Thursday, January 28, 2010

A monologue of my first year in office by Barrack Obama

Financial Crisis!?!? It’s not my fault. It’s never my fault! I have such good intentions…. And logically good intentions always produce good results right??? Since it obviously can’t be my fault it’s their fault. Who’s to blame? Those greedy fat cat bankers; blame them!!! In the mean time my fault-free administration is going to save America with bailouts:
"We also took steps to prevent the rapid dissolution of the American auto industry, which faced a crisis partly of its own making, to prevent the loss of hundreds of thousands of jobs during an already fragile time,"

-President Obama
"This recovery plan will save or create more than three million new jobs over the next few years,"

–President Obama
"We're moving in the right direction. We're starting to make real progress on the road to recovery. Quite simply, the Recovery Act is performing as advertised."

-Joe Biden
Look at me everyone I just saved the world!!!! (p.s. Thanks for the Nobel Peace Prize… I deserved every vote; I’m also glad you agree with me that sending 100,000 troops to Afghanistan is for peace purposes) Ohh wait, we’re going to lose money on the bailout and the American people don’t support it??? Well one thing is for sure, I DID NOT support the bailouts… Actually no one like the bailouts, yeah, we didn’t like it at all:

“And if there's one thing that has unified Democrats and Republicans, it's that we all hated the bank bailout. I hated it. You hated it. It was about as popular as a root canal.”

-President Obama
You see it was all Tim Geithner and Ben Bernake’s idea sooooo you really can’t blame me. In a completely unrelated matter I do support both their reconfirmation. They’re good men, good intentions which ALWAYS equals good results. If the bailout does get repaid you can send me a thank you card addressed to: 1600 Pennsylvania Ave Washington, DC 20500. But remember if the bailouts don’t get paid it was Tim Geithner’s plan all along and it’s not my fault.

"Faced with crisis, the man of character falls back on himself. He imposes his own stamp of action, takes responsibility for it, makes it his own."

-Chales de Gaulle

"For years governments have been promising more than they can deliver, and delivering more than they can afford."

-Paul Martin

"You cannot escape the responsibility of tomorrow by evading it today."

-Abraham Lincoln

"Let us not seek the Republican answer or the Democratic answer, but the right answer. Let us not seek to fix the blame for the past. Let us accept our own responsibility for the future."

-John F. Kennedy


State of the Union


Thanks President Obama for that encouraging State of the Union Address last night....you must not have been convincing enough?

I present you with the REAL State of the Union.....



Nasdaq Composite


S&P 500 Index


Dow Jones Industrial Average


Dow Jones Transportation Average

Tuesday, January 26, 2010

Dollar update

Some crazy action in the futures and forex market tonight, be ready for a VERY interesting day tomorrow...

This goes with the post below too so make sure you check out the post below this too.

Here was the last update on the dollar: http://absolute-investments.blogspot.com/2010/01/count-on-dollar.html

This flat turned out to be spot on and we are currently here on the hourly chart.
I went long a couple of contracts as it was breaking out of the triangle at 76.46.

Gold and Oil prediction revisited.....

Here is the link to my gold and oil charts from early December calling this short term rally in gold and oil: http://absolute-investments.blogspot.com/2009/12/short-term-oil-gold-rally.html

Here's the oil prediction...

Here's what happened... turning point i estimated around the white circle. It went slightly above bouncing off resistance from previous highs. I'm expecting weaker demand and oil to fall from here.
Here's what I predicted for gold..

Gold fell just short of my target but continued down sharply like i was expecting... I am still very bearish with gold in the short-intermediate time-frame

Monday, January 25, 2010

Quote of the Day

In response to this article on Yahoo Finance! - "Obama announces initiatives for middle class"
In a partial preview of a State of the Union address that aims to answer voter angst about the economy and reconnect with the public, Obama outlined the series of proposals from the White House. The product of a middle class task force headed by Vice President Joe Biden, the proposals will also be included in Obama's budget request due to be submitted to Congress next week.

This is insane....my only response is a quote from Ronald Reagan.
"In this present crisis government is not the solution to our problem. Government is the problem."

