Wednesday, July 27, 2011

Weather Forecast Wednesday- Stormy With a Chance of Economic Chaos; Durable Goods, Not So Durable; Delta Airlines Net Income Drops 58%, Goes to Plan F; Credit Suisse Cutting 2,000 More Jobs; Fed's Beige Book Turning Brown; Radiation is Not Healthy For You; More

And now, today's weather: stormy with a chance of economic chaos. High 14.294 Trillion. Low -127.89 Trillion. Ultra Violent index 9.7. People are urged to seek shelter in gold and silver.

The economic storm clouds have been gathering for some time now, but because they have been lingering for so long, people have grown accustomed to the sight of them. And that is where the danger rests.

Today's June Durable Goods Orders plummeted 2.1% while inventories increased 0.4% to the highest level ever recorded. Demand down, inventory up - this points to a clear contraction in 2Q GDP and might put the U.S. back "officially" in recession. Oops. Then again, in the real world, we've been living in an economic depression since 2008 and now are entering the second leg of that depression so "officially" what they report "officially" doesn't matter one way or another.

Delta Airlines announced further cuts in flights as net income dropped 58%, which was blamed on higher oil prices. Now, they are planning for sustained higher fuel costs which they will pass on to the passengers. Delta gets an "F" for Failing.

Speaking of failing, another TBTF&TCTS bank named Swiss Debt Credit Suisse, is looking to cut 2,000 more jobs - which should be announced this Thursday. Keep an eye on that. On top of another wave of job cuts from the banksters industry, which we predicted three months ago.

Being that today we got a very late start, we're able to incorporate the Fed's Beige Book of inactivity, which showed "the economy" (or whatever remains of it) slowed down, ahem, more than "expected." Eight out of 12 regions experienced contraction and all of it was blamed mostly on Japan. Well, that and floods and droughts. Oh and maybe some snow for good measure. Don't bother wasting your time reading the 40 pages of blah, blah, blah when we can summarize it for you in two words - crumbling economy. Next.

As the drama in Washington roars on, we see gold and silver going up, up and away. More and more people are catching on to the fact that fiat currency is worthless. Now, combine what we predicted three months ago when we said the Comex is dry on physical, and it's setting up to be a long hot summer for those holding fiat and no gold.

Finally, as the financial world continues to burn and crumble, we present to you a video that proves what we have always known - radiation is not healthy for you. Take that, Ann Coulter.

Tuesday, July 26, 2011

Wormwood Tuesday- One Week Later and Already Greek Contagion is Spreading; PIIGS Bond Yields Remain Elevated; Great Quote From Obama for the History Books; Debt Ceiling Talks Continue; New Home Sales, Plunge Another 1% on Top of Last Year's Record Low; Fukushima Updates; Much More

Not one week ago, Greece was granted a final wish a new bailout worth $140 Billion (on top of last years $140 Billion bailout) which despite all of the drama, solved absolutely nothing. As we reported, this band-aid solution which hyped "the markets" into typical KoolAid hysteria, would eventually wear off and reality would once again come back to bite - ever harder, ever deeper. (Thank you WB7 of ZeroHedge for the Hitchcock graphic!)

Sure enough, one week later, nothing has changed. Italian and Spanish bonds remain at elevated levels not seen since the inception of the EU and these levels are to be closely watched as investors doubt the solvency of the entire EU. Spain's 10yr continues to float just above the 6% threshold as does Italy's 10yr. We'll continue to monitor this rate and see what it predicts for the EU. On the heals of yesterday's moot Greek downgrade, Moody's noted that the new bailout would make it easier for Greece (exactly what the last bailout was supposed to do) to reduce its debts but debt to GDP will remain "well in excess of 100 per cent of its GDP" for years. Again, as we have been highlighting since forever, ratings agencies are good for "after-the-fact" events, but as with the whole 2008 debacle, they failed to forewarn the whole world of the pending doom. That's why you have Fiat's Fire!

In the meantime, the drama across the pond in the U.S. continues, as Obama fights a Boehner over a debt ceiling increase. More theatrics, more smoke and mirrors, more bread and circuses for the masses. While you watch the continuing circus, we want you to keep this quote from a 2006 Obama in mind:

"The fact that we are here today to debate raising America's debt limit is a sign of leadership failure. It is a sign that the U.S. Government can not pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government's reckless fiscal policies. Increasing America's debt weakens us domestically and internationally. Leadership means that, "the buck stops here.' Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better." - Senator Obama, March, 2006

What changed since 2006? Did debt all of a sudden in 2008 become necessary to keep the pyramid scheme going? Did Obama become privy to new information?

You know, he was 100% correct when he spelled it out in very plain terms then - raising America's debt limit is a sign of leadership failure. It is a sign that the U.S. Government can not pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government's reckless fiscal policies. Increasing America's debt weakens us domestically and internationally

We couldn't have said it any better. Now, with that being said, let's check the price of oil and the profits for the top oil companies. Oh, what a surprise! Record profits for the oil companies - and for Wall Street. But no soup for you, Main Street USA. Instead, you'll have to fight over the fewer and fewer jobs that Wall Street chooses to keep here. Remember, there is no quicker way for a company to cut costs than to cut jobs. Going "green" is costly in the short term but cost effective long term, so in this economic depression recession, they chose not to make that investment. What else can they do if they are to keep bonuses? How else can they keep this rigged casino operating for another month? 

The bottom line - raising the debt ceiling or not is inconsequential in the long term. Period. Allow that to sink in. 

If an agreement was reached tonight for example, it would only postpone one of two inevitable outcomes: 1) a U.S. default or 2) hyperinflation. We firmly believe they will choose hyperinflation as that buys them time, versus defaulting which would spell immediate disaster for them. It's a mathematical certainty.

Also certain, is the current U.S. cash burn rate (which has increased exponentially) will now only buy 6-8 months if the proposed $1.6 Trillion increase is passed, at which point they will have to decide to raise it again or not. Which is why so many Wall Street banksters "experts" are calling for abolishing the debt ceiling altogether, because they know, come 6-9 months from now it will need to be raised again. So if this giant scam global economy is to continue, that ceiling has to be abolished. If it's not raised, Wall Street's free money comes to an end. They can't have that now, can they? 

Further, and this is the real kicker - any and all catastrophes (man made or naturally occurring) will be met with unprecedented fiat printing, which in turn equals more inflation for you and bigger bonuses for Wall Street. Which is certainly why immediately following the triple catastrophes of Japan in March, the talking bimbos on CNBS were celebrating this disaster. No joke. It was touted as "bullish for the economy," and one old filthy fleabag went as far as saying, "thank goodness the monetary toll is not as bad as the human loss." Remember that? Our blood is still boiling from that. 

We will say, another major disaster such as the one in Japan, might just push oil up to $150pb and jump "real time inflation" from the current 11% to 18% or more. It's coming. Given 2011's record earthquake activity, our anti-Goldman HF data mining supercomputer is putting the odds of another major quake in 3 months time at 80%. And we're already 1/4 the way on a Level 6 GEES. Things are speeding up. 

Fresh off the presses today is the New Home Sales data which, (surprise, surprise) "unexpectedly" dropped another 1% in June to a three month low, on top of last year's sales which were the worst recorded sales in over 50 years. Oops. June also now makes two consecutive months of "unexpected" drops. Of course, Fiat's Fire readers are not surprised and this news is not unexpected. Only Wall Street's finest found this "unexpected" as they awaken from their KoolAid induced comas. Then again, they also thought silver and gold were not monies, but traditions. We all know where gold and silver are today. 

