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Monday, September 30, 2013

Visual Quiz-- Confederate Flag: Yes or No

~ Black Confederate soldiers (1861)

Its the last Monday in September.. couldn't bring ourselves to waste a moment of time or brainpower addressing the impending government shutdown starting tomorrow..

Its much like a parent telling their teenager that as punishment he/she can't use the car except for going to school and work and to pick up the parents' dry cleaning...

Until the shutdown affects people receiving Social Security, food stamps or military pay which would provoke genuine public wrath, its all a big silly game no matter how you feel on Obamacare.
So instead, we're going to do a visual quiz and we call it 'Confederate Flag: Yes or No'

The inspiration for this was reading an AP article over the weekend that a giant Confederate battle flag was to be displayed along I-95 in Richmond.

Some say the flag represents hate.. to others its Southern pride and honoring Confederate Civil War dead.
~ Private Louis Napoleon Nelson, CSA.. rode with Gen. Forrest;  member of Company M of the 7th Tennessee Cavalry

The flag was co-opted in the early 20th century by the modern Klan and ultimately other hate groups so in a way it takes on that power much like the swastika has been around as a symbol since times of antiquity but of course it was taken over by monsters in the 1930s and now that symbol only possesses one meaning..
Now if those who flew the stars n bars decided to fly the flag just above, no one would have known its meaning even though it was the Confederate flag of the 3rd Kentucky Mounted Infantry which served in the Army of Tennessee then under command of General N.B. Forrest for the duration of the war...

Little piece of interesting trivia:  The Confederate Army in the Western theater called themselves the Army of Tennessee in reference to the state.  The Union called themselves the Army of the Tennessee in reference to the river..
~ Polk Arnold who served with Gen Forrest's Escort Cavalry

Its all about perception, the meanings we give symbols and the power we allow others to control how such symbols are to be interpreted.

And its so much simpler to brand the Confederate flag as evil while looking upon the US flag naively as noble and pure..  We don't recall Jim Crow, the Native American Wars and internment of Japanese Americans during WWII to to under the Stars & Bars...

So let's start with a few flags..  Decide- is this a Confederate flag or not?

The first flag was the first Confederate Naval Jack which was eventually replaced by the middle flag until 1863 when the Stars & Bars represented both Southern Army and Navy.

The last flag is of the current EU (European Union).

OK, let's try some others:

The first flag is the governmental flag of the Confederacy.  This was the flag flown over the Southern capitol at Montgomery, AL and then Richmond, VA for the war's duration.

The 2nd flag is the state Confederate flag of Louisiana (1861-65)

The bottom flag is the current flag of Mississippi flown currently over their capitol building.  The state is now as loyal to the United States as any other.

So how are you doing?  Ready for some more??

The first flag represented those of the Native American Choctaw tribe who fought on the side of the Confederacy.  The Cherokees also fought for the South.

The middle flag is that of the 10th Tennessee Irish Infantry Brigade who fought for the South and suffered heavy losses by war's end.  The bottom flag is that of the 28th Massachusetts Irish Brigade.

Are you starting to get the point?

Here's more.. Confederate or not?

Here all three are Confederate flags.  The top is that of 4th Missouri Infantry Regiment under Gen Van Dorn and was used until their surrender after the fall of Vickburg, MS on July 4th, 1863.

The middle flag is of the 39th North Carolina under major-general John McCown .  He was of Scottish descent which explains the use of the cross of St Andrews.

The bottom flag is of the 39th Georgia Brigade which fought for the Army of Tennessee during the Vicksburg campaign against General Grant (Union).

Here's a couple more to round things out:

So which if any are Confederate flags?

The top flag is that of the 16th Tennessee Infantry Confederate volunteers under General Polk used until they surrendered to the Union in 1863

The middle flag is the naval flag of Estonia and the bottom flag is the naval flag of Russia..

So how did you do?

Flags are merely that... flags.

We create the symbolism and meaning whether it be positive or deviant and worse.  And like certain 'words', we allow others the power to control its definition as well as delineation based on ignorance, guilt and or/cowardice.

Friday, September 27, 2013

Trapped.. like a Bernanke Rat

For the next few months, speculation will be whether the Fed will start tapering back its $85 billion/monthly QE securities purchases which will be akin in significance to a fat person eating one less cookie per day..

Personally we expect it to occur at earliest in January 2014 when a new Fed chair is in charge who will take the fall for the truly F'd up policies of Bernanke the past 4.5 years..

In addition, tapering now would wreck havoc on the Christmas shopping season and by extension throw Investor rats into a tizzy.

The Financial Times explained in an article written in January, 2010 the dilemma the Fed is in; a quandary of their own creation (to financial laypeople, what is written will be a little bit technical so just follow the gist):
"No matter how bulled up the equity market becomes, should data improve, the Fed is likely to remain very cautious, mindful that it needs to keep the bond market happy. Becoming the buyer of last resort in the past year (2009) resulted in the Fed crossing an important line in the bond market... 

