Stocks and Precious Metals Charts - For Ours Is the Kingdom, the Power, and the Glory - Don't Lie To Yourself

“For us to achieve 3 percent GDP growth over the next 10 years from tax reform, we have to have welfare reform. We need people who are mentally and physically able to work to get into the workforce. In my district, a lot of employers can’t find employees... Sometimes we need to force people to go to work.”

Rod Blum (R-Iowa)


“If we pass tax reform, we have to have welfare reform.  When you have a vibrant economy, there’s no reason for Americans to suffer on welfare.”

Clay Higgins (R-La.)


"There is felt today very widely the inconsistency in this condition of political democracy and industrial absolutism. The people are beginning to doubt whether in the long run democracy and absolutism can coexist in the same community; beginning to doubt whether there is a justification for the great inequalities in the distribution of wealth, for the rapid creation of fortunes, more mysterious than the deeds of Aladdin’s lamp."

Louis D. Brandeis, The Opportunity in Law, Speech to Harvard Ethical Society, May 4, 1905


"Starting around 1980, American society began to undergo a series of deep shifts. Deregulation, weakened antitrust enforcement, and technological changes led to increasing concentration of industry and finance.  Money began to play a larger and more corrupting role in politics.  America fell behind other nations in education, in infrastructure, and in the performance of many of its major industries. Inequality increased.

As a result of these and other changes, America was turning into a rigged game— a society that denies opportunity to those who are not born into wealthy families, one that resembles a third-world dictatorship more than an advanced democracy."

Charles H. Ferguson, Predator Nation


“When the system is rigged, when ordinary citizens are powerless, and when whistle-blowers are pariahs at best, three things happen. First, the worst people rise to the top. They behave appallingly, and they wreak havoc. Second, people who could make productive contributions to society are incented to become destructive, because corruption is far more lucrative than honest work. And third, everyone else pays, both economically and emotionally; people become cynical, selfish, and fatalistic. Often they go along with the system, but they hate themselves for it. They play the game to survive and feed their families, but both they and society suffer.”

Charles H. Ferguson, Inside Job

It is a disgrace that the economy and markets are organized and regulated so badly that people have to suffer poverty and be sustained on welfare in the midst of general and unprecedented prosperity. Unlike these congressional fellows quoted above, however, who seem to believe that killing welfare programs is the solution, most human beings will tend to believe that the cure for this is in reform based on social and human values. That is, before they are subjected to a constant and heavy application of stereotypes and propaganda about what has caused our current record economic inequality, and those naturally inferior beings whose lot in life is to be poor and oppressed.

We saw how the last Gilded Age ended. The gilding was covering a pervasive internal rot and creeping corruption, like a whited sepulcher. And it ended in violence and blood.  And this time will be different.

Today was the Non-Farm Payrolls report, and to sum it up in a nutshell, there are plenty of part time and dead end jobs at non-living wages. And the cheerleaders of the status quo have declared the arrival of The Recovery™ , hallowed be its name.

I thought it was cute that the 228,000 jobs added this past month are a bit outweighed by almost the same number of new initial jobless claims each week.

The Labor Participation Rate continues to be rather tepid, if not dismal. Maybe we should force people to go to work, at whatever job and wage we choose, as the Congressman from Iowa has proposed.

Or perhaps we can build a society where those who choose to work can do so with dignity and a living wage.   As Franklin Roosevelt noted in 1933,

"In my Inaugural I laid down the simple proposition that nobody is going to starve in this country.  It seems to me to be equally plain that no business which depends for existence on paying less than living wages to its workers has any right to continue in this country. By 'business I mean the whole of commerce as well as the whole of industry; by workers I mean all workers, the white collar class as well as the men in overalls; and by living wages I mean more than a bare subsistence level-—  I mean the wages of decent living."

It occurred to me today that this crypto-mania took off about the time that a small group of people identified a structural shortage in the available physical gold supply in London.   Despite some stopgap loans and virtual bullion seizures, the shortage remains.  Well, let's see how that works out for them.

A friend sent a photo of the snowfall in her yard just west of Atlanta this morning.  We are expecting the same storm to roll up the coast through this evening, giving us our first snow of the season at about 3-5".    Ho ho ho.

