Tuesday, August 25, 2009

Fun With Charts! The Road To Recovery?



Here is the market graph from Doug Short, Doug Short is matching up the market bottoms for four crashes (with an interim bottom for the Great Depression).

Note that the Great Depression crash is based on the DOW; the three others are for the S&P 500.

Nat Hentoff: I am finally scared of a White House administration

Nat Hentoff, the prodigious Village Voice writer who retired after 50 years in 2008 was given the following blurb in the NYT;
Across his 83 years, his three dozen books and his countless newspaper columns and magazine articles, Mr. Hentoff has championed free speech and opposed censorship of any kind, whether by liberals or conservatives. Few have more assiduously and consistently defended the right of people to express their views, no matter how objectionable.

The thing is that, agree with him or not, Nat Hentoff offers no opinion that isn’t supported by facts, diligently gathered.

Mr. Hentoff may not hear as well as he once did, or stand quite as straight. But he will not fade to silence.

Mr Hentoff has not faded into silence yet his coverage on Obama's Health care reform has been ignored by mainstream media. Obviously you know why. From August 19th;
I was not intimidated during J. Edgar Hoover's FBI hunt for reporters like me who criticized him. I railed against the Bush-Cheney war on the Bill of Rights without blinking. But now I am finally scared of a White House administration. President Obama's desired health care reform intends that a federal board (similar to the British model) — as in the Center for Health Outcomes Research and Evaluation in a current Democratic bill — decides whether your quality of life, regardless of your political party, merits government-controlled funds to keep you alive. Watch for that life-decider in the final bill. It's already in the stimulus bill signed into law.


The members of that ultimate federal board will themselves not have examined or seen the patient in question. For another example of the growing, tumultuous resistance to "Dr. Obama," particularly among seniors, there is a July 29 Washington Times editorial citing a line from a report written by a key adviser to Obama on cost-efficient health care, prominent bioethicist Dr. Ezekiel Emanuel (brother of White House Chief of Staff Rahm Emanuel).


Emanuel writes about rationing health care for older Americans that "allocation (of medical care) by age is not invidious discrimination." (The Lancet, January 2009) He calls this form of rationing — which is fundamental to Obamacare goals — "the complete lives system." You see, at 65 or older, you've had more life years than a 25-year-old. As such, the latter can be more deserving of cost-efficient health care than older folks.


No matter what Congress does when it returns from its recess, rationing is a basic part of Obama's eventual master health care plan. Here is what Obama said in an April 28 New York Times interview (quoted in Washington Times July 9 editorial) in which he describes a government end-of-life services guide for the citizenry as we get to a certain age, or are in a certain grave condition. Our government will undertake, he says, a "very difficult democratic conversation" about how "the chronically ill and those toward the end of their lives are accounting for potentially 80 percent of the total health care" costs.
This end-of-life consultation has been stripped from the Senate Finance Committee bill because of democracy-in-action town-hall outcries but remains in three House bills.


A specific end-of-life proposal is in draft Section 1233 of H.R. 3200, a House Democratic health care bill that is echoed in two others that also call for versions of "advance care planning consultation" every five years — or sooner if the patient is diagnosed with a progressive or terminal illness.


As the Washington Post's Charles Lane penetratingly explains (Undue influence," Aug. 8): the government would pay doctors to discuss with Medicare patients explanations of "living wills and durable powers of attorney … and (provide) a list of national and state-specific resources to assist consumers and their families" on making advance-care planning (read end-of-life) decisions.


Significantly, Lane adds that, "The doctor 'shall' (that's an order) explain that Medicare pays for hospice care (hint, hint)."


But the Obama administration claims these fateful consultations are "purely voluntary." In response, Lane — who learned a lot about reading between the lines while the Washington Post's Supreme Court reporter — advises us:


"To me, 'purely voluntary' means 'not unless the patient requests one.'"


