Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Tag Archives: Stock Market

Hurricane Sandy’s Impact on the Election

Hurricane Sandy (2012): 60 km Wind Area Forecast

Hurricane Sandy (2012): 60 km Wind Area Forecast (Photo credit: Canadian Pacific)

Hurricane Sandy is immense and could be the worst storm to hit the east coast of the US in 100 years, according to the Economic Collapse Blog (ECB). Michael, writing for the ECB, ticks off the remarkable impact the storm is having (or likely to have) on the 50 million residents living in the estimated impact area:

  • Tropical storm winds are being felt more than 500 miles away from the center of the storm
  • No reported storm recorded since 1988 has been larger than Sandy
  • Nearly 10,000 flights have been canceled as a result of the storm
  • New York City’s Mayor Bloomberg has ordered the evacuation of all residents living in Zone A (a high risk low-lying area in the city)
  • The storm surge could be more than 15 feet above sea level in Zone A
  • The city could experience winds of 80 mph or higher
  • The city’s subway system is being shut down, and could be flooded by Sandy
  • Schools as far away as Boston are closed
  • The stock market is closed
  • Some parts of Kentucky, West Virginia and North Carolina could get as much as two feet of snow
  • Damage estimates by AccuWeather Enterprise Solutions is projecting that Sandy could result in $100 billion in damage,more costly than Hurricane Katrina

But the impact could determine the outcome of the election, according to Josh Vorhees, writing for Slate, a wholly-owned subsidiary of the establishment mouthpiece Washington Post. For one thing, it has turned the campaign schedules of the presidential candidates upside down, with Romney canceling key visits to

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Hurricane Sandy Gives Obama an Excuse to Exercise Presidential Prowess

The latest from the Washington Times spells out just how large Sandy is:

Sandy was headed north from the Caribbean, where it killed more than five dozen  people, and was expected to hook west toward the mid-Atlantic coast and come  ashore late Monday or early Tuesday, most likely in New Jersey, colliding with a  storm moving in from the west and cold air streaming down from the Arctic. The  series of events has created a potentially devastating mix that could affect the  lives of 50 million people from the East Coast to the Great Lakes, forecasters said.

It was Rahm Emanuel who, early in the Obama administration, uttered these chilling words: “You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things you think you could not do before.” And thus was unleashed the storm of totalitarianism that has flooded the halls of Congress and the main streets of America ever since.

Now that Hurricane Sandy has shut down the stock market and a large part of the economy along the East Coast, Obama is wasting no time: 

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Is QE3 a Myth?

English: President Barack Obama confers with F...

President Barack Obama confers with Federal Reserve Chairman Ben Bernanke following their meeting at the White House. (Photo credit: Wikipedia)

Graham Summers, writing for ZeroHedge, has pointed out that Fed head Ben Bernanke hasn’t done any new buying of securities despite his promise to do so back in September. The Fed publishes its balance sheet. You can see it here, in graphical form. As Summers said, if Bernanke was buying, how come the measure of money – the adjusted monetary base – is declining?

Would Bernanke lie? Oh, no!

The stock market jumped up nicely at the news, but has retraced most of those paper gains. Maybe the market has figured it out: it was

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So Romney Won the Debate? Whoop-dee-do.

Mitt Romney politely cleaned Barack Obama’s clock tonight. A lethargic and at times tired looking President Obama was out-hustled, out-facted, out-energized, and out-informed by Former Governor Mitt Romney. Completely unlike Romney’s convention speech, tonight he focused on strong economic issues, developed his philosophy of limited government, and convinced me beyond a shadow of a doubt that he is in fact a pro-growth tax reformer who wants to lower the rate, and broaden the base in a revenue-neutral fashion that will actually create jobs and spur the economy.

This quote from Larry Kudlow removed for me all doubt – that Kudlow is a fool, a tool, a useful idiot promoting the party line.

Obama vs. Romney 2012

Obama vs. Romney 2012 (Photo credit: DonkeyHotey)

I like Kudlow and think that some of his commentary on the stock market makes sense. I like his perspective there. I think it is often reasoned and careful. And I’m glad he’s separated himself from “the Mouth” – Jim Cramer.