The exit from QE is always going to be messy, unlike the relatively simple act of raising the overnight target interest rate. It leaves policymakers hoping that talk of extending QE will help contain rates from rising too quickly and save them the trouble of actually buying more bonds.

The danger, however, is that the bond market seeks a resumption of buying. A lot of easy money was made on Wall Street bond desks last year thanks to the Fed's buying. Can you blame dealers for not wanting to see that party end?
This potentially leaves the Fed trapped, for any sign of a recovery in the economy will be accompanied by rising rates, which in turn threaten sustainable growth and could well shake the equity market.

To prevent such a scenario, it is very likely that the Fed will reinforce its role as the buyer of last resort...

All which entails that the eventual end of QE will be a messier affair than perhaps many investors care to think. And one that bodes ill for the dollar and US fiscal policy down the road."
The comments written above referred to QE1..  we're now at QE 4&5, otherwise known as QE infinity.  
And for the record we Do blame the greedy soulless dealers and market profiteers for putting themselves and their financial best interests over the nation's..

I know.. we can be so naive sometimes.
So as stated before Bernanke has enjoyed all the love and kisses from his Investor and Banking buddies and isn't going to put himself in a position where he has to accept any deserved scorn..  Not while in office.

Let it wait until after the memoirs are released..

So we'd be surprised if any tapering is done this year beyond maybe breadcrumbs.

Thursday, September 26, 2013

Better Now or Then? (2013 vs 1913)

For today's posting, we're going to do some comparing between 1913 and the present, and not just because its fun or interesting to compare different points in time that are separated by 10, 25, 50 or 100 years of space..

1913 is also the origin year for the Federal Reserve.

Took 5 years for those bedbug banking elites to convert their secret Jeckyl Isl, Ga. meeting into irreversible law..

But A Lot of campaign contribution dough to Presidential candidate Woodrow Wilson going up against a fat yet weak incumbent (William H Taft) and a 'Bull Moose' in Teddy Roosevelt the previous year (1912) goes a long way..
So was life better then or presently?

Oh sure today we enjoy great advances in technology and creature comforts that we take for granted which the world never heard of..

Who can rightly argue against the advent of central air conditioning/heating, machines that wash clothes and dishes and heat up meals in fractions of time..

Of course there were no such things as nuclear weapons,  patriot missiles, stealth fighters and unarmed drones either..

And in 1913, there was yet to be a savage bloody "Great" war that needlessly took tens of millions of lives for absolutely nothing while sewing the seeds for a sequel a generation later
People also socialized face to face and actually acknowledged others vs today where the young in particular do everything humanly possible to ignore all living breathing life around them to bury noses in texting devices

So we call the whole technological debate a 'push'.

But we asked if life was better.. Not if the technology was..

In 2013, most women work because they Have to.   In 1913, most those who worked did so because they Chose to.
Feminism propaganda aside, it is a hell of a lot Better in life to do something by freedom of choice then the necessity of survival.

A man usually was the sole wage earner in a home of 4 and supported all quite well and without second mortgages, credit cards or other forms of debt acquisition to keep the family afloat.

The average salary back then was $585 which interestingly only comes to $12,929 today.

Think about that...
The average salary today is around $47,000 and most families need both adults to be working and contributing to make the house run efficiently.  In 1913, one breadwinner earning just under $13k in today's money was sufficient...

A lot of it has to do with the rise in inflation.

$20 in purchasing power then equals 85 cents today. Yes... $0.85    And if you had $20 in your pocket back in 1913, it would be like carrying $472.28 at present.

That's a cumulative rate of inflation of 2262.4%
Here's a little perspective to understand how dramatically our purchasing power has fallen in 100 years thanks to the Federal Reserve and their continual never-ending policy of weakening the US dollar...

The average new car in 1913 cost $600 which would be like someone purchasing a brand new Camry or Altima today for $13,261.

If you took that $13,261 and transported yourself back in time to 1913, you'd have over $313k in purchasing power which would allow you to feel like a Mr (or Ms) Monopoly as you gobble up property (average new home in 1913 was $5,935)

It boggles the mind today but all these figures are based on the Fed's inflation calculator.
See its not simply about how much $$ you make in the year you live in vs what you can buy and its price point at that time.  There's also a comparable inflation adjustment that must be made that people often forget.

So yes, theoretically, you could take $13k, transport yourself back in time to 1913 and have enough capital in your possession to buy 52 new homes or 521 Model T automobiles.

Conversely, an average wage earner in 1913 would have to work over 37 years to be able to afford a new mid-sized car if he/she ever teleported to the present.