-Ronald Reagan

Thursday, January 21, 2010

Credit risk rising?

The TED spread is basing....look what happened the last time it based like this:


Goldman beats estimates....why are they down 5% and their CDS cost are up 21% on the day? Doesn't sound to me like they are doing so good.

According to Forbes:
"The investment bank crushed earnings estimates at $8.20 per share."
Zerohedge has a different story....
"Goldman Credit Default Swaps have surged by over 20% on the day the firm may have finally lost its trading "edge." With a 5% decline in the stock, the company default risk has jumped to a 5 month high at 121 bps."
Point being...risk is still high, the system is broken, and you had better be careful going long equities at this point.

Tighten your belts...goodbye carry trade

GOODBYE OBAMA, GOODBYE BERNAKE, GOODBYE GEITHNER, and with them GOODBYE to the dollar carry trade.....look out below Dow.

Check the model portfolio link on the right side of the page...it's doing swell today!

Dow Jones Industrials

Tuesday, January 19, 2010

The Modern Money System.....A Must Read!!!!


Have you ever asked yourself how our money is created? Money comes into existence through loans. Yes, money = debt. When banks (central banks, commercial banks, and investment banks) give loans new money is created to be used in trade and commerce. The total amount of loans, or debt, outstanding in the world represents the global money supply. So, if you think about it, every dollar in your pocket represents a slice of debt owed to someone else.
“If there were no debts in our money system, there wouldn’t be any money”

-Marriner Eccles – Governor of the Federal Reserve 1941 house Committee on Banking and Currency
If you need further explanation as to how money = debt take the time to watch this video.

Money As Debt

Simple, right? Here's the kicker. What comes with a loan? Interest. When you take out a loan you always have to pay back the entire amount of the loan with a little added interest stacked on top. Where do you get the extra money to pay this interest? You pull it out of the global money supply, global debt pool, by working and being paid for your labor. But if money = debt and all debt has interest, then where does the extra money to pay all the interest payments in the world come from? The truth is nowhere, it doesn't exist. As interest stacks up more and more, day after day, month after month it continues to represent an ever larger fraction of the global money supply. At some point the amount of interest owed in the world will be larger than the amount of money (debt) that actually exists. Mind blowing, right? What does this mean? What happens when there isn't enough money in the global pool for everyone (individuals, companies, and governments) to pull out that extra piece (through labor) and make their interest payments? You guessed it, bankruptcies, defaults, and foreclosures. What comes with bankruptcies, defaults, and foreclosures? Poverty, and all the good things that come with it; homelessness, hunger, disease, desperation, and war. This realization has incredible implications. Bankruptcies, defaults, and foreclosures are inherently built into the world's modern monetary system. What does this mean?

Without fixing the monetary system you CANNOT end world poverty, you CANNOT put everyone in a home, you CANNOT make healthcare affordable for everyone, you CANNOT end world hunger, and without fixing these problems we CANNOT have world peace (no matter how many beauty pageant contestants wish for it). It is clear. The modern monetary system is flawed and desperately needs to be reformed. To find a solution you must first understand the problem. This is a problem the world seems to overlook. Why? Could it be because the implications of modern monetary theory are not discussed in school, not even in a graduate level business program? I think so. But why is this? Is it a secret? Is someone trying to hide this enormous problem from the masses? I'm not so sure. Maybe we are too unaware to see what’s right in front of us?
"There is no nation on earth powerful enough to accomplish our overthrow. Our destruction, should it come at all, will be from another quarter. From the inattention of the people to the concerns of their government, from their carelessness and negligence. I must confess that I do apprehend some danger. I fear that they may place too implicit a confidence in their public servants and fail properly to scrutinize their conduct; that in this way they may be made the dupes of designing men and become the instruments of their own undoing."