But this quote on last night’s debate is just too much for me. My problem is that I know more about Mr. Romney than I would otherwise know if I weren’t a writer. I’ve done some significant digging into Mr. Romney’s political history and into his Mormon faith, and I don’t like at all what I’ve found.

But not Mr. Kudlow. He is a cheerleader. That’s what cheerleaders do, they lead the cheers:

This is the first time I have been totally convinced of his tax reform bonifide and principles. Elsewhere in the debate, Romney had to correct President Obama on a number of issues, including oil tax breaks, healthcare issues, job training programs in the federal government and even how Obamacare works. Romney’s knowledge base was broad and deep, much broader and deeper than President Obama showed tonight.

Kudlow has no excuse for not knowing this about Romney:

Finally, Romney went toe-to-toe with President Obama and looked presidential every step of the way. Romney kept an even demeanor, and showed himself as a man who was in control. It was a different Romney than I saw at the convention. It was much more of the Mitt Romney that I have come to know through many interviews and personal conversations throughout the years.

Kudlow’s rant tells me a lot more about Kudlow than it does about Romney.

Growth in Money Supply: Mainlining Heroin

Ambrose Evans-Pritchard: Global slump risk falls as world money rebounds

The first green shoots have begun to emerge in money supply data from across the world, raising hopes of a tentative global recovery by later this year.

I don’t know why more economists (I am not one, just a wanna-be) don’t use an analogy that I find useful: money created out of nothing and injected into the banking system by buying government bonds is like mainlining heroin.

I have no experience with such activity, but the analogy is useful nevertheless. The addict (and we are addicted to easy money, aren’t we?) is seeking another “high” and shoots himself with heroin. Over time, however, it takes more and more heroin to achieve the same high.

Eventually, of course, the addict either dies from an overdose, or goes through rehab and suffers the painful inevitable withdrawal. The longer the addict puts off the day of withdrawal, the worse it will be.

And so we come to the whole point of Ambrose Evans-Pritchard’s article from the British liberal paper Telegraph: money supply is (and has been since the middle of June) increasing greatly. He provides a useful graph of world money supply and if you look carefully, you’ll see a sharp upturn in that supply taking place starting in June.

I went to the Federal Reserve charts available here and found the same thing: the Adjusted Monetary Base, which had declined sharply since the middle of February, has enjoyed a significant “bounce” upward, again starting at about the middle of June.

And the effects of that additional injection of money and credit is having its expected (temporary) effect. Evans-Pritchard quotes Mr. Simon Ward at Henderson Global Investors who tracks these sorts of things:

Mr. Ward said global industrial output should start to “bottom out” by October. The rebound is a huge relief to monetarists following the sudden collapse of M1 growth from a peak of 5.1pc last November, a rare pace of decline with echoes of early 2008…

Any world recovery is likely to be very fragile as the US and Europe battle the headwinds of debt deleveraging, and China struggles to manage the fall-out from its last credit blitz. There is no margin for policy error anywhere. Yet the bulls have a nice puff of wind in their sails for now. Enjoy it.

At least he’s honest about one thing: the high will be temporary; our stock market just went over 13,000 on the Dow for the first time since April, after hitting a bottom of just over 12,000 in late May/early June. That coincides nicely, doesn’t it, with the increase in the supply of money beginning in early June?

But the heroin addict will enjoy another high, putting off the inevitable crash for another little while.

CalPERS Made a Paltry 1 Percent in Past Year

Stock Market

Stock Market (Photo credit: Ahmad Nawawi)

Monday’s report from the California Employees’ Retirement System (CalPERS) contained two numbers that are spelling out the death spiral of that plan: too little money making too little returns. How bad are the returns? According to the report, the plan made a paltry one percent in the past year (July 2011 – June 2012), far below what’s needed for the plan to be able to keep its promises to its beneficiaries

Joe Dear, the plan’s chief investment officer, sang a familiar refrain when he tried to explain the plan’s poor performance:

The last twelve months were a challenging period for all investors as the ongoing European debt crisis and slowing global economic growth increased market volatility and reduced equity returns. It’s a clear reminder that we must remain focused on performance, risk and internal controls in today’s financial environment.