Update 1: As if they couldn't see that the FHA was going to need a bailout. Oops. 

Update 2: Birmingham AL, readies for going bust. Who could have known?

Update 3: Crude oil, back over $100. Very bullish for the economy. Or not. Got gold? Got radioactive-free Milk?

Monday, July 25, 2011

Short & Sweet Monday- Add BlackBerry Maker RIM to List of Companies Making Big Job Cuts, 11% of Workforce; Add National Association of Realtors to that List as Well, 10% of NAR Workforce Cut as Jobless Recovery Swings Into High Gear; Greek Debt, Junked; Cesium Spreads Across Japan

As we have pointed out 14.249 Trillion a dozen or so times already (one of our very first articles was on this topic), it bares worth repeating that real, organic economic growth is long dead and has been officially since 2008. Currently, the only way for things to appear as normal is to pump endless amounts of fiat into the system - which happens to be exactly what the Central Banks of the world have been doing since that dark day in 2008, to "fill the gaps" as companies cut jobs, and close stores and factories, etc. What this creates, besides the obvious inflation, is a perpetual system of economic destruction. No wonder then, why gold and silver, exactly as we predicted, have been and will be going "to the moon, Alice!" in the coming weeks and months ahead. Daily fluctuations are inconsequential - what matters are the long term trends.

By now, you know that the MSM has coined the term "jobless recovery" and made it a household term, which was supposed to be used in a positive KoolAid induced sense. However, it's backfired terribly on them in part because it's obvious that this "jobless recovery" is a "recovery" for Wall Street and it's "jobless" for everyone else. However, we know the worst is yet to come; this "jobless recovery" is far from over so get ready for more "jobless" on your street and more "recovery" for Wall Street CEOs.

We begin this week with more bull...ish news, by adding BlackBerry's RIM with an 11% workforce reduction (2,000 jobs) and the National Association of Realtors (NAR) with a 10% reduction (somehow the NAR tried to spin this news into something positive despite giving numbers but we'll guess that 10% reduction equals 150-200 employees). We were hoping the spinmaster of horrific housing news, L. Yun, would be on that list, but we're sad to report that he will get a bigger bonus for his mastery of spinning. Looks like housing is about to drop off a cliff, again. This should be worth a few hundred points on the Dow(n) Jones. Like tomorrow's Case-Shiller/S&P Housing data.

Not that it matters, but Greek debt was downgraded again, this time to triple junk status; somehow we already knew Greek bonds were junk since 2009. Oops. The "markets" should rally on this news and the now 100% certain default. You have to like the way they eased you into this Greek default, though. Good job on the spin.

Just don't forget that Italian and Spanish bonds are looking ugly today, as once again, contagion is back. Over 6% on the 10yr for Italy. Clearly unsustainable. "Wwwwhat? I thought they fixed that problem last week!" says you. Nope. For some reason, band-aids on gangrene infested amputations never seem to work out too well for the patient. And just now we learn, courtesy of ZeroHedge, that Italy, in addition to Austria, has suspended August bond auctions. [insert Goofy voice] "Well gee! Who could have known?"

Like, who could have known that cesium-137 contamination would continue to spread across Japan? Japan has been so busy in a massive cover up forgot to provide standardized testing for radiation and now look what happens. It looks like Japan doesn't care much about its people, nor the people of the world as they are making it too obvious that their "thrown in the towel, the end is near" agenda has just gone full power.

Told you. Short and sweet and painless on this slow news day.

Friday, July 22, 2011

Faux Markets Fryday- Market Rallied On Inflation and Faux EU Band Aid Bailout, Savvy Investors Not Fooled; Monopoly Game is Almost Over; TBTF Banks Rotate Money From Left to Right; Dr. Deficit Makes a Joke While More Americans Suffer; SA Nations Mock the U.S. for Monetary Policy; IEA Halts SPR Release, Catch on to Scam; Fukushima, Still Leaking Radiation; Much More

Want to know why gold is skyrocketing if everything is supposed to be so great? Remember, as we reported yesterday, the MSM want you to believe that the EFSF/EU/ECB and the Greek bailout miraculously saved the whole global economy from collapsing. Despite all of the drama, the EU (namely Germany and France) came together in  perfect peace and harmony and proposed an agreement that would make everyone happy. Happy days are here again.


The "economy" continues to be flooded with fiat money and that ends up "trickling down" (you remember, the "trickle down Obamanomics" that is making you feel so rich these days) to you in the form of inflation. We won't beat a dead horse, but just go shopping for basics and fill up your car and let us know if this inflation is "transitory." Right, Dr. Deficit?

The Game.
Remember when you were a child (or last year) and you and your friends got together to play the classic board game, Monopoly? Do you remember that almost always, the guy who was the "banker" in charge of your money, won the game. No matter how many times he landed on your hotel properties (which you somehow mortgaged to him at the end to pay your bills) he always won? Well, how could this be? Proximity to the coffers had nothing to do with it. Riiight.

In an ironic (and depressing) sense, that is what our world has become. The game is called "Monopoly" for obvious reasons, and it's designed so that one person will always eventually win. The game can go on for a long, long time but ultimately, one person wins and then the game is over.

The real monopoly game is now almost over. We already know who "won" so why play any more? Because you love your iPad, silly!

If you needed more proof that the end of this game is almost over, just look at the price of gold (and silver). The higher they go, the closer the end of this Monopoly game is. And those banks which borrowed TARP funds and then paid them back, all of a sudden have been found to simply take money from their left pocket and put it in their right pocket by borrowing directly from the Fed. First good article in a long time to come from Yahoo finance. With all of the drama about debt ceiling this and Greek contagion that, could they (the U.S. and EU) be working to coordinate a strategic default, at the same time?

Today, we see an excellent article from Bloomberg's Anna Jackson that spells it out in simple terms. The latest data suggests most consumers are increasing their credit card purchases just to get by as inflation hits them harder and harder. And how does Dr. Deficit reply to this? He says, "The anticipated pickups in economic activity and job creation, together with the expected easing of price pressures, should bolster real household income, confidence, and spending." Really? You can't make this stuff up.

You know the U.S. economic policy is screwed royally when it's getting harsh words from South American nations who are experts in defaulting and a poor gov't structures. My oh my. How the tables have turned.

Which is why gold and silver still shine. Since the global economy runs on oil quite literally, it goes without saying that the higher the price of oil, the higher the cost of nearly everything else and in turn the slower the general economy. Very simply economics 101 here. With that said, we're looking at $100 oil once again (after the totally failed Obama SPR release) which would equate to about $4.00 gasoline by August. With that said, we're interested to find out more about the IEA calling for a halt of SPR oil releases. Did they catch on to the fact that the TBTF&TCTS banks (namely, JP Morgue) are now speculating with your tax money on commodities which in turn raise the price of oil higher, which in turn put more pressure on the IEA to release more oil from the SPR to try and lower the price of oil which in turn gets bought up by the TBTF&TCTS banks (namely, JP Morgue) and on and on and on and on - whoa! Our heads are spinning. Then again, none of us have a poison Ivy League PhD so maybe we don't understand economics 101 like the good Doctor.