But Obamas' doctors will initiate these chats. "Patients," notes Lane, "may refuse without penalty, but many will bow to white-coated authority."


And who will these doctors be? What criteria will such Obama advisers as Dr. Ezekiel Emanuel set for conductors of end-of-life services?


I was alerted to Lanes' crucial cautionary advice — for those of use who may be influenced to attend the Obamacare twilight consultations — by Wesley J. Smith, a continually invaluable reporter and analyst of, as he calls his most recent book, the "Culture of Death: The Assault on Medical Ethics in America" (Encounter Books).


As more Americans became increasingly troubled by this and other fearful elements of Dr. Obama's cost-efficient health care regimen, Smith adds this vital advice, no matter what legislation Obama finally signs into law:


"Remember that legislation itself is only half the problem with Obamacare. Whatever bill passes, hundreds of bureaucrats in the federal agencies will have years to promulgate scores of regulations to govern the details of the law.


"This is where the real mischief could be done because most regulatory actions are effectuated beneath the public radar. It is thus essential, as just one example, that any end-of-life counseling provision in the final bill be specified to be purely voluntary … and that the counseling be required by law to be neutral as to outcome. Otherwise, even if the legislation doesn't push in a specific direction — for instance, THE GOVERNMENT REFUSING TREATMENT — the regulations could." (Emphasis added.)


Who'll let us know what's really being decided about our lives — and what is set into law? To begin with, Charles Lane, Wesley Smith and others whom I'll cite and add to as this chilling climax of the Obama presidency comes closer.


Condemning the furor at town-hall meetings around the country as "un-American," Harry Reid and Nancy Pelosi are blind to truly participatory democracy — as many individual Americans believe they are fighting, quite literally, for their lives.


I wonder whether Obama would be so willing to promote such health care initiatives if, say, it were 60 years from now, when his children will — as some of the current bills seem to imply — have lived their fill of life years, and the health care resources will then be going to the younger Americans?

A Georgia County Shares a Tale of One Man’s Life and Death

A truly heartwarming story,

A Georgia County Shares a Tale of One Man’s Life and Death

Published: August 22, 2009

His pallbearers were the six boys who built his plain pine coffin in their high school shop class. They built it right in the middle of the classroom. When they finished, one of the boys crawled inside it while the others toted him around the school to make sure it worked.

Now Sammy Green lay inside the coffin, wearing the overalls he requested, while the boys marched him to his mountainside grave. Two preachers played guitars and crooned the kind of bluegrass gospel Mr. Green loved. “I’m a weary traveler,” one song began, “traveling through this land.”

Only about a dozen people attended Mr. Green’s funeral on Thursday afternoon in these fog-wrapped mountains, tucked into the northeast corner of the state. None were relatives — they are all dead — and most hardly knew Mr. Green, if they knew him at all. The boys who built the coffin never met him. Yet it was the people of the county who made the funeral possible.

For years, the story of Mr. Green, a never-married 76-year-old itinerant millworker who could not read or write, and his impending burial had spread through the mountains of Rabun County and beyond, becoming the kind of tale these people have long been famous for telling.

It began two years ago when a couple of students and a teacher from Rabun County High School showed up to interview him for Foxfire magazine, a renowned student-run publication devoted to Appalachian culture.

Since its founding here in 1966, Foxfire has sent students out to interview aging relatives, vanishing craftsmen and all manner of homegrown characters. Subjects run the gamut: beekeeping, moonshining, witches.

The magazine’s articles have been anthologized into a popular series of books. With about nine million in print, they have been adapted into a Broadway play and TV movie.

Mr. Green spoke into the students’ tape recorder for hours about his hardscrabble life. He was born in nearby Murphy, N.C., one of six children. His father pulled him out of the second grade to grind corn at a watermill. He hunted squirrels for food, smoked “baccer” (tobacco) and walked six miles to church, where he was baptized in a river on a 35-degree morning.