It’s going to take much more than that to bring his plan back from the edge of oblivion. The plan, the largest public pension plan in the country, currently covers 1.6 million Californians but has only $233 billion in assets. At present it is paying out an average of $3,065 every month to each recipient who retired in the last year, but since the plan is at least 50 percent underfunded it won’t take long for those recipients to start seeing substantial cuts in those checks.

The problem is two-fold: The plan is underfunded because the state hasn’t been able to

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Experts Disagree on U.S. Economic Outlook

The Six Million Dollar Man

As soon as Automatic Data Processing, Inc. (ADPannounced that hiring slowed in April compared to March, with 199,000 new jobs being the lowest since last September, the experts began scratching their heads. Joel Parkken, chairman of Macroeconomic Advisors which produces the monthly reports for ADP said that “this deceleration seems consistent with other incoming data” and that it also means that Friday’s employment report from the Bureau of Labor Statistics (BLS) will show that the unemployment rate will stay at 8.2 percent, the same as last month.

ADP also revised downward last month’s jobs numbers from 209,000 to 201,000, and indicated that 123,000 service jobs were added in April while manufacturing lost 4,000 jobs. Paul Ashworth, chief U.S. economist at Capital Economics who estimated that job growth would be 175,000 for the month, is now backtracking:

Obviously, the weak ADP reading means that there are now clear downside risks to our estimate…Indeed, it is possible we could see a repeat of March, when payrolls [reported by the BLS] increased by only 120,000.

Looking back over the last five months of ADP data, however, gives a better picture of the economy and jobs. Since November total payrolls have increased by 1 million, or about 200,000 jobs per month. Two-thirds of those jobs were created in the service industry while one-third was in the goods producing sector, with only about 15,000 jobs being created in the heavy manufacturing sector every month.

But this report from the payroll giant, which tracks job growth closely, differs from the survey of

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Friday’s Unemployment Numbers: Correcting the Corrections

English: President Barack Obama discusses his ...

The news released by the Bureau of Labor Statistics (BLS) on Friday appeared to be all good: The unemployment rate was down by 0.2 percent to 8.3 percent, the lowest since the month after President Obama was inaugurated. November and December estimates were revised upward. Most private industries showed growth, including 70,000 new business services jobs, 50,000 new manufacturing jobs, and a remarkable 21,000 new jobs in the construction industry. The labor force expanded by 500,000 which appeared to indicate that more people are coming back into the market looking for work. But the skeptics were legion: the Wall Street Journal, while accepting the numbers at face value, said, “Even with the recent gains, this is by far the worst jobs recovery since the Great Depression, and the U.S. still has about 5.5 million fewer jobs that it did before the recession began in December 2007.” Across town, the Washington Times said the numbers looked better than they should because of the number of young people dropping out and the paper even found an economist at the Federal Reserve to agree with it. Brian Holter, who works at the Minneapolis Fed, said: “However these factors stack up, the improvement in unemployment is largely the work of declining participation rates and, unfortunately, not job growth.” John Ransom, writing at Townhall.com, was blunt in his assessment of the BLS report: 

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Not All Economic News is Bad News

English: There's a light at the end of the tun...

Republican presidential candidate Ron Paul noted on Tuesday that efforts to rein in government spending appeared to be in vain, due to an agreement reached with the White House during the recent debt ceiling negotiations. Congress would have to pass a joint resolution to oppose any extension of the debt ceiling, which President Obama is free to veto. Said Paul: “A default is becoming more mathematically unavoidable with…every debt ceiling increase.”

