form of overt attacks upon the idea of government by the people. Instead, politically it means encouraging what I have earlier dubbed civic demobilization, conditioning an electorate to being aroused for a brief spell, controlling its attention span, and then encouraging distraction or apathy. The intense pace of work and the extended working day, combined with job insecurity, is a formula for political demobilization, for privatizing the citizenry.

It works indirectly. Citizens are encouraged to distrust their government and politicians; to concentrate upon their own interests; to begrudge their taxes; and to exchange active involvement for symbolic gratifications of patriotism, collective self-righteousness, and military prowess. Above all, depoliticization is promoted through society’s being enveloped in an atmosphere of collective fear and of individual powerlessness: fear of terrorists, loss of jobs, the uncertainties of pension plans, soaring health costs, and rising educational expenses.”

Sheldon S. Wolin, Democracy Incorporated

"Our corporate oligarchs are harvesting the nation, grabbing as much as they can, as fast as they can, in the inevitable descent."

 Chris Hedges

 

Gold Daily and Silver Weekly Charts - Cap, Cap, Pounce

Welcome to September. Ouch.

The spotlight is now on silver, and less so on gold.

Both metals took a hit that was fairly obvious starting late last night. I was surprised it did not go deeper.

It is tough to make a real short term bullish case until we break this pattern of lower highs and lower lows.

Big amount of silver get shoved around the plate at the Comex, so we will have to shift gears a bit and adjust to reports with much bigger numbers of ounces involved.

Today was the first day. Let's see how the rest of the month goes.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Bubble On Through M&A's and IPO's

Stocks had a bit of a roller coaster ride today, with techs trying to take the lead on the upside.

The markets are sloughing off quite a bit of exogenous risk. But that ought not to surprise us, because that is almost the very definition of a bubble in assets. The fundamentals and realities are ignored, as pieces of paper become increasingly traded on their own without regard to risks.

September is going to be marked by the biggest IPO ever. The much awaited Alibaba will be rolling out between now and about September 20. The wiseguys are also going to taking a lot of M&A activity out of the trunks and planting them in the killing fields of a toppy market. Why not? Whether you are paying with cash or stock, your currency is debased.

So barring any untoward events I would expect the markets to muddle through to the latter part of September, and then get set up for some sort of correction into October.  It will probably not be severe, again unless it is driven by some geopolitical events, because of the midyear elections coming up.  Unless of course the financiers decide to engage in some mild form of coup d'état.

I put out an excerpt from a new Harvard Business Review article earlier today that is worth reading here.

Although greed is always a factor in any human activity in our fallen world, there are times when it reaches a peak of activity and predominates, becomes a focus along with power. And then the world is turned upside down as it were. We are in such a time, I firmly believe.

Have a pleasant evening.

The Anti-Humanism of the New American Century

"Plunderers of the world, when nothing remains on the lands to which they have laid waste by wanton thievery, they search out across the seas. The wealth of another region excites their greed; and if it is weak, their lust for power as well.

Nothing from the rising to the setting of the sun is enough for them. Among all others only they are compelled to attack the poor as well as the rich. Robbery, rape, and slaughter they falsely call empire; and where they make a desert, they call it peace."

Tacitus, Agricola

The fully financialized recovery is not sustainable. In fact, it closely resembles a Ponzi scheme.

The Fed creates enormous amounts of money, which it carefully feeds into the financial system through its Banks and their associated Funds. This is a 'trickle down approach' to monetary stimulus.

The monies created are directed primarily towards the same types of activities that have been dominant in the financial system for the previous ten years at least: financial speculation, building of monopolies, acquisition of assets for repressive exploitation through rents, and the transfer of wealth to the top one percent through largely non-productive activities.

The result can be seen in the continuing plunge of the velocity of money, which is a measure of how much actual GDP related activity is being generated by the additions of monetary growth. Most of the growth we are seeing is only on paper and in accounting gimmicks, and not in real advances and improvements in the standards of living and infrastructure.

 In fact, one can make a good case that all those things that are dependent on longer term planning are suffering greatly, and even being 'hollowed out' for the sake of short term greed.

This short term mentality that has been engineered into our social, economic, and legal structures is going to bring about a cycle of booms and busts. We have seen two busts thus far, and are working on a third. And the third time might be the charm.

The forces of the anti-human are growing stronger and more strident. They are hungrier for power, and having laid waste to some areas, move on to others in a cycle of perpetual war and acquisition until exhaustion or collapse. The only imperative these new Lords of the World have is 'more.' 

It is only in this context that some of the recent decisions that are being made and actions undertaken can be fully understood.

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

"Five years after the official end of the Great Recession, corporate profits are high, and the stock market is booming. Yet most Americans are not sharing in the recovery. While the top 0.1% of income recipients—which include most of the highest-ranking corporate executives—reap almost all the income gains, good jobs keep disappearing, and new employment opportunities tend to be insecure and underpaid. Corporate profitability is not translating into widespread economic prosperity.

The allocation of corporate profits to stock buybacks deserves much of the blame. Consider the 449 companies in the S&P 500 index that were publicly listed from 2003 through 2012. During that period those companies used 54% of their earnings—a total of $2.4 trillion—to buy back their own stock, almost all through purchases on the open market. Dividends absorbed an additional 37% of their earnings. That left very little for investments in productive capabilities or higher incomes for employees."

William Lazonick, Profits Without Prosperity, Harvard Business Review Sept. 2014

h/t Wall Street On Parade

Joseph Stiglitz: The Costs of Inequality

“There are two visions of America a half century from now. One is of a society more divided between the haves and the have-nots, a country in which the rich live in gated communities, send their children to expensive schools, and have access to first-rate medical care. Meanwhile, the rest live in a world marked by insecurity, at best mediocre education, and in effect rationed health care―they hope and pray they don't get seriously sick.

At the bottom are millions of young people alienated and without hope. I have seen that picture in many developing countries; economists have given it a name, a dual economy, two societies living side by side, but hardly knowing each other, hardly imagining what life is like for the other.

Whether we will fall to the depths of some countries, where the gates grow higher and the societies split farther and farther apart, I do not know. It is, however, the nightmare towards which we are slowly marching.”

Joseph E. Stiglitz, The Price of Inequality

NAV Premiums of Certain Precious Metal Trusts and Funds

Gold and silver took a fairly stiff hit this morning as the US dollar rallied on Yen and Euro weakness.

I have been looking for a big down move to flush out the trade and help to set a shorter term bottom. This may be it, or we may have some more to go.

Chartwise we are at the bottom of a trading range, if in fact this is what it is.

As you may have heard, the central banks are trading the US futures markets. Perhaps we need a new form of Glass-Steagall that prevents ALL the TBTF banks from engaging in speculation and all the corruption that comes with it, and distorting market prices with their immensely subsidized money.  What better way to transfer money from the many to the few.

When will enough be enough for this pack of crony capitalists?  Alas, their motto might best be expressed as:

'Wir haben keine Hemmungen, und einen großen Magen.'

Our inhibitions are few, and our appetites are enormous.

Since the precious metals seem to be running counter to stock these days, the rounding top that may be forming in US equities is of particular interest.

Lots of possibilities, but for now the weakness in metals is the dominant force, and stocks have been on a tear since bouncing off their own bottom of doom and gloom just a few weeks ago.

It is hard to be too cynical about these markets, and too skeptical of official statements.

Let's see what happens.