See why we never have any time travelers from the past?
To be fair, the Federal Reserve is not the only reason we've seen a dramatic fall in the quality of living in this nation and inability for one wage earner to support a growing family.

The 16th Amendment has something to do with it too--  the institution of an income tax to be collected which was ratified in early 1913.

Prior to the tax with the exception of wartime, government revenue was collected through customs duties and excise taxes.

When the law was in place, originally it was one tax rate-- 2% on incomes over $4,000 ($106,000 today).  They poor, working class and what would generally be considered 'middle' class did not pay a penny...
Today we collect 10% from the poorest of the poor worker and 50% from the top wage earner.  And what we can't take from the everyday person via income tax, we do in consumption taxes, 'sin' taxes and turnpike/bridge tolls.

One can argue on the merits of the modern tax code or even argue in today's society its not enough...

But in plain math, you take someone working today earning $75k and not take 1/3 or more of their livelihood to give to the government, that's an additional $25,000 in purchasing power to perhaps use toward buying a home with less down or buy a new car out the door...

And poor banks... however could they make excessive profit off the people if they now have the discretionary spending to buy what they wish without need for credit and loans?

See how this all works?
So the depreciable standard of living we feel today is based on a multitude of reasons.. the Fed essentially 'F'ing with our currency and devaluing the dollar, the institution of the Federal income tax in all its unfairness, the fact US workers had jobs-a-plenty in 1913 vs this outsourced world we live in today..

It all adds up.. And the only reason most survive.. and we do mean ONLY reason is because credit i.e. debt acquisition fills in the void and changes people from once planning for the future, to living year to year, paycheck to paycheck

So yes we may have computers, cellphones, iPods and all that..  but we also work much much harder to just keep in place on the economic treadmill of life and many are slipping under...

Are we truly better now or then?
P.S.   Today (Thursday) the Dow closed at 15,328

Do you know what the Dow was in 1913?


Yes..   Eighty-Eight.   The Dow would not reach 100 for the first time Ever until late 1919.

Wednesday, September 25, 2013

Much Ado About Anything

Its super-early Wednesday morning..  We weren't able to post yesterday due to meetings galore taking us into today so this is our first and only chance to do so..

So let's see how the market's doing..

Ahh.. we see its dropped another 66 pts to 15,000 and blah-blah where the previous day it was 15,000 and blah-blah, and in all likelihood today will finish at around the same number..

We do like seeing it continually drop but wake us when it gets to 13,000 and blah-blah at the very least.
Supposedly there's sudden investor uncertainty that the Fed may actually start tapering soon after all, and threat of government showdown-shutdown and probably a really foul mood on Wall Street based on how terrible the N.Y. football Giants are (we're guessing on that one)

So what to make of all this sudden nervousness and jittery reactions?

First thing to remember is everything on Wall Street is orchestrated and telestrated by the Fed..  If you are a professional Investor, a banker, member of the financial media or just someone in the know, then you Know what will happen before it happens.

In fact before major announcements by the Fed are made public, they text 'teak' it to contacts in the industry and media whom they know will release the info to the secondary people who without the heads-up, may react dramatically to anything the Fed states to the public..
This ensures a calm market and everyone feels that they're thoroughly connected in the loop.

So the nervousness causing the market to drop is merely professional scum.. um.. Investors, traders, media and the like not yet filled in secretly as to what the Fed's plans are to manipulate things.

If you see the Dow begin dropping 200-250pts consistently, then the Big Boys know tapering is coming because they were forewarned.

But really the Fed is behind the 8 ball on this one.    They took a criminal operation run by greedy soulless thugs (Wall Street) and since 2009 decided the best way to recover the market was to 'drug' them all with free money..
And goodness how they devoured it... devoured like opium

And now these bad people are hooked; got a really bad fix..and since the real economy is still flat lined, what is the Fed to do?

Gotta always appease the investor ya know...

A couple weeks ago they couldn't have even symbolically tapered by a few hundred million which is like one-tenth of one percent of the $85 billion monthly for fear the barnyard animals in the silos would go crazy and take the market down with it...
And now they're still floating rumors of tapering?  More like trial balloons to see if there's even the slightest chance they can without the backlash..

You try weaning a happy baby from its bottle, or from a tasty teat... What reaction do you think you'll get?

Hard enough weaning an adult from one...

But we digress..
The Fed and the market are both also worried of a government shutdown.  Not because it will impact people's lives and deprive them of an income..   No no no silly..

Its more like it will affect when information like the monthly BLS jobs report is released which is one of those faux factors the market uses to push the Dow even higher..

If there is an October 1st shutdown, the BLS won't be able to tell us when the employment data, and other key economic reports will be released until after the shutdown ends.
Some BLS employees will report to the office to provide for an orderly shutdown but no new work will occur.   Computers will be shutdown to prevent problems. Those workers that worked from home or in the field will be forced to turn in laptops, and BLS provided cell phones.