On that thought, we'll leave you with some depressing news from Fukushima. First we learn that power to the cooling pumps at reactor 3 were shutdown and TEPCO assures us that no "major" radiation increases were found. Well, that all depends on your definition of "major." We know that could mean a whole Chernobyl was released and it still would be healthy safe according to TEPCO and the Japanese gov't.

We find it interesting that is running an article on the cover ups of Fukushima. Although Fukushima is "out of sight, out of mind" for the majority of MSM, it doesn't mean that some individuals are not paying attention to this ongoing epic catastrophe. Since March 11th, the situation has escalated. So much so that more and more radioactive materials are being discovered in Philly, PA sewage water. Of course, officials claim that sudden and sharp rise in radiation is from "cancer patient's urine." Riiiight. Just like radiation is healthy for you.

Finally, we want to thank all of our readers for your support. We have finally reached 100 posts and 140k page views in just over 4 months time and we hope to be around for another 100k posts. Then again, the banksters control "The Bank" and they own Boardwalk, Park Place, all of the Rail Roads, Pennsylvania Avenue, the utilities and even somehow they managed to take over the Community Chests. Time to get a beer and call it a night.

The huge bomb that rocked Oslo today should be bullish for the economy.

It all makes sense now that Business Insider has confirmed what we suspected. 1 in 66 Americans are psychotic. And that works out to be roughly 5 million very sick Americans. We know of at least one who holds the top position at the U.S. Federal Reserve and a PhD. The other 4,999,999 all are on the same payroll. It makes sense. Now, who wants the the "Iron" or the "Thimble"?

Thursday, July 21, 2011

Smoke and Mirrors Thursday- EU Enters 11th Hour, All Global Financial Problems Solved, Markets Rally; Initial Claims Get Swept Under Rug as They "Unexpectedly" Rise Again; Entire Memphis School District Shut Down Indefinitely; Tons of Bullish Economic News, Such as Store Closings and Mass Layoffs; Gold and Silver Still Shine; Mega Mansion Gives Marker; Much More

Update 1: You asked for it. Here it is. What does total U.S. unfunded liabilities look like in fresh clean $100 Bills you ask? Sit down and enjoy. No problem a digital dollar created out of thin air can't fix. Again, smoke and mirrors.

Main Article
As the EU enters the 11th hour and a crisis meeting is held, already KoolAid infused hope is bubbling forth that somehow, in a single brush stroke of European genius, all of Greece's problems (and by extension, all of the world's financial problems) are solved. In an instant. Poof!

The biggest news to come out of this latest "Marshall Plan" is an expansion of the EFSF which will allow Greece to borrow for 15 years at 3.5% , which oddly enough happens to be 30 basis points less than current 15yr French bonds at 3.8%. Huh? Say what? Exactly.

Most of these latest 11th hour heroics are once again based on hopium assumptions that Greece will miraculously produce outrageous 3.5% GDP growth in a years time (for those keeping track, not only did the most recent 1H data show that Greece totally bombed and experienced a huge economic contraction, they missed all revised marks set forth as part of the bailout requirements as well). Now we learn officially that Greece will be allowed to default. Act surprised. When all else fails, close your eyes. This won't hurt one bit.

On this news, "the markets" once again rally as the dollar tanks. Sure, P/E ratios of 1200x are never enough - might as well run them up to 1400x on another dose of hyperinflation hope filled expectations, because we all know how good Wall Street's finest are at making estimations. Speaking of which, the SPR oil release which did nothing for you or I made JPMorgue about $20 million richer in just a few days time - on the tax payers dime, both ways. $100pb oil is very bull...ish for the economy. Right on.

No, scratch that - fundamentals don't matter one single iota so long as Apple sells a trillion iPads to children selling their kidneys and their virginity. After all, Apple stock is a leading indicator of good times to come.

For that reason, the news out today that Initial Claims rose again "unexpectedly" by 10k to 418k means nothing. Neither does that fact that this makes it the 16th consecutive week of Initial Claims above the 400k mark - a very important marker. What's that? You went to 6 years of college, paid $140k in tuition and you still can't find a job? We heard McDonald's is hiring hamburger flippers. Oh, wait. Sorry, those positions are already filled with woodpulp.

Of course, today's Initial Claims data quickly and quietly gets swept under the rug so as not to shake your confidence in this depression recovery - just like yesterday's astoundingly horrific Housing data  where "the markets" rallied on that news as well. Pay no attention to the fact that housing just fell off a cliff. We're once again at a loss for words over this total insanity. Any wonder why retail investors have left the building? The expression that that markets "can stay irrational longer than you can stay solvent" don't apply here. There are no free markets. Period.

Then again, this great illusion which continues to be sold to the public as an economic recovery, is setting the world up for a Mega Black Swan. And that will occur when everyone least expects it. And yes, we've moved higher on the GEES scale because of it.

So while Wall Street celebrates the Xanax hope drug induced rally and coming hyperinflation, we will continue to pay close attention at the real fundamental, structural changes that are taking place under everyone's noses. Consider:

-We wonder if the entire Memphis School District is celebrating the Dow(n) Jones rally today, as school has officially been indefinitely postponed over money (or lack of). One group of citizens will be celebrating however - the over 100k students who will not be going to school as planned on August 8th. Skool is officially out!

-Last year, over 1 million homes were repossessed by TBTF&TCTS banks and this year is not expected to be any different but new delays may push that out into 2012 and beyond as Bloomberg reports, is casting a real major storm cloud over housing for the foreseeable future.

-Worried about the debt ceiling drama? Don't be. The debt ceiling will be raised as we said it would and the U.S. will never be allowed to technically default thanks to the invention of the printing press. However, as Ron Paul so aptly said, "When a country is indebted to the degree that we’re indebted, the country always defaults. We will default because the debt is unsustainable [...] if we don’t understand this, this default will not be because we don’t send out the checks. We will send out the checks. It will be defaulted on because people will get their money back, or they will get their Social Security checks and it won’t buy anything." Well said. The entire basis for this blog is just that - inflation is required in order to keep the global ponzi economy going and TPTB in power. Everyone else is just another slave.

-How else can a public company keep its stock price so insiders can sellout high while the economy continues to plummet? Cut everything. All full time jobs become part time jobs with no benefits. Short term savings can be achieved by closing many stores in rapid succession, even if they are profitable long term. Now that Borders Books Stores is officially closing all 400 remaining stores (well, with a BK filing a few months ago, who could have seen that coming? Not Wall Street's finest.) and cutting the last of the 11k jobs they support, this should be worth a few hundred points on the Dow(n) Jones today. 

Nothing is more bullish for the economy than store closings. In addition to Borders, just today we'll add 220 Gap stores, 58 nationwide Perkins restaurants, and about 3,700 U.S. Post Office locations. Stay tuned, tomorrow we'll have a few more biggies. 

- Besides the bullish store closings, Lockheed Martin is announcing 6,500 "voluntary" job layoffs which just came on the heels of a 2,700 involuntary job layoff. 

- CA Tech just reported record profits, but they'll still have to cut 500 jobs if the CEO and the other filth the other execs are to keep bonuses this year. 

- Cracker Barrel Old Country Store Inc.said it will layoff 60 workers. The move will save them $10 million. Ready for this? They cited "higher commodity costs and the effect of a 'challenging economy' on consumer spending habits" as the reasons for the cuts. I know a few people who will have a field day with this one.

