Thursday, June 18, 2009

Operation Red Dragon - Part 1

Pictures from "Operation Red Dragon". We had fun taking them, so enjoy. I'll put more up later.

Monday, June 15, 2009

The March to 6,000 - The economic house of cards begins to tumble…

Owners of capital will stimulate the working class to buy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks, which will have to be nationalized, and the State will have to take the road which will eventually lead to communism.– Karl Marx, Das Kapital, 1867
I heard a report on the radio recently that stated ‘90% of economists believe we are recovering economically’ and ‘we have hit bottom and we will see slight growth in the Q3 and moderate growth in Q4.’ Not to mention all of the "green shoots" analogies that are flying around. One is left in the position of thinking that the worst is over because the experts have spoken loudly that 'We, the great country are free from this dastardly downturn that plagued us.'

Responding to that, I will say the following: They are wrong! Absolutely in no uncertain terms dead wrong. They did not predict the crisis (I did) and they are not to be trusted specifically because they have not merited your trust. Kenyesian thinking is at best foolish and more realistically, massively destructive to our society as a whole.

All over the nation they are convincing scores of individuals to ‘take what they have, plow it into the market and ride it up!’ Why would you trust them? They are the Judas goats leading the flock to the slaughterhouse. And guess who’s the sheep?

This is not a recession, it is a depression. And a massive one at that. We are not at the bottom, we are on gaining momentum for the next plunge down. If you thought the last drop was bad, this one is going to strike fear into the hearts of men everywhere. The Dow will push through the last market low of 7,392.27, then 6000 and after that 3000. As capitol assets are ravished, what you will be seeing is the consumption of the golden goose in a proverbial feasting on the rotting carcass of the American consumer. If you disagree, ask yourself the following, what is holding US up?

The idea for this post had been pushing around in my head for quite some time, but here we stand at the precipice and back on September 19, I posted the following:
Oh, only a 48-55% increase in government debt, well at least we're not crazy like Japan. At least we're not selling our children into slavery with interest payments via the IRS.
Let's get a few things straight here:
• "They" are not "us". If the banks fail, then let them fail! It is the consequence of their consummate greed in over-leveraging these loans. This money used for the bailout is coming out of your pocketbook and going into theirs. When was the last time a bank or corporation was this nice and allowed you to set your debt aside at their expense?
• "You" will be left holding the bill. Your children and grandchildren will be held responsible for paying off this debt when it comes due.
• This will not fix the real problem. Do you really think giving someone a free ride when they are being greedy is going to change the behavior? There is no negative incentive for them not to participate in the behavior.
• The downside to this is way above one trillion - This figure is optimistic. If things get ugly, the taxpayers are holding tens, if not hundreds, of trillions of dollars in these "toxic" loans.
Oops... The Real Effect, dead on! Note the following – You are being charged for this bailout via direct taxation through the IRS and the confiscation of your money in Kansas and California. This information was posted in September before the bailout package passed and it did nothing to fix the problem.

Citigroup and Bank of America are still going broke. We’ve had massive layoffs… The new numbers for the bailout has been costed at over 14 trillion dollars. This does NOT include the trillion dollar ‘stimulus’ package. Let’s state this again: the banks are engaged in a heist. Robbery.

Let us consider the following Rampant Devastation: GM, Chrysler, Ford, General Growth, Citiroup, Circuit City, Anne Taylor, Lane Bryant, Fashion Bug, Eddie Bauer, Catherine’s, Talbots, Gap, Footlocker, Wickes, Zale’s, Bombay, Whitehall, Disney, Piercing Pogada, Linen and things, Pep Boys, JC Penny’s, Wilson Leather, Sharper Image, KB Toys, Lowes, Dalrds

The Real Effect
So what happens next?
  • The US dollar is going to tank (think Iceland)
It has to. There is massive unemployment already and while the rate is slowing slightly that is hardly comforting. The U.S. bond market is going to implode resulting in the US’s first defaults.
  • Banks claim ownership of 401ks and the government moves to “protect” them by seizing them.
I would assume they would be placed in a new 'secure conservatorship’.
  • Obama loosens the unemployment restrictions so more can draw from the government and then moves the unemployed to the government ranks. At the same time, States cut off the most poor creating a "humanitarian crisis". (Think California)
  • Commercial Market collapse continues
  • The second wave of the housing market collapse hits (The less risky loans start to default)
SFGate states -
“On the supply side, an assortment of factors seems poised to trigger new waves of foreclosures that will continue to bloat inventory. They include the expiration of foreclosure moratoriums, more underwater "walk-away" homeowners, pending recasts of option ARM loans, rising delinquencies in prime and Alt-A loans, and soft sales of high-end homes.”
  • Commodities surge (Massive inflation)
Gold, silver, food are surging – big banks, investment houses are purchasing now. We are now in the Inflation/Deflation death spiral. New
  • Unemployment highs
After the next 'wave' hits, employers will cut even deeper in an attempt to staunch the flow of red ink that will inundate most companies.
Consider the following evidence:

Unlucky 13 In April 2009, 13 U.S. cities had unemployment rates above 15%.
  1. El Centro, Calif. 26.9%
  2. Yuma, Ariz. 20.3%
  3. Merced, Calif. 18.3%
  4. Yuba City, Calif. 18.2%
  5. Elkhart, Ind. 17.8%
  6. Modesto, Calif. 16.8%
  7. Stockton, Calif. 15.6%
  8. Bend, Ore. 15.6%
  9. Fresno, Calif. 15.5%
  10. Visalia, Calif. 15.4%
  11. Redding, Calif. 15.4%
  12. Hanford, Calif. 15.3%
  13. Longview, Wash. 15.2%
The U6 Data, a more realistic unemployment figure has unemployment pegged at 16.4% using the Birth/Death ratio (A guess to how many jobs were created) A formula from the 1980's, not using that ratio results in a staggering 20.2%! (10.9 million people are unemployed since Jan 1, 2009)
  • Taxes and fees are going to continue going up.
States will declare bankruptcy, Republicans will point at Democrats and Democrats will blame Republicans. Look for the I94 corridor project currently under construction is SE Wisconsin to stall out and seek out 'alternate sources' of funding as we sell our roads to private companies (probably foreign) that will buy them cheap and then gouge the motorists.
  • Water is going to become the next oil.
Things are NOT going to get better, they are going to get significantly worse overall. It may be true that we might see some small respites here and there as investors hope for a resurgence in the market but overall we are in for one serious ride.

Edited for appearance on 7/1/2010