-Daniel Webster
I do know one thing. I know what people do when they are in debt. They work. They give their physical labor in exchange for money to make interest and principal payments, not knowing that because of ever growing interest they work in vain. The world, because of the growing interest on new money (debt) being created is buried under perpetual debt. But we keep working to pay it off anyway. What is it called when people are forced to work? Wait a second, isn't that...wait, it can't be? Yes, it's called slavery my friends. I don't know about you, but did you really think slavery, imperialism, and empire (all of which started around 3,000 B.C. in the Fertile Crescent and continued unabated until the 1800s) all just abruptly ended in the mid-to late 1800s? Don't be so naive. The monetary system today is a modern form of slavery. What do people do when they are enslaved? They fight for their freedom!
"The refusal of King George III to allow the colonies to operate an honest money system, which freed the ordinary man from the clutches of the money manipulators was probably the prime cause of the revolution."

-Benjamin Franklin
You think I'm crazy don't you? Your asking, slaves to whom? My answer, the banks. No, I'm not talking about XYZ County Bank down the street with the old teller lady that gives your kid a lollipop every Friday afternoon. I'm talking about the big boys, the central banks (Federal Reserve Bank of the United States, Bank of England, European Central Bank, Bank of Japan…etc) and international banks (World Bank and IMF). Where do you think the U.S. government gets its money when it runs out of tax revenue and it can't raise all of the money it needs in the open bond market? Don't even say, "well it prints it". Wrong! It sells the remaining bonds it needs to the Federal Reserve Bank (who does have a Constitutional mandate to "print" money when it sees fit), meaning the Federal Reserve Bank prints money and uses it to buy the governments bonds, essentially loaning our government money with interest attached. Yes, that's right; we are charged interest to use our own money.
"The bold effort the present (central) bank had made to control the government ... are but premonitions of the fate that await the American people should they be deluded into a perpetuation of this institution or the establishment of another like it."

-Andrew Jackson
As interest piles up our government must tax us more and more to pay off the perpetual debt payments. With more of our income going to Uncle Sam we must WORK HARDER to maintain our way of life and make our own debt payments or face a downgrade in our standard of living. That my friend is economic slavery. Now what about the commercial banks? How do they contribute to this madness? Well the commercial banks give loans (create money) as well. If you choose to take out a loan you sign an agreement that if you don't pay the loan back your assets can be sold to satisfy your debt, potentially leaving you homeless, and therefore in poverty. For example, the bank takes over your house if you default on your mortgage payments, as many people are these days. What if a bunch of people default? Won't the bank giving the mortgage loans also lose out? Yes, it will, and that's the kicker.

The commercial bank, as it is being done in insane amounts today, can sell its bad mortgages to the Federal Reserve Bank (who prints the money to buy them), in essence the Federal Reserve is purchasing real estate. The commercial bank gets cash back that it can then lend out again to another unlucky borrower, or it can park it in what is essentially a savings account at the Federal Reserve Bank and draw a risk free rate of interest that the Federal Reserve pays (with money it prints out of thin air) to it's member banks (basically all banks in the United States).
"If Congress has the right under the Constitution to issue paper money, it was given to be used by themselves, not to be delegated to individuals or corporations."

-Andrew Jackson
So, conventional wisdom says if the commercial banks stop lending they won't make any money, but this isn't true because they are earning risk free interest on their deposits at the Federal Reserve. When the banks stop lending the global pool of money stops growing, but the interest on the debt outstanding continues to grow. When you default, because there isn't enough money to go around to pay the interest it is a win win situation for the bank. They get your assets, sell them to the Fed and park the new cash right back at the Fed to earn even more risk free money. All this happens while you are homeless, trying to provide for your family, and wondering where it was along the way you went so wrong.
"We have, in this country, one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This evil institution has impoverished the people of the United States and has practically bankrupted our government. It has done this through the corrupt practices of the moneyed vultures who control it".

-Congressman Louis T. McFadden, 1932
Sounds crazy, right? Nope, this is happening right before our very eyes. You might be asking yourself, what about the FDIC? Where do they come in? In some cases the Federal Reserve does not directly “bail out” a bank when it goes under. The FDIC is funded by the banks through premiums for each depositor. These make up the FDIC's deposit insurance fund, which is how you get paid when a bank fails. The FDIC steps in and takes over the failed back, absorbs its losses, and then sells (at a steep discount) the usable assets to another, healthier bank. The question is, what if the FDIC fund runs over budget (as anything government eventually does)? Where will it get the money to “absorb” the losses of banks that is rescues? This source of funds is sufficient during good economic years like 2005 (0 bank failures), 2006 (0 bank failures), and 2007 (3 bank failures). During tough economic times like 2008 (25 bank failures), 2009 (140 bank failures), and now 2010 (4 bank failures already), the FDIC will run out of funds meaning they will either default or require a bailout.
“Off the wire this morning:

FDIC Deposit fund had negative $8.2 Billion balance in Q3 2009

That's broke. Bankrupt. Kaput. Gone. Poof. Dead. Rotting. A corpse……..One question: Is the only thing preventing panic and bank runs the sheer stupidity of The American People?”