Have a pleasant weekend.

Peak Monetary Goofiness: One Thousand People Own 40% of Bitcoin Market

"About 40 percent of bitcoin is held by perhaps 1,000 users; at current prices, each may want to sell about half of his or her holdings, says Aaron Brown, former managing director and head of financial markets research at AQR Capital Management. (Brown is a contributor to the Bloomberg Prophets online column.)   What’s more, the whales can coordinate their moves or preview them to a select few.  Many of the large owners have known one another for years and stuck by bitcoin through the early days when it was derided, and they can potentially band together to tank or prop up the market...

As in any asset class, large individual holders and large institutional holders can and do collude to manipulate price,” Ari Paul, co-founder of BlockTower Capital and a former portfolio manager of the University of Chicago endowment, wrote in an electronic message. “In cryptocurrency, such manipulation is extreme because of the youth of these markets and the speculative nature of the assets.”

Olga Kharif, Bloomberg: The Bitcoin Whales: 1,000 People Who Own 40 Percent of the Market

'As in any asset class, large individual holders and large institutional holders can and do collude to manipulate price,'

Amen brother.  That's why we need regulators and oversight that is not 'captured' by those same very large institutions and wealthy political donors who are in such a good position to manipulate those markets.

And they are going to be bringing out a futures market and ETFs based on these digital chili beans.  This reminds me so much of the tech/internet bubble.

Gold and silver, I suspect, are going to be remembered as one such market segment that fell victim to the canard of free and naturally efficient markets and the natural rationality and fairness of financial and economic actors.  It is pretty hard to miss, particularly in silver.

My son and I had some time to discuss a number of things the past few days. He is a much better mathematician than I was at his age, and that makes sense because what he is doing at his level for Electrical Engineering starts to become very heavily dependent on mathematics.  I was much more of a boy programmer and systems architect at his age.

He was 'mining' his own bitcoins some years ago using a rig he set up using a video card and a few things he threw together just as a learning exercise.  We discussed the blockchains and how mining worked at some length back then.

I was curious to know about these 'forks' and where that was shaking out. Each new technology and bubble has its own set of jargon and technicalities.  As you may know, a Bitcoin has a memory block of a certain size. As a transaction in bitcoin occurs, that transaction is broadcast to the ENTIRE community of bitcoins, and is updated on them. I did not realize that is how it is set up.

The 'forking' is the usual scalability story, a fix to address a structural memory shortage, as we saw in the internet when we started running out of IP addresses based on the original IP block architecture.

Now I understand why bitcoin transactions can take so very long to complete, and why they are not being used in day to day transactions. And they are not, despite the hype.  They are used primarily for speculation and hoarding.

What I did not understand was how highly concentrated bitcoin ownership is by its nature, and why the 'bitcoin' market is becoming increasingly fragmented with different groups with their own architecture creating their own non-interchangeable types of bitcoins and crypto-currencies.

The key to this is obviously going to be the middlemen, the exchanges.  And I do not believe that they are particularly well founded or regulated.

I was a little surprised when he explained to me why and how a small group of oligarchs with access to enormous computing power were essentially in control of the future of the market. The early adopters are essentially along for the ride.  The technocrats are essentially making it up as they go along, and they do not necessarily agree, or have to agree, with each other.

And then today the story broke which I quoted above and below. And then the whole thing kind of fell together for me.

I cannot believe that the regulators have allowed the CME to bring out futures for these things, which apparently they are going to do over the weekend. Futures on a very immature, unregulated commodity which is closely held by about 1,000 people, most of whom know each other.

Bitcoins are not self-sufficient, naturally constrained, or universal.  That they are 'digital gold' is at best a reach, and more likely one of those passing fancies that become popular then fade.   Bitcoin is just a unit, a value bucket, that requires someone else to stand behind it in its particular manifestation.  And that is the key.

Gold is gold, and has 'worked' since the days of Alexander.  Cryto-currencies are just a new form of a very old enthusiasm.   The Bitcoin market seems much more like the very early over-the-counter stock market under the buttonwood tree.  Or perhaps even tulipmania.