He worked for a while at a steel mill outside Atlanta, but returned to North Carolina to cut pulp wood and, as he told his visitors, “snake logs.” He paid for his own parents’ burials, once walking 16 miles for a headstone (he never had a driver’s license).

Finally too old to work and practically homeless, he met a family of traveling gospel singers at church and they took him in. One daughter eventually moved with her family to Rabun County and brought Mr. Green along.

After he finished his life story, Mr. Green asked the students to turn off the recorder. He looked troubled. Suffering from a deteriorating lung disease, he said he did not have enough money to be buried. He worried that if he died a pauper, the county would cremate him, an act that he believed would sentence him to eternal damnation. All he wanted, he said, was a pine box and a hole to put it in.

In the driveway as they left, one of the students, Casi Best, turned to the teacher and said, “Can’t we do something?”

“I could tell it was burden for him,” said Ms. Best, now a freshman at Piedmont College, in Demorest, Ga.

So Ms. Best and some other students started a “Bury Sammy” campaign. The school’s industrial arts teacher got the six volunteers from his ninth-grade class to build a coffin, pulling a design off the Internet. A bluegrass barbecue was held at a Wal-Mart parking lot. Mr. Green showed up briefly, trailed by an oxygen tank, marveling at the coffin on display.

“He said, ‘I don’t know if I’ll fit in there,’ ” recalled Joyce Green (no relation), the faculty adviser for Foxfire. “I knew he would. My son had already measured him.”

A granite company donated a headstone. A county cemetery offered up a plot. A funeral home director cut his rate to cost. People dropped change into gallon jugs placed inside gas stations, banks, beauty parlors. The $3,100 needed to bury Mr. Green was soon raised.

“He said, ‘That’s one thing I don’t have to worry about,’ ” remembered Sherri Eads Gragg, the woman who had taken him in.


Go here for the rest of the story.

Monday, August 24, 2009

Roubini: The risk of a double-dip recession is rising

From the Financial Times;
That effort worked and the free-fall of economic activity eased. There are three open questions now on the outlook. When will the global recession be over? What will be the shape of the economic recovery? Are there risks of a relapse?

On the first question it looks like the global economy will bottom out in the second half of 2009. In many advanced economies (the US, UK, Spain, Italy and other eurozone members) and some emerging market economies (mostly in Europe) the recession will not be formally over before the end of the year, as green shoots are still mixed with weeds. In some other advanced economies (Australia, Germany, France and Japan) and most emerging markets (China, India, Brazil and other parts of Asia and Latin America) the recovery has already started.

On the second issue the debate is between those – most of the economic consensus – who expect a V-shaped recovery with a rapid return to growth and those – like myself – who believe it will be U-shaped, anaemic and below trend for at least a couple of years, after a couple of quarters of rapid growth driven by the restocking of inventories and a recovery of production from near Depression levels.

He then goes on to discuss the reasons for a U shaped recovery and not a V shaped one.

1) Employment is still falling sharply in the US and elsewhere – in advanced economies, unemployment will be above 10 per cent by 2010.

2) True deleveraging has not begun yet because the losses of financial institutions have been socialised and put on government balance sheets. This limits the ability of banks to lend, households to spend and companies to invest.

3) consumers need to cut spending and save much more, yet debt-burdened consumers face a wealth shock from falling home prices and stock markets and shrinking incomes and employment.

4) Most of the shadow banking system has disappeared, and traditional banks are saddled with trillions of dollars in expected losses on loans and securities while still being seriously undercapitalised

5) weak profitability – owing to high debts and default risks, low growth and persistent deflationary pressures on corporate margins – will constrain companies’ willingness to produce, hire workers and invest.

Finally oil, energy and food prices are now rising faster than economic fundamentals warrant, and could be driven higher by excessive liquidity chasing assets and by speculative demand.