- And on and on. We could list another dozen or so news articles just from today's tickers, but for the sake of time, we suggest you put your rose colored glasses on and enjoy "the market" rally today on this wonderfully bull...ish news. But before you do, remember that Gentworth Financial is down 20% today on "more mortgage woes and a poor outlook." Shhh, don't let this make a headline. 

Our heads are still spinning from yesterday's rally. For what it's worth, the best way to win this rigged game, is not to play at all. Gold and silver are things they don't want you to own. So think about that. 

Finally, if you're living on the west coast you're probably being radiated & radiated & radiated by Fukushima yesterday a 70,000 square foot mansion made the news and it reminded us of the time just before the French revolution in 1778 when the elite were building larger and larger palaces all over the country, while the people starved on food stamps and they suffered from a lack of jobs, lack of food and clean water, high taxes, inflation, etc. Sound familiar? We're not sure if that article about the mansion was written as propaganda to get people to get up out of their chairs and go buy a house, or to feel good because that mansion is supposed to be a signal of economic prosperity, but we will say in the terms of a temporal marker, it's obvious what is coming. Rally on, Mr. Market! 36k on the Dow(n) Jones can't come soon enough. 

Wednesday, July 20, 2011

Head Spin Wednesday- Housing is a Bust, Again, as Existing Home Sales Plunge; Gang of Six Plans to Raise Your Taxes and Cost of Living; M1 Over 12%, While M2 Surges to Third Highest Ever; All-in-One News; Much More

Update 1: The final results are in. Over 58% of current Netflix customers will be heading for the exits in  September/October. We expect a full 20% of the 58% that say they will leave to actually stick around but downgrade their service. 15% are undecided. That still leaves almost 40% reduction in customers. Should be worth a P/E ratio of 200x earnings if you ask us. Just in time for insiders to dump a few million more shares on the unsuspecting retail investors.

Main Article
With all of the hoopla and boulder dash over the debt ceiling drama, few people really understand the reason we need to even discuss it in the first place. The fact that the debt ceiling has been increased time and time again, should be sounding the alarm bells that something is just not right - certainly not a sustainable economic policy. The few individuals that understand what raising the debt ceiling really means also understand that raising the debt ceiling means devaluation of our currency - and devaluation of currency means inflationary pressures and in turn, higher gold and silver prices.

Strong arguments can be made on both sides of the issue and we're not here to beat a dead horse but in summary: not raising the debt ceiling means a certain technical default will follow on our debts which in turn bring about the destruction of the economy as bond yields skyrocket and the economy implodes; on the other hand raising the debt ceiling means more fiat money, more inflation, higher gold prices, among a whole host of other unintended consequences and not of the good variety. Both outcomes at this point in time will end up in disaster. Which is why gold has been so strong lately. Everyone knew that the debt ceiling would be raised, on way or another. And it won't fix a thing - except raise your cost of living and your taxes.

Just yesterday, we almost fell out of our lounging chairs when we saw "the markets" rally and the bimbos on CNBS celebrating over "better than expected" (there's that word again) housing starts. Savvy investors aren't fooled in the least.

Today, we got the existing homes sales data and if we were to use one word to describe it, it would be ugly. Not only did June existing home sales plunge to an 8 month low of 4.77 million on expectations of 4.90 million, there was a record surge in order cancellations from 4% in May to 16% in June - that's nearly 1 in 5 homes that were cancelled in the middle of the transaction. Oops.

Needless to say, that plunge in sales bumped the inventory up 3.3% to 3.77 million units to a 9.5 month supply of homes at the current pace. If we extrapolate the numbers, not only are we looking at a shadow inventory of at least 2.2-2.5 million units that are itching to get on the market, but the long cycle on housing is looking like there won't be a bottom for another 7-10 years. We have to wonder how the factory conveyor belt home builders (read: KB Homes, Toll Brothers, et al) will be able to survive that long if they stop building yesterday tomorrow and allow inventory levels to drop to more normal ranges. Housing? Let's call that part of the American Dream dead money. Next.

We've discussed "retail sales" in detail here before and we have told our readers to pay particular attention to the M1 money supply which has increased an incredible 12% YoY. Needless to say, if retail sales don't at least come in above that, it's a wash. Today, we present to you another great article from ZeroHedge that describes how the third largest weekly M2 spike in history will predict a spike in "economic indicators." Notice how the M2 chart looks like the earthquake chart of recent? That's no coincidence. A must read for everyone of every level of financial knowledge. It should alert you to the fact that the "economy" is nothing but a hoax, in case you weren't aware.

The news wouldn't be over unless we mentioned Greece, the PIIGS, the U.S. and Fukushima all in a single sentence. Here we go. The big day for Greece is arriving as bond yields remain elevated across the board for the PIIGS, while the word insolvency is added to the ECB's vocabulary and bond vigilantes begin to move in early on the U.S. debt crisis, which is now officially emitting more radioactive material than Fukushima.

And that's all the news you need to know. We'll be back later with more updates when we return from a business meeting.

Tuesday, July 19, 2011

Trembles Tuesday- Another One of Wall Street's Finest Says S&P to 2000; Our Netflix Poll is Soon Ending and Suggests More Than 65% Will Leave; Pres. Ahmadinejad Says Israel Breathing Last Breath; Housing Starts, Fails; Goldman's Earnings, Fails; Greek Bond Yields, New Joke in Town; BofA's Earnings, Fails; S.O.S From Fukushima City Counsel, "So Critical Now, Please Help!"; Much More

We're looking forward to the final results of our Netflix poll due tomorrow afternoon, but so far it's safe to say Netflix is going to take a Redbox to the head take a good hit to their bottom line come September/October. Of those polled who have a Netflix account, an incredible 65% say they will cancel their account or already have. Then again, with a BS P/E ratio of 80x earnings, does it really matter? Why not make it 160x?

Take for example, the ludicrous and sensational attention seeking claim this week by discredited Wall Street clown Laszlo Birinyi that the S&P 500 index will hit 2000 before this bull...ish market runs dry.

Don't be surprised, but he could be right - but for all the wrong reasons and that is where the danger rests. Traditional organic growth is long dead and has been since the start of the Greatest Depression The World Has Ever Seen in 2008. The number of publicly traded stocks that manage to just stay alive (read: self-funded through stock dilution, reverse splits etc) or avoid being delisted by those same scams is incredible - a true testimony to the gangrene on Wall Street - but that's a whole 'nuther story our friends. The point here is that true economic growth is dead. Period.

So how could he be right about the S&P at 2000? Inflation. Plain and simple. Even now, what "the markets" are gambling on is a tsunami of fiat money flooding "the markets" and they have been since 2008. Lest you forget, since 2008, the "economy" has been goosed with almost $2 Trillion in funny money - and that's just from the U.S. Fed. Not 4 months ago, within 3 days of the "bullish" catastrophe that struck Japan, the Bank of Japan printed $250 Billion of funny money. That amount grew to $440 Billion within days, as daily injections began to occur. The final tally has never been officially publicized but we can tabulate from what was published that Japan's most recent "stimulus" as a direct result of the March 11th earthquake and tsunami totaled $1.1 Trillion which includes Yen intervention in the FX markets. Any wonder why the cost of living has been rising sharply?