I am not saying that everyone involved with this is acting in bad faith.  Not at all.  And something like a cryptocurrency *could* become real money some day.   It needs someone with a lot of financial clout to stand behind it with sufficient full faith and credit at a stable value of exchange for some particular flavor of crypto-coin.

This is just my own, certainly fallible, judgement.  But based on everything I know this is nuts.  And it is going to end very badly.

"Roughly 40% of the cryptocurrency is owned by 1,000 people, claims Aaron Brown, head of financial markets research at AQR Capital Management. In such an unregulated market, Brown said large holders of bitcoin could potentially be working together to orchestrate price changes. Given bitcoin’s recent spike, now could be a great opportunity for these users to part with a portion of their bitcoins, locking in the near 1600% price increase since the start of the year.

Bitcoin appears to be making its way into mainstream investing. Last Friday the US regulator gave the CME group and CBOE Global Markets the green light to launch bitcoin futures. Just yesterday, London-based digital banking company Revolut launched Bitcoin, Litecoin and Ether trading for their users.

As the cryptocurrency becomes a more mainstream investment and demand for it rises, these bitcoin ‘whales’ will be able to part with their bitcoins for a hefty profit. This could leave new investors with an asset in the midst of a bubble.

Roger Ver, a well known early adopter of bitcoin said, regarding ‘whales’ working together, “I suspect that is likely true, and people should be able to do whatever they want with their own money.”

Read the entire story at Market Mogul here.

Stocks and Precious Metals Charts - The Melody Lingers On

"The song is ended, but the melody lingers on…."

Irving Berlin

We put up the Christmas tree today, and opened boxes with wreathes, night lights, and other decorations. I was caught off guard by a box that held her favorite scarves and gloves.

I picked up a position in silver today.

If I had Bitcoins, I would be taking a big chunk off the table now and putting some of it here. But that's just my opinion, and I could be wrong.

Non-Farm Payrolls tomorrow.

Have a pleasant evening.

Stocks and Precious Metals Charts - What Goes Around

“Incestuous, homogeneous fiefdoms of self-proclaimed expertise are always rank-closing and mutually self-defending, above all else.”

Glenn Greenwald


"For too many of us the political equality we once had won was meaningless in the face of economic inequality.  A small group had concentrated into their own hands an almost complete control over other people's property, other people's money, other people's labor — other people's lives.  For too many of us life was no longer free; liberty no longer real; men could no longer follow the pursuit of happiness...

The money changers have fled from their high seats in the temple of our civilization.  We may now restore that temple to the ancient truths.  The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit."

Franklin D. Roosevelt


"When we talk about morality, and when we talk about justice, we have to, in my view, understand that there is no justice when so few have so much, and so many have so little."

Bernie Sanders

Stocks muddled through today, closing nearly unchanged with a little dead cat bounce in the FANGs.

Oil lost ground despite a larger than expected drawdown in crude. The larger than expected build in gasoline put a damper on that short term enthusiasm.

The Washington Circus continued playing its tunes to itself today.

A vote in the House today to impeach President Trump was defeated 364 to 58. Way too early. lol.

It will be interesting to keep an eye on the Congressional antics with regard to the government shutdown.

Gold and silver took the usual early morning hits and then floundered sideways for the rest of the day. I ascribe this action to the pre-Non-Farm payrolls jimmy-jive. The regulation of US markets is near an all time low in my judgment.

The rest of the leaves from the big oaks dropped in a passing storm last night. The yard looks like I have not touched it at all. Well, one more good session and I think I can put the mower away and bring out the snowblower and get it ready.

The young man is coming to spend some time here for the next couple days. He has been working weekends on his research projects. I took Dolly to the groomer— she was not pleased.  She is pouting on her pillow. But she needed it.  And I was tired of stepping on the acorn tops she has been dragging in with her tail on the kitchen floor.  That is no fun in bare feet.

And so there is sweet and sour meatball soup on the stove, and it looks to be coming together nicely.

I am going to make oatmeal raisin cookies using my mother's recipe which was written on the inside of her old cookbook from the Jane Addams School that in those days was at 49th and Carnegie in Cleveland.  It is The Settlement Cookbook by Mrs. Simon Kander (orig. pub 1903).   I am substituting pecans for walnuts and adding chopped dates with the raisins.

Have a pleasant evening.