Friday, August 21, 2009

A Classic E-mail from a Friend

So my wife and I are getting our bathroom floor re-tiled this week, so
we've both been home to make sure the guys do it properly. We got stir
crazy yesterday and ended up playing Monopoly, which I hadn't played
in forever. In flipping through the rule book to remind myself how
shit worked, I came across this incredible gem:

"The Bank 'never goes broke.' If the Bank runs out of money, the
Banker may issue as much as needed by writing on any ordinary paper."

Yeah, that sounds about right. I'm hereby blaming Parker Brothers and
Rich Uncle Pennybags for the financial meltdown of 2008, for having
created the overriding (unsustainable) banking mentality for a
generation of financiers and government lenders. In fact, I'm suing
them. For gross negligence and depraved indifference.

Wednesday, August 19, 2009

White House to Lower 2009 Deficit Estimate to $1.58 Trillion


Hooray!!! Oh wait a minute....

Bloomberg:
The White House’s biannual budget review set for release next week will show the projected shortfall lessened primarily because the administration scrapped contingency plans to provide hundreds of billions of dollars in additional aid to the financial industry, said the official.

The reduced deficit is also attributable to fewer bank failures than the administration anticipated, which meant spending by the Federal Deposit Insurance Corp. will be $78 billion less than forecast, said the official, who requested anonymity because the figures haven’t been publicly released.

So once again lets celebrate because things are "less bad" than they thought! Lets forget that the 76 bank failures this year is the 2nd higest number in history aside from the S&L crisis. Oh and let us not forget that these budgets, like all government figures, get revised in later quarters to much worse numbers.

The return of "The Man"

So the comment section has been pretty sparse since I started this blog and yesterday I came across this very interesting article called The Left's Favorite Enemy Conjured Up Again by Keith Riler. It offers up a very lively discussion topic regarding the resurgence of "The Man"....
My lefty friends stare at me blankly when I ask why that outdated, goofy guy known as "The Man" is still at the core of their social doctrine. They insist theirs is a political orientation that is sophisticated and intellectual, appreciative of the nuances of modern capitalistic society and the actual individual human beings involved therein. Then we get this:
Chris Matthews, on Tuesday's "Hardball," invited on California Senator Barbara Boxer to dismiss the increasing number of town hall protestors opposed to Obama's liberal agenda as the "angry, and "noisy," "well-dressed middle-class people in pinks and limes...Brooks Brothers Brigade."

And,
The White House is now taking a hard line against the Tea-Party organized disruptions of Democrats' town hall meetings, the Washington Times reports, with press secretary Robert Gibbs referring to it this morning as "the Brook Brothers Brigade"....

He's back! And he's white, old, in khakis and a blue oxford ... The Man!!

The divisive intent of "well dressed middle class people" intentionally stokes class envy, at best, and is bigoted and hateful, at its worst. These citizens, like all people, deserve both dignity and respect.

He then goes on to discuss how easy it is to slip into using the word they with abandon.
Our President has been using "they" and "them" quite a bit. He said the following in reference to citizens clamoring to be heard at town hall meetings:
But I don't want the folks that created the mess -- I don't want the folks who created the mess to do a lot of talking. I want them just to get out of the way so we can clean up the mess. ... I don't mind cleaning up after them, but don't do a lot of talking.
Them who? They who? What folks? What special interests? Did anyone voting last November believe the winner of the election would represent only those who voted for him? Did anyone believe that a vote cast might neuter that voter's future ability to participate in democracy? Did anyone voting for McCain expect such intolerance from Obama, or anyone voting for Obama expect such intolerance from McCain?

The word "they" has a really creepy way of simplifying, stereotyping, dismissing and aggregating so as to diminish the dignity of individuals, as in the following uses: "They are always trying to keep us down." "They are subversive." "They need to get out of the way." Our civil rights heroes are very cognizant of the misuses of "they".
The article makes some points that I had not thought of and think may have some merit.

Discuss.....