-Karl Denninger – The Market Ticker
Where will this bailout come from do you ask? The government. We have been down this road before. Where does the government get its money? From taxing us. What if it falls short on its obligations (the FDIC runs out of money)? It sells bonds that the Federal Reserve buys with printed money. The government then owes interest to the Federal Reserve on those bonds and the debt grows ever larger. You remember the story. But wait; doesn’t the government control the Federal Reserve Bank? Absolutely not! Congress delegated its exclusive right to coin money to the private corporation that is the Federal Reserve Bank in the 1913 Federal Reserve Act.
"The regional Federal Reserve banks are not government agencies. ...but are independent, privately owned and locally controlled corporations."

-Lewis vs. United States, 680 F. 2nd 1239 9th Circuit 1982
The ability given to banks, central banks in particular, to create money out of thin air and charge interest on that created money (because money is created out of loans) has forced the entire globe into a new era of slavery, a perpetual debt servitude. Think about it. Money is created out of debt. What do people do when they are in debt? They submit to employment to pay it off. But if money can only be created out of loans, how can society ever be debt free? It can’t. And that’s the point. Physical slavery requires people to be housed and fed. Economic slavery requires people to feed and house themselves. It is one of the most ingenious scams for social manipulation ever created, and at its core it is an invisible war against the population. Debt is the weapon used to conquer and enslave societies, and interest is its primary ammunition. And, as the majority walks around oblivious to this reality, the banks, in collusion with governments and corporations continue to perfect and expand their tactics of economic warfare.
“None are more hopelessly enslaved than those who falsely believe they are free.”

-Johann Wolfgang von Goethe
Sounds crazy, I know. You might be asking yourself where this all started? Europe. Central banking was first developed there. The United States has had occasional clashes with central banks in its past, but we always seemed to escape the clutches of debt money. In fact the last time in American history the national debt was completely paid off was in 1835 after President Andrew Jackson shut down the central bank that preceded the Federal Reserve. In fact Jackson’s entire political platform essentially revolved around his commitment to shut down the central banks. An attempt was even made on Jackson’s life. On January 30, 1835 Richard Lawrence, an unemployed house painter, approached Jackson as he left a congressional funeral held in the House chamber of the Capitol and shot at him. His gun misfired. Historians have come to view Lawrence as a mentally unstable person, but the Democratic president became convinced that his political enemies in the rival Whig Party had hired Lawrence to assassinate him. At the time, Jackson was locked in a bitter struggle with the Whigs over his ultimately successful effort to scuttle the Bank of the United States. Jackson had made his intentions very clear:
“I am one of those who do not believe that a national debt is a national blessing, but rather a curse to a republic; inasmuch as it is calculated to raise around the administration a moneyed aristocracy dangerous to the liberties of the country. Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves.”

-Andrew Jackson
So how can we begin to fix the problem? We first need to annul the charter of the Federal Reserve Bank of the United States. Then we need to allow the Treasury of the United States to issue its own interest free, debt free money. This country should not have to pay an interest fee to use its own money. This isn’t an easy task. During the American Civil War, President Lincoln bypassed the high interest loans offered by the European banks, and decided to do what the founding fathers advocated, which was to create an independent and inherently debt free currency. It was called the Greenback. Shortly after this measure was taken, an internal document circulated between private British and American banking interests that stated:
“Slavery is but the owning of labor and carries with it the care of the laborers, while the European plan… is that capital shall control labor by controlling wages. This can be done by controlling the money. It will not do to allow the Greenback… as we cannot control that.”