So we could technically see a 36,000 Dow(n) Jones and an 3,000 S&P - but if we do, we'll also see gold at $50,000/oz and silver at $1,500/oz and a roll of toilet paper will cost $30 per. Or how about a cool $1.24 Billion for lunch? Put it on the Black Amex, please.

Coming to a restaurant near you if Lazslo the clown is correct. 

We've been jesting about a giant asteroid striking the earth and causing the markets to rally to new highs but there is always some truth in jest. Dr. Deficit can't wait for the big one to hit so he can go Donkey Kong on those new printing presses. Why wait? President Ahmadinejad just said "Israel is breathing its last breath." That should be worth a few hundred points on the Dow.

Housing starts and completions were released today and come on the heals of a super bull...ish NAHB home builders sentiment survey (conveniently brought to you by Wells Fargo). Let's not even go there - it's an insult to our intelligence to say that home builders have any clue as to what the housing market will be doing in 6 months from now giving the current environment is the worst in history. Let alone, "sales traffic" remains at all time lows. What did Mark Twain say about "statistics?" Oh, right. He said, "Lies, damned lies, and statistics." Next.

We don't think we need to discuss the psychology of "the markets" and how important it is. Now that retail has left the building, "the markets" are occupied by clueless hedge funds, HFT computers and a dozen or so different variations of TBTF market participants. As we have said a million times, they are left to cannibalize off one another now that retail has left the building, like Elvis. And here comes Goldman's earnings. Presented to you without comment from ZeroHedge.

"Come on in! The water is so nice!"

Hey, did you hear the joke about the priest, the rabbi and the Greek bond yields? Well, it turns out the joke is the Greek bond yields - now at 40% on the 2's. You can't say we didn't warn you.

We've got another one. Did you hear the joke about the elderly man who walks into a bar, a young beautiful blond and Bank of America's earnings? No? Neither did we, but when we show you BAC's latest loss of $9 Billion, you understand it. Do we need to remind you BofA is a TBTF? Again, we warned everyone way back in March, which banks were festering diseases ready to unleash death and BofA was one of our top banks to avoid. Other top places to avoid after dark include, Detroit Michigan, Cape Town South Africa, Mogadishu Somalia, Deutsche Bank, JPMorgue, New Orleans Louisiana and Karachi Pakistan.

Joking aside, when Greece is officially allowed to default, contagion will not stop there as the ECB expects. Rather it will spread faster than gonorrhea in the Jersey Shore hot tub. There is no stopping this slow motion train wreck. The legalities of allowing Greece to default are astronomical. Then again, the legalities of bailing out the PIIGS in the first place was even more astronomical. More bread and circuses for the masses while the chiefs plays golf. Got gold?

Monday, July 18, 2011

Just Another, Manic Monday- The EU Inches Closer to Brink as PIIGS Bond Yields Skyrocket; Italy and Spain in Spotlight; Former WH Chief Economist Says More Economic Stimulus Necessary, Fails; Is The Muni Implosion Here? Whole County In AL Goes Bust, Soon; Gold and Silver Always Shine Against Fiat Here's Why; Educational Video About Banking; Super Typhoon Ma-on Heads Towards Japan; More Radiation Detected as People Outraged Over New "Revelations"; Much More

Update 1: A double eruption at the Mt Lokon volcano in Indonesia confirms that the "Ring of Fire" is heating up - quite literally. Coupled with a dozen or so earthquakes in that same region in the past 24 hours, we can see a lot more "economic stimulus" will be needed to fill the sinkholes and plug the volcanoes.

Update 2: We always wanted to visit Greece but now we believe holding off for another 10 years or so might be the wise choice, as protests shutdown airport and ports. Thousands of tourists stranded.

Update 3: A few companies you might want to avoid, for your health if not out of principles.

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Exactly one week ago, we reported that the latest 1H Greek budget was a complete and utter failure as they missed all "targets" by 3 bottles of warm ouzo in the morning a long shot, but then they turned around and blamed a "deeper than expected recession" for the misses. Oops. Hu Who wants to bet Greece will never meet the bailout requirements?

Here again, none of our readers were surprised by this latest data which was quickly swept under the rug because as we explained in great detail, not only is Greece (and by extension the whole EU) trapped in an ongoing fiat debt-death-spiral of which there is no escape but the continuing riots, protests and general strikes would seal the deal and finish off an already comatose economy. Once the people break away and demand change, there is no going back. It's a proven, historical socioeconomic fact which TPTB seem to be ignoring or denying.

One of the very first articles used to test the waters on this site was an article we published about Greece, and we have been focusing on Greece because of the implications to the global economy. Back in March when we began, we had warned that the situation in Europe would continue to deteriorate and gave the PIIGS only months, if not weeks to live. Today, we see Italian, Spanish, Greek and Portuguese bonds imploding - but most notably the Spanish bonds which have seen the 10yr reach a new EU era high of 6.37% (and as we have been saying, the 7% EU threshold is getting closer to judgement day). As the EU begins to lose its grip on the PIIGS the bond prices will continue to plummet and yields skyrocket. The whole EU is looking like bubonic plague a circus tent collapse today, so brace yourselves for some fireworks if yields continue to rise (ignore the Greek 2yr, as they are now flashing the big red default sign at 34.66%. Oops). Even the fake bank stress tests can't hide the fact that the whole EU is one big circlejerk. Warning: Eurobonds are junk Human consumption of gasoline as a dietary supplement is deadly.

You've heard, "what happens in Vegas stays in Vegas," but now you see what happens in Greece spreads to Germany, France, Italy, Spain, the United States, the whole world, as it only takes one domino to cause the fall of many; think in a similar sense how Lehman and AIG fell and touched off this whole catastrophe. The only truly sovereign nations remaining will be those that don't rely solely on others and that have enough gold in reserves to back their paper currency. Funny, we can't seem to think of any.

Since this accelerating great depression "recession" officially ended in June of 2009, we have to wonder why former White House Chief Economist and Economic Advisor Jared Bernstein is calling for more stimulus. With economists like this, there is no wonder why the world is in the situation it's in. As we have held since 2008, stimulus programs may buy time but nobody has the courage or ability to fix the fundamental problems - like the EU, it's simply throwing good money at bad. Now that the "stimulus" half-life has now been reduced to 3 months, increasing the debt ceiling one more time will do nothing.

Of course, nothing speaks economic depression turned collapse green shoot jobless recovery more than whole counties going under. It seems Jefferson County in Alabama is having a transitory rough patch. Nothing a little more fiat printing can't fix.

Which is why so many savvy investors are rushing to trade in their worthless fiat for gold and silver (both are up to highs, $1600 and $40 respectively). We can clearly see the fundamentals for $2000 gold and $70 silver are in the cards and as things spiral out of control, more fiat will be printed - all of this means higher prices for gold and silver - likely $50 silver by late August if things continue as is. We like to watch a little global balance indicator we like to call the 'JP Morgue to Silver Threshold', whereby the price of silver is higher than the price of one roll share of JPM toilet paper stock. Those who are extra cautious and prudent are buying food, water and supplies now, before they are in very short supply when the dominoes begin to tumble. And tumble they will.

Of course, the gold/silver bears will claim there is a bubble in gold forming but we firmly believe the only bubble forming is the fiat bubble (and the bubble on Dr. Deficit's head, which has turned into a boil). Say, have you tasted an iPad recently?