So all this.. we call it 'Much Ado about Anything' because anything short of scripted guaranteed certainty in the stock market and it may cause all these super-elites to do something they're incapable of doing...

Like honestly trade (buy/sell) based on actual skill

Monday, September 23, 2013

How the Fed works: An Attempt to make it Understandable to a 10 yr old..

We ran across this header on a site called CNS News:

'$3.39T Quantitative Explosion: Fed Owns More Treasuries and MBSs Than Publicly Held Debt Amassed From Washington Through Clinton'

MBS are Mortgage Backed Securities or more specifically ''toxic' mortgages

"Since the beginning of September 2008, in fact, the Fed's ownership of Treasury securities and MBSs has increased seven fold.

As of the close of business Thursday, the Fed said, it owned approximately $2,052,055,000,000 in U.S. Treasury securities and approximately $1,339,771,000,000 in mortgage-backed securities—for a combined total of about $3,391,826,000,000 in Treasury securities and MBSs."
We keep trying to explain what's going on and to do so in as clear-cut easy to understand manner as possible and because we keep thinking we're failing on this due to its complexity, we're going to try again..

So those readers who already know all this, you may still want to read as a refresher..

Or not..

It's really up to you..  We provide the information..  You're still free to choose to acquire it..

OK.. so we begin our latest attempt at simplicity:
Many nations own portions of US debt.  For instance, based on figures from October 2010, the United Kingdom owns $478 Billion in US Treasuries with Luxembourg owning at the time $78.5B

Owning Treasuries means owning Bonds essentially.

Government sells IOUs to others to be paid back over time with different interest rates in exchange for getting immediate money to pay out other IOUs come due.

Ex: John borrows $5 with interest from Anne so he can pay back the $4.75 with interest he borrowed last month from Beth.   Next month he will borrow $$ to pay Anne back.. etc..
OK.. let's continue..

As of Oct 2010, the largest foreign nation holding onto US Treasuries i.e. debt was mainland China with $907 Billion followed closely by Japan owning $877.   The combined amount comes to $1.784 Trillion

The Federal Reserve as of this moment holds approximately $2,052,055,000,000 in U.S. Treasury securities, which is give or take $300 billion more than China and Japan combined.

See why we can never Ever default?   We'd be doing so to ourselves..

Now..  How does the Fed, which is a private entity by the way..  How does it get the $$ to buy these securities?
Answer:  It prints the necessary money it needs to spend; it creates this money out of thin air.

And what is new money created from nothing really called?

New debt.

Every dollar printed is a dollar borrowed but its not the Fed who pays back this obligation..  Nope its the taxpayer.

So in simple terms, the everyday person with their heads in the sand or between their legs is paying two times over.  Through higher taxes, they pay towards maintaining the debt and reimbursing the Fed's expenditure.
We pay for that artificial market and ownership of those worthless toxic mortgages.

OK, still with us?

Let's move a little more forward before wrapping up..

When the Fed is buying these mortgage securities, the questions to ask are 1) Why? and 2) What is the valuation they are paying?

Answer #1.. They're buying the crap to help liquidate the drowning banks who if forced to acknowledge mark to market its real valuation, would take down every major bank in this nation.
So they are stepping in as the sole buyer of junk worth pennies on the dollar.

This leads to answer #2..  What is the valuation being paid?

100 cents on the dollar.

So in simple terms, think of it like an auction where there's one bidder constantly outbidding him/herself purposely to 'feed' the seller the most money possible for something understood to be utterly worthless.
Remember, the #1 goal for the Fed... the primary purpose for its existence is to always come to the financial rescue of the banks.

So to use that auction example, imagine your loved one was in financial need and you couldn't simply hand them the $$ needed for survival, so you do a 'back door'.. you buy all their possessions, purposely overpaying until the person you want the $$ to go to has enough to stand on their two feet.

This is why the Federal Reserve is so evil.  It gives the illusion of being part of the government.  The President nominates someone every four years and there's monthly visits to Capitol Hill and obligatory speeches or reports to release..

But its as 'Federal' as Federal Express.
So $3.391 Trillion.. and that doesn't count next month's $85 billion.. or the following month..

And it doesn't count the Trillions secretly funneled to foreign banks, other central banks such as the ECB and corps around the world...

And the populace is really clueless.  

They will argue with the teenager behind the fast-food counter if they didn't get exact change on their Whopper Jr. or proper points were not assessed on their rewards card...
And this..The Fed..  All This...  just too big to comprehend

And don't think the Financial Elite don't know all this..  Its why they can be so transparently out in the open.

Lesson:  Don't sweat the small stuff.. Focus on the bigger picture.