-The Hazard Circular July 1862
Unfortunately in 1865 Lincoln was assassinated and his messages were short lived. The international bankers succeeded to install another central bank in 1913, The Federal Reserve Bank. Another President also attempted to defeat the Central Bank on June 4, 1963. President John F. Kennedy signed Executive Order Number 11110 that returned to the U.S. government the power to issue currency, without going through the Federal Reserve. The order gave the Treasury the power "to issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury." With the stroke of a pen, Mr. Kennedy was on his way to putting the Federal Reserve Bank of New York out of business. If enough of these silver certificates were to come into circulation they would have eliminated the demand for Federal Reserve notes. This is because the silver certificates are backed by silver and the Federal Reserve notes are not backed by anything (they are created out of thin air). Executive Order 11110 could have prevented the national debt from reaching its current level, because it would have given the government the ability to repay its debt without going to the Federal Reserve and being charged interest in order to create the new money. After Mr. Kennedy was assassinated just five months later, no more silver certificates were issued.

Is it a coincidence that assassination attempts, two of them successful, were made on the very three Presidents that vehemently opposed the power of central banking? You tell me. As long as this institution exists, perpetual debt is guaranteed. Why hasn’t this changed already? How has such an evil institution lasted so long in our society? I’m not sure. The Federal Reserve has the ability to print money and operates in virtual secrecy. If you can print money, and no one has a clue about it, I’m pretty sure you can buy some pretty decent lobbyist to represent your interest in Washington. But wouldn’t we know about these bribes and payoffs? No, we wouldn’t! The books of the Federal Reserve Bank have never been audited. Even if they were, could the Fed not just pay bribe its auditors?
"Most Americans have no real understanding of the operation of the international money lenders. The accounts of the Federal Reserve System have never been audited. It operates outside the control of Congress and manipulates the credit of the United States"

-Sen. Barry Goldwater (Rep. AR)
I encourage you to do your own homework. Research fractional reserve lending, read about why the Founding Fathers hated the very thought of central banking, ask your local banker where he's getting the money to give you a loan, figure out why our national debt keeps growing, and above all be vigilant. Always question authority as it's the patriotic thing to do.
"We are completely dependent on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system.... It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon."

-Robert A. Hamphill, Atlanta Federal Reserve Bank
What can you do? Check out these websites listed below and get active in your community. Spread the word! It’s time we stand up and recapture the freedom our ancestors fought for!

http://www.campaignforliberty.com/

http://schiffforsenate.com/

http://www.auditthefed.com/

http://mises.org/

Saw this on Slope of Hope.....Great Post Tim!

Ok, so I'm re-posting an absolutely great post I just read by Tim Knight on one of my favorite blogs (hope you don't mind Tim)...check it out at: Slope of Hope
"This is a bull market.......The difference this time is the speed at which companies adjusted and cut their costs. We all know that when a recovery does take hold, the rebound in earnings is going to be very dramatic." - CIBC Asset Management, October 2009

For old-timers on Slope, you may remember reading this before........

"...industrialists have been cutting costs and increasing efficiency. This will increase profit margins when the recovery comes." - Wall Street Journal - July 11, 1930.

Dow Jones Industrial Average (1929-1932)

Quote of the Day

"The budget should be balanced, the Treasury should be filled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome be bankrupt. People must again learn to work, instead of living on public assistance."

Cicero - 55 BC
....and u know how Rome got away with it for so long - they secretly reduced the silver content in the coins (aka DEBASED/printed money) more and more - until they were worthless....and then the Empire imploded, ushering in the Dark ages...

History might not repeat itself, but it sure does rhyme.

Monday, January 18, 2010

SPX Update

S&P 500 Index


It seems to me as if a major top is very near. The rate of change is continuing to slow and multiple divergences have formed on the RSI and MACD. Complacency has returned to this market and it is just a matter of time before we roll over and move lower. A break of the rising wedge pattern could signal the beginning of the end for the 'recovery'. I will be watching closely and will be adding some short positions tomorrow. Good trading.

Wednesday, January 13, 2010

Count on dollar

Here is what i have for the dollar right now... if anyone has an idea for USD let me know