We posted this video way back in the "early days" but given the developments over the past few days, it would be wise to educate yourselves again by watching it again. Now who would have thought that watching cartoons could be so edgeyoumakayshunal? Well worth the 30 minutes.

From Fukushima, we learn so very disturbing but never unexpected news about the levels of radiation (and corruption) that is rampant across Japan. First, we are keeping a close eye on the Typhoon "Ma-on," which has turned into a category 4 super typhoon over the weekend and is headed straight for Japan. Work is being rushed to cover reactor 3 as it closes in.

Second, we learn from Energy News that "the new scandal appears to be much wider" as the cover up over radioactive beef and other atrocities committed by the Japanese gov't continues. When money is at stake, evil blinds the mind. As we first speculated, and as was later confirmed by a former Japanese official who resigned over a bad conscience, the "revelations" as he called it, over the radiation cover ups will really be shocking. We expect many more revelations over this catastrophe to come to the fore as the weeks roll by and humans and animals develop symptoms of radiation sickness. Like we've been saying, "you ain't seen nothing yet."

Friday, July 15, 2011

Crap to Fan FryDay- Social Security May Not Be So Secure After All - Where is The $2.6 Trillion Trust?; S&P Says Downgrade Coming, Default Possible Even With Debt Ceiling Increase; Consumer Confidence Closes in on Reality, Plummets to Two Year Low; Empire Manufacturing Slows; U.S. Treasury Burns $90 Billion in Under Two Weeks; More

When something is too unimaginable, too unbelievable to even think about - it can't be true, right? We've discussed the term "cognitive dissonance" here in great detail and it's about to be used as a daily term. Obama made waves this week when he said,  "I cannot guarantee that those checks [social security checks] go out on August 3rd if we haven’t resolved this issue. Because there may simply not be the money in the coffers to do it."

The reason it has ruffled so many feathers is because most people, including the majority of the politicians, assume or believe without a doubt that the Social Security Trust Fund still has $2.6 Trillion in it's coffers as the SS Trustees are reporting. If that is the case, then Obama is simply pulling a real political stunt and he is outright lying. 

On the other hand, this might be one of those "need-to-know" factoids that only El Presidente and few other top officials know and he just let the cat out of the bag that the SS Fund is broke. Could it be? It's unimaginable to even think about it. Yet, the evidence is mounting it could be true. Forbes has an excellent article on this very topic and you may prefer to bury your head in the sand or drink a full bottle of your finest whiskey before you do. 

We even have been speculating that the debt ceiling will be raised - that all of this is just political drama that is becoming more wild by the minute. But what if, all of this is not just theatrics? The S&P (a day after Dagong) is now claiming even if the U.S. raises the debt ceiling, there exists a real possibility of default. 

And the EU? Forgetaboutit. Greek bond yields are through the roof, along with skyrocketing Irish, Portuguese and now Italian bonds. Then again, we already knew the EU was in a similar debt-death-spiral the U.S. is in. 

Yesterday, we reported the Rasmussen Consumer Confidence plummeted to a two year low. Today, we bring to you the University of Michigan Consumer Confidence, which surprisingly is not that far off from the Rasmussen report - two years lows across the board. Of course, we suggested months ago to take the pulse of the U.S. economy by doing a "Friends and Neighbors Survey." Get ready for the knock out round.

The only toenail the U.S. has hanging on, from keeping the world from going off the edge, is the little manufacturing that remains here and most recent data suggests now even that is failing. NY State manufacturing and indicators all show the final days are here. Everything must go. 80-90% off everything. 

Finally, we present to you a great find from ZeroHedge which shows how bad the situation really is (in case you haven't believed us all this time). US Treasury burns $90 Billion in less than two weeks time. No commentary is required, but we will say, someone might want to ask how much fiat money is remaining in the federal pension funds. Don't look now, but the EU is in even worse shape while England quietly distracts with royal this and royal that. "Oh look what dress Kate is wearing for tea."

We'll be doing some updates over the weekend and today so be sure to check back often.

Thursday, July 14, 2011

Wealth Gap Thursday- Discrepancy in Wealth Signals Collapse Imminent; Retail Sales Disappoint "Experts," Validate Our Research; Four Indicators For You; Weekly Unemployment Benefits Show Weakened Economy, Clown Award Goes To...; Moody's and Dagong May Downgrade U.S., Says "Borrowing to Pay Off Loans Won't Work."; Greek FM Fails; Monster Typhoon to Hit Fukushima; Ron Paul Says U.S. is Insolvent; Much More

Update 1: Act surprised - Rasmussen Consumer Confidence Index lowest in 2 years. We thought by now the all of the "green shoots" would have turned into giant sequoias. We speculate Dr. Deficit needed them to print more fiat.

Update 2: Hundreds scramble for Dallas rental vouchers (aka section 8). Is there such a thing as a "4th world nation"?

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Anyone who wishes to see what occurs on a fundamental level during an empire's decline, should take a day trip around New Jersey or New York.

You should begin your journey in the capitol of New Jersey, Trenton (or Washington D.C.). We suggest you spend a few minutes in this cesspool of extreme poverty and desolation observing the architecture and surroundings. Then, without delay take a drive 40 miles to the northeast to a town called Short Hills. There you will find great wealth and a mansion housing boom that would one expect to see during great economic prosperity. Drive another 40 miles to the northeast and you'll stumble upon a town called Alpine. Here you will find wealth beyond imagination and a mega-mansion housing boom that rivals the fastest growth in history.

Yes, the great wealth gap - a clear indicator of a nation in decline. As the middle class is decimated, the wealthy take all the chips. Marc Faber recently made the observation while attending a convention in Los Angelos, that he has never seen more Ferraris, Aston Martins, Lamborghinis and Porsches in one place at any time in recent memory. He went on to say roughly, this wealth discrepancy is always an indication a financial collapse is imminent. He is correct.

Ready? Today's retail sales and food sales data shows a 0.1% (+/- 0.5% margin of error) monthly increase and an 8.1% yearly increase. Sounds good on the surface, no? It's another reason to rally "the markets," and increase those ludicrous 2H11 GDP estimates even more, right? Green shoots abound!

Allow us to remove the smoke from the burning fiat - those "green shoots" have been chopped down and turned into paper pulp for the endless fiat. You see, retail sales are, as you already know, calculated in dollar terms, not unit sales. This means during times of inflation (we have 9%-11% in the U.S.) retail sales should always be up. They should also always be up when the M1 money supply is up 12% year-over-year(!) The Fed is giving the "economy" full gas pedal to the metal, and yet the car is slowing to a halt. Oops.

Further, this data also includes gasoline sales which were up (again, in cash terms) 24% YoY. Considering gas prices were up almost 91% YoY, there's a big gap to fill. You do the math. It goes without saying what would explain that discrepancy. Dr. Deficit, you didn't expect the millions of unemployed Americans to go out and start driving around for pleasure in their big SUV's, did you?

Notice the direct correlation to the other metrics:

- Food stamp recipients are at all time high and the numbers continue to skyrocket(!)
- Real time unemployment (read: the U6 + the officially unaccounted) is pushing 24%(!)
- Duration of unemployment is at an all time high of 40 weeks(!)
Labor force participation rates are at a 30 year low and declining rapidly(!)