Tuesday, August 18, 2009

Homeowner Misperception Index

Zillow.com has this neat survey showing the sentiment and (IMO) delusion of homeowners regarding the prices of their homes and how they are the most optimistic they have been in over a year. It is really fascinating. On to the charts.




Along with growing misperception is a growing optimism that home values will not continue their declines in the coming six months. For three quarters in a row, homeowners have effectively called a bottom, with the majority thinking their home’s value will not decline any further. This quarter, the number of “optimists” was our largest yet:

• 34% think their home’s value will increase
• 47% think their home’s value will stay the same
• 19% of homeowners think their home’s value will decrease

The most optimistic bunch are homeowners in the South and Northeast, where fewer markets experienced a “bubble,” and where home value declines haven’t been as precipitous as many major cities in the West.

Monday, August 17, 2009

Giant Clawed Dinosaur Unearthed in Utah


MSNBC REPORTING

U.S. Debt as a Percentage of GDP Means No Growth for 50 Years

From UK site Market Oracle comes a great little piece on US GDP growth being funded entirely by debt and how the last 50 years of our growth has come from an 11.5 Trillion dollar increase in borrowing.
Apparently, a bazooka wasn’t enough. Last summer, that is what then Secy. of the Treasury Henry Paulson asked for when he made his case for sweeping financial powers. Instead, Congress gave him a nuke, and apparently that wasn’t enough either. Making the jump from completely absurd to the absolutely ridiculous, Timothy Geithner became the latest in a long line of Treasury Chiefs to run to Congress to ask for an increase in the nation’s debt ceiling.

The fact that he is asking for the increase should not be a surprise to anyone given the massive deficits already racked up over the past 18 months. What would be laughable if it weren’t so serious, however, were the comments made in his request letter to Congress.

"It is critically important that Congress act before the limit is reached so that citizens and investors here and around the world can remain confident that the United States will always meet its obligations,"


How exactly does digging your hole even deeper inspire confidence? How does borrowing nearly 50 cents of every dollar you spend inspire confidence? How can anyone with two bits of common sense to rub together take this as anything less than an overt devaluation of the Dollar?

The aricle then goes one to show the a table of GDP and total debt outstanding. It includes the governments estimates over the next 5 years as well where they assume a resumption of 5% GDP growth. The article then questions this unrealistic assumption by showing that the money supply (the discontinued M3) has continued to grow at a 5% clip. THIS IS THE RATE OF INFLATION! I understand that the govt uses CPI because they can can massage and manipulate the data to show whatever they want. The fact is Bernanke discontinued M3 so he could do just that, inflate M3 and not report it.

Finally he concludes that if one were to discount the GDP growth from the past 50 years by the 5% average that M3 grew you would get 0 growth from anything other than the increase in debt. So keep this in mind when the congress raises our debt ceiling again.

Pre Market Update; Red Rover, Red Rover....


Well the back and forth game between buyers and sellers in this consolidation range looks to have come to an end with what is looking like a 20+ point drop during the globex session last night and into this morning. The longstanding level of 983 was tested and appears to be a spot where buyers are defending price. When levels are defended it acts as confirmation that my assessment and calculations of the patterns are indeed valid.

Going back to Thursday's close and Friday's price action, My comment that it 1016 was going to be tested was not a statement of fact. It had already been tested in the overnight session (a test by proxy*) what remained was just a test of that level during the cash session (9:30-4:15). Friday's afternoon rally again came too late and didn't do enough damage to the chart to give buyers any control.

The result of this last 1/2 hour of action on Friday acted as a slingshot for sellers and propelled price action through the much tested 990-991 straight down to the 983 level. Given how much buyers protected 990-991 my assumption is that 983 is not going to be as sticky. Next Stop 965.

Sellers start losing control of this attempt to break lower by not defending 998. Any close above 998 and this can be deemed yet another probe of the 991 area and would indicate that when 1007 breaks, it is to start a new market rally.



* testing by proxy means that the price action got close enough to the high to be considered a test of the actual high without actually touching it