Not only is the word “default” becoming commonplace but also the words “economic collapse.” A study conducted by Leflein Associates and published by EcoHealth Alliance showed that of the 1003 individuals interviewed for the survey, 63 percent—or more than six out of ten of them—feared an “economic collapse” more than a natural disaster, a terrorist attack or a global outbreak of disease. This study was picked up by Michael, the author of his Economic Collapse Blog, who piled on by adding a long list of reasons why concerned citizens should be afraid of such an event: 

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European Union Agreement: Too Little, Too Late

English: The City of London skyline as viewed ...

As reported by Annika Breidthardt for RealClearMarkets.com, the latest European crisis summit that ended last weekend resulted in “a historic agreement to draft a new treaty” which she then characterized as “too little, too late.” Reaction of the equity and currency markets agreed, with substantial losses in American and European stock markets opening the week, and the euro dropping to lows not seen since last February.

The agreement will require EU member states to ante-up $267 billion to the International Monetary Fund which will then turn around and re-lend it to those member states in financial trouble. Exactly how those needing the funds will “ante-up” was left unexplained. The existing bailout fund—the European Financial Stability Fund, or EFSF—will be leveraged, debt upon debt, to give it more ability to lend to those same struggling countries.

But the big news is the moving forward of the date for ratification of the ESM—the European Stability Mechanism—by a full year, to June of 2012. This is the elephant in the living room that few in the media have spent much time reviewing, although a careful analysis is available here. The reason for moving ahead with such a grotesque totalitarian program is obvious: there may not be enough time left to implement it. Investors continue to demand

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Forbes: Rich Nations Go Broke by Overpromising and Overspending

Russian coins in ice castle

Cato Institute senior fellow Jim Powell wrote in Forbes magazine about the inevitable and predictable decline of rich nations that debauched their currencies in order to pay their bills. Powell said that politicians’ urge to promise and then to spend is almost overwhelming, calling it “a visceral urge to spend money they don’t have. They can’t control themselves. They’ll weasel their way around any efforts to put the lid on the cookie jar.”

The Roman Empire was on a gold standard, minting and using the aureus from the 3rd century B.C. until the 4th century A.D. The aureus initially contained 10.9 grams of gold, which was worth about 25 denarii, or about a month’s wages. As the empire devolved into promising more and more services (grain subsidies, public entertainment, and a huge bureaucracy and military establishment) it soon exceeded revenues generated through taxation. To make up for the difference, the aureus was steadily debased so that by 50 B.C. it contained 9.09 grams of gold, 8.18 grams by 46 B.C., 7.27 grams by 60 A.D., 6.55 grams by 214 A.D., 5.45 grams by the year 292, 4.54 grams in 312, and 3.29 grams by 367.

Paper money was more easily debased, as the Chinese discovered. Powell noted that seven different Chinese dynasties issued paper money to pay their bills and all of them eventually collapsed or were

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Big Banks Gamble on Derivatives at Taxpayers’ Risk

Risk Tournament

When Bank of America announced that it was moving its derivatives-laden portfolio at its subsidiary Merrill Lynch over to its bank holding company, it said it was merely responding to pressure from some of its partners to take advantage of the holding company’s higher credit rating. It would also reduce the need for the bank to post an additional $3.3 billion in collateral because of the recent downgrade it suffered at the hands of Moody’s last month.

But the real reason, according to Bloomberg, is that the FDIC insures the bank but not Merrill Lynch, and in the event of a failure in

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How Bad Will This “New” Recession Get?

A homeless man in Paris

The prediction by the Economic Cycle Research Institute (ECRI) that the United States is headed into another recession was greeted by a rise in the stock market from 1,074 on the Standard and Poor’s 500 Index on Tuesday, October 4, to 1,238 on Friday, October 21, a gain of 15 percent in just 13 days.

This sudden rise happened in the face of ECRI’s spokesman Laksman Achuthan’s emphatic forecast that “it’s going to get a lot worse…you haven’t seen anything yet.” Furthermore, Achuthan said that

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UBS CEO Grübel Hastily Resigns Over Rogue Trading Losses

UBS AG Headquarters in London, Liverpool Stree...