And the list goes on and on. What does this tell you?

We can literally go on for hours about the failed economic policy in this country and around the world (and hope someday, someone invites us to speak on this topic). We have been constantly highlighting the fact that stocks are based on whether or not Dr. Deficit will print more fiat. That's all. Fundamentals mean nothing. There is no such thing as "organic" company growth. The only "growth" comes from the inflationary pressure of the money supply and the amount of hype Goldman is willing to put into the selling of an IPO (read: LNKD with an absurd P/E ratio of 1200x. They just have not found enough suckers willing to bite this sour bait) How long can this last? Not much longer, as the death spiral accelerates exponentially near the end. Always has, always will.

We do have to give credit to the spin clowns masters who like to turn anything negative into bull...ish news. Today's clown award goes to Associated Press writer Christopher Rugaber who wrote, "fewer people sought unemployment benefits last week, an encouraging sign the job market may be slowly improving."  Good try Chris, but a total failure. Call me when that number drops below the population growth. Obviously, this was your first day on the job. Now, where do we begin? Let's see - 405,000 (an abysmal number, let alone an encouraging number) people applied for unemployment, and only 18k hamburger flipping jobs were added in June. Now, if 250k jobs are needed to be created each and every month for the next 6 years to return to pre-depression pre-recession levels, how many people including the population growth birth/death farce model should apply for unemployment benefits in a given week? [insert Goofy voice] Well, gee golly Micky. I don't think I have enough toes to count.

We find it more than ironic that Moody's has place the U.S. on death watch downgrade review since the U.S. should have been downgraded in 2008. The Chinese ratings agency Dagong, has said they will downgrade the U.S. even if the debt ceiling is raised and placed the U.S. on negative outlook. Why, you ask? They make this pure genius (Einstein level of genius) conclusion - "borrowing to pay off loans won't work." [insert Goofy voice] Well, shucks Mickey! By golly! You don't say!

Of course, they already downgraded the U.S. last November because of QE2, so they have finally begun to see the light that the whole world is insolvent fiat is a scam and the EU is about to implode. We're just surprised they didn't downgrade the U.S. to junk status like Moody's did to Ireland yesterday, in an after-the-fact cowardly move. A little late, guys.

The freak show circus continues. The head clown, Dr. Deficit, said yesterday that "gold is not money." Since that is another Dr. Deficit one liner that will go down in the history books and talked about for years to come, we won't say anything else... but, judging by the recent moves in this shiny stuff, we'd have to say a lot of people don't agree with the good Doctor - or at least they speculate gold will be a type of money in the near future. Say, did he just say 6000 years of gold as money "tradition" can be broken with a piece of toilet paper fiat? Yes he did. duh! #winning!

In other news, Greece's FM just said there is no "danger of default." Our readers, who we have trained to read between the lines and sniff out steamy bull droppings know that this means Greece is moving one step closer to defaulting. Along with the entire EU.

Then again, once this monster Typhoon levels Fukushima reactor 4 SFP, will a default really matter? Ron Paul doesn't seem to think so.

Wednesday, July 13, 2011

Inflation Disguised Wednesday- Netflix Tries to Pull the Wool Over Our Eyes With 60% Price Increases, Fails; Mortgage Applications Plummet, Along With Everything Else Related to Housing; 33% of Seattle Homeless Live in Their Cars; Bumpy Ride Coming, So Says Billionaire Fund Manager; Greece's GDP Plummets as Bond Yields Skyrocket; Fukushima - Soil Samples Taken Near Tokyo Show Dangerous Levels of Radiation; Much More

As we keep a very close eye on the developing global hyperinflation, we begin to notice more and more subtle increases in everyday products. Years ago, manufacturers were caught red handed quietly increasing the price of products by decreasing the size of the products. FrankenManufactures like Unilever, Nestle and Coca-Cola subtly decreased the size of many products - from cat food to laundry detergent to tuna fish to canned soup to mustard - but kept the same price. After all, you notice the price first, not the size.

To those with an IQ above 9.2, this is clearly "inflation in drag." Of course, these manufacturers assumed most consumers were dumber than a pair of safety scissors in a paper shredder won't notice that a 39.0 oz can of whatever, is suddenly 30.9oz but sells for the same price. The price looks the same.

Along the same Putin "holligans" - yesterday, Netflix made waves when news broke (on their blog) that they would charge 60% more for some of their popular services (read: the service that 85% of their customer subscribe to).

Let's break this down, piece by peace. First, they desperately try (and fail) to soften the blow (of this inflation in drag) with what they consider "positive" changes for the consumers - which really turn out to be not so positive for the consumers (but positive for their profits... or so they think).

Second, they try to mask the price increases by separating their DVD/Unlimited streaming service into two products - and then combine them back into one service (another one of those laugh out loud moments). We won't even begin to explain what a total failure this is, on so many levels! Stop insulting our intelligence, Netflix. Anyone involved in this PR disaster should be fired and sent to Blockbuster.

Third, they try to offer some reasoning (read: lame kindergarten excuse) why this price inflation increase is necessary, saying they are now offering you more choice, when in reality (and after a little due diligence on our part) we discover their contracts with broadcasters and production studios are in negotiations or running out and they are about to get their you-know-what handed to them. Oops.

We are conducting another one of our famous non-scientific polls, and predict that there will be a mass exodus from NetFlix come September. Instead of making smaller, gradual price increase (like we would have done to mask the blow over time), they chose to blow up the pricing model which made them so popular.

Therefore, Netflix goes into the Hall of Shame for their complete and utter failure at herding the sheep passing on this inflation in drag to John Q. Consumer. How do you spell "Complete Public Relations Failure?" You spell it - N E T F L I X. Expect their stock to take a hit as well as their already comical 100x P/E ratios get blown up (right after Wall Street pillages and baits the retail investors, first). Happy investing, suckers.

We're 100% Bernanke certain this "real time inflation" won't show up on the fake and manipulated CPI, but it will show up in your wallet as your home value drops below the water table in your basement.

Speaking of housing, the latest bullish housing news from the Mortgage Banksters is out today, and it's as radioactive bullish as ever. The key highlights are:

- Mortgage applications decreased 5.1 percent from one week earlier.
- The Market Composite Index decreased 24.0 percent compared with the previous week.
- The Refinance Index decreased 6.2 percent from the previous week, and was 42.1 percent lower than a year ago.
- The Refinance Index has decreased the past four consecutive weeks, reaching its lowest level since April 29, 2011

Of course, if you were to ask any realtor/mortgage bankster/broker, "when is the best time to buy a house?" you know their answer would be, "right now!" Needless to say, spring is typically the best time of the year for housing. If these are the numbers coming out of housing now, we have only one thing to say for the fall season - "duck!" (Looking at the "stock markets" today, we see they are loving this news, along with Dr. Deficit's new plan to save the world - print more money!)

No wonder then, gold and silver are roaring today as gold made a new high today in Euros/Dollars/Pounds/Toilet Paper. As we like to say, gold never gets old when the whole world is
about to fold.

In other bull...ish news, 33% of the homeless in Seattle, WA are living in their cars and things are about to get much, much worse as housing values plummet and strategic defaults increase. Bumpy ride to total chaosin September here we come! Even billionaire fund managers are starting to see the light - TSHTF sooner than expected.