Image via Wikipedia

The announcement by Kaspar Villiger, Board Chairman of UBS (Union Bank of Switzerland), that CEO Oswald Grübel had resigned on Saturday caught many by surprise, partly because just the day before he had said he had the board’s complete support. According to Villiger, “The Board regrets Oswald Grübel’s decision. Oswald Grübel feels that it is his duty to assume responsibility for the recent unauthorized trading incident.” He added:

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The Fed: QE3 is All but Certain

DSC_1334

Image by The UpTake via Flickr

The latest report from the Board of Governors of the Federal Reserve System confirms what every sentient being already knows: The economy is in the dumper, with little improvement expected. The report used words like “considerably slower,” “deterioration,” “flattened out,” “weak,” and “depressed” to describe current conditions, and it even noted that excuses such as bad weather and the earthquake in Japan “appear[ed] to account for only some of the current weakness in economic activity.” (Emphasis added.)

In other words, the Board had a BFO (blinding flash of the obvious) and

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Chile’s Privatized Social Security Program is 30 Years Old, and Prospering

The Coat of arms of Chile

Image via Wikipedia

As a quiet example of how privatizing Social Security works in the real world, Chile’s 30-year experiment is succeeding beyond expectations. Instead of running huge deficits to fund the old “PayGo” system, private savings now exceed 50 percent of the country’s Gross Domestic Product.

Prior to May 1, 1981, the Chilean system required contributions from workers and was clearly in grave financial trouble. Instead of nibbling around the edges to shore up the program for another few years, José Piñera, Secretary of Labor and Pensions under Augusto Pinochet, decided to do a major overhaul of the system:

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The Great Recession and American Boomer Reality

Gold Rolex Oyster Perpetual Date

Image by jwinfred via Flickr

In its extensive study of how the Boomer generation is faring, the Wall Street Journal focused mostly on their difficulties, challenges, disappointments and missed opportunities. It had little to say about the outside event no one saw coming, the Great Recession, and nothing at all about the resilience of the individuals moving into what used to be called the “golden” years.

For example, Steven Rutschmann, age 60, has a 401(k) plan with about $500,000 in it, and his wife also has a 401(k) plan and is expecting a small pension when she retires from her nursing position. They went to see a financial planner who told them that

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What If the Debt Ceiling Isn’t Raised?

Ceiling Fan

Image by elston via Flickr

Following the petulant pronouncement from the Obama administration’s chief economics advisor that any suggestion of not raising the debt ceiling was engaging in a “game of chicken,” two other establishment types noisily concurred.

Timothy Geithner, the U. S. Secretary of the Treasury, said that failure to raise the ceiling “could make it impossible for the U. S. to access global credit markets,” while Bill Gross, the co-CEO of PIMCO, the world’s largest bond fund manager, plainly implied that unless the ceiling were raised promptly, the U.S. could lose its coveted AAA credit rating: “Ultimately, if we continue a trillion-dollar-plus [annual deficit] then, yes, your credit rating will be threatened.”

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Reality Checks from New Jersey, Illinois

Governor of New Jersey Chris Christie

Image via Wikipedia

Steve Kroft called it “The Day of Reckoning” on his “60 Minutes” segment on Sunday, but many weren’t buying it. Despite persuasive statistics showing that states have overpromised and overspent, Kroft’s conclusion about time having run out on the states was met with denial, even anger. He interviewed Meredith Whitney (who accurately predicted the decline in bank stocks as far back as 2007), who reiterated her conclusion that states’ debts are the next big bubble to burst. Her biggest concern is complacency:

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Great Depression II: Here We Go Again?

The Causes of The Great Depression / FDR Memor...

Image by Tony the Misfit via Flickr

The unremitting flow of negative news about the economy has finally caught the attention of the mainstream media, causing an increasing number of economists to make comparisons between today’s recession and the Great Depression.

David Rosenberg, Gluskin Sheff’s chief market economist, commented to his clients that the monster drop in new home sales in June compared to May was not exactly “a one-month wonder” but instead invited comparison of the current recession’s similarities with those of the Great Depression. He said they include:

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.