Speaking of expected, the IMF is just now admitting that Greece's GDP contraction for 2011 will be -3.8% versus the expected -3.0%. Of course, since their entire FY2011-2016 budgets were based on these comical expectations, they will never be able to meet any bailout requirements. Ever. We should point out, death spirals tend to be like quicksand and ponzi schemes and fiat money and debt. Bailouts always follow other bailouts in an endless cycle. Jean Claude Trichet has proven himself to be the funniest circus clown in the worst tent. EU = total failure.

Speaking of total failure, have you seen the latest PIIGS bond yields? Ireland just went to a level 6 on the GEES as their 10yr yields blew up to Greek levels. How do you spell inverted yield curve? Answer: PIIGS. Not that it matters any longer as their fate is sealed. Now, we just wait for the inevitable. Dr. Deficit's answer to everything of course is "print more money!" His plan will make every citizen of planet earth a homeless trillionaire by years end - and he's simultaneously 100% certain there is no inflation.

Finally, as Japan glows brighter and brighter from the healthy radiation doses being served up, we learn that concerned citizens are taking the matters into their own hands. One individual took a soil sample collected near Tokyo to a private lab to be tested - the results were incredible. We are truly again, at a loss for words. 50,000 Becquerels/kg (for reference 300 bq/kg is the safe limit) - right where children walk and play everyday. Disgusting.

Tuesday, July 12, 2011

Domino Tuesday- Italy Flashes Big Red Help Sign as Contagion Spreads Rapidly; China and ECB Buyers of Only Resort, Again, Fail; Greece Will Officially Default, Concedes Officials; Bond Yields Explode; Cisco to Now Cut 10k Jobs; Record U.S. Deficit; New Levels of Insanity as Insiders Sell at Incredible Pace; Russia's Putin Calls U.S. "Holligans" For Reckless Fiat Printing; Cost to Minnesota Shutdown Incalculable; Severe Drought Grips 14 States While Floods Grip 7; Banks New Business - Slumlording; Volcano in Chile Continues to Spew Ash; Fukushima, and Lots of it; Much More

Update 1: Oopsie! We told you so and just now the MSM catches on. "High levels of radiation found in rainwater across Northwest USA." Might as well let the cat out of the bag now.

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In the blink of an eye, or a radioactive flash from Fukushima, Italy moves from the back of everyone's mind to the forefront - with a big red flashing neon HELP! sign to remind you like Jack Nicholson in The Shining, "Heeeere's Johnny!"

Over the past year, Italy has been relatively quiet - so much so that in many economic reports, many authors chose to leave the extra "I" in PIIGS out of the acronym and just call them the PIGS. However, Italy has not for a single moment left our sight and we have more recently been warning to keep a close eye on Italy and Spain in the coming weeks as contagion was already spreading and infecting Italian and Spanish bonds. Lest we forget, Italian banks, as we warned about, are overexposed to Greece - and Portugal - and Ireland - and Belgium. Oops.

We have to wonder if those bond holders just now discovered that Italy is insolvent because the cast of Jersey Whore is in Rome, and Snookie (who happens to be a financial expert and world renowned economist with a PhD in global finance), made a public service announcement. On breaking news that Snookie (and her crew of fellow experts) said Italy is an "insolvent sovereign on the verge of collapse," Italian bonds skyrocketed. The 10yr exploded to over 6%, only to later fall on news that China and the ECB were buyers in the secondary markets (where have we seen this before) and that OJ Simpson congratulated Casey Anthony for a good acting job after she was set free once again, the EU is saved. Ok, maybe we're going a bit far here, but insolvent is insolvent and all the PIIGS are insolvent. It goes without saying Hu's who's next to taste the bitter bite of fiat currency. What will happen when the FM of Italy resigns?

All that this latest drama has proven (besides the fact that the whole world is run by imbeciles) is that Italy is the third EU member that officially will require a bailout. Greece and Ireland are already basket cases held hostage by banksters and officially will be forced to accept bailouts (this despite rumors that Greece will officially default before the European Stability Mechanism goes into action in 2013. For now, it's Italy's turn to burn. Simply by examining the bond yields, we see Portugal is a given organ donor bailout insolvent nation, and that contagion will next spread to Spain as the 10yr Spanish bond, as we predicted, has gone well over 6%.

Keep in mind, 7% (on the 10yr) is the EU's unofficial threshold maximum and once a member reaches that level, it's lights out. Look at Greece. Look at Portugal. Look at Ireland. Now look at Spain and Italy. See the big picture?

Moving on to the U.S. we find some big news coming out today including but not limited to 1) Cisco Systems could cut not 2k, not 5k but now 10k workers, 2) a record U.S. trade deficit, 3) and new insanity in insider buying.

Let's briefly examine each. First, the news about Cisco cutting 10k employees should come as no surprise to readers of Fiat's Fire. We have been warning that as the economy continues to sink into the mire, these big corporations will be defending profit and margins at all costs. If they could replace all workers with robots, they would. It also is telling because it signals that the economy is slowing if demand for high tech products is slowing. So much for a jobless recovery. Our advice to corporate pigs - enjoy it while you can.

Second, the trade deficit exploded to $50.2 Billion as the price of oil imports jumped to the highest since 2008, which simply means Wall Street's finest were once again way off the mark as they guesstimated a deficit of $44.0 Billion. How anyone thinks this is even remotely sustainable is beyond all logic and reasoning. As this deficit grows larger and larger, we have to wonder if America's corporations even care. We have an idea - they care as much about you as you care about what socks Justin Bieber is wearing today. Very short sighted of corporate America, and once again, they deserve what is coming.

Thirdly, our favorite talking point - how blatantly disgusting it is to see insiders of companies sell their shares at breakneck speed while talking about how wonderful the future is. Not 3 years ago, if the insider selling to buying was above 30:1, it would be a warning sign to "the markets" that something bad was on the way. Last week's ratio, in line with the average, was 3,700:1. That is three thousand seven hundred to one. Oops. Again, if anyone needed any more proof that the entire financial system is set to implode, this is it. For once, we agree with Russia's Putin when he branded the U.S. as "hooligans" for their reckless printing. No, you can't make this stuff up.

Moving on to more economically bullish news, we learn that Minnesota's shutdown will cause damage to the Minnesota economy that "will be real, significant -- and incalculable." Almost no mention of this in the 10 o'clock news or anywhere else. Nevertheless, this story will be spun into something bullish for the economy and it should be worth another 300 points on the Dow(n) Jones Crap Index.

Across the U.S. a severe drought has gripped the nation and engulfing now 14 states in an emergency. No rain, means no crops. No crops, means no money for farmers and much higher prices at the supermarkets. Definitely bullish news for the economy and your wallet.

While 14 states are in a drought emergency, at least 7 states are in a flood emergency which is being called "the worst flooding in U.S. history." We're 100% Bernanke certain that all those people can't wait to go out and spend their welfare checks on iPads and iPhones while they wait for the water to recede. This alone should be worth 400-2500 points on the Dow(n) Jones Crap Index. Put your rally hats on. See, we also can be bullish like Wall Street's finest.

Of course, nothing is more bullish for the economy than what the Too Big To Fail and Too Corrupt To Save banks are doing. We give them kudos for diversifying into other business areas with their latest venture into "slumlording." Yes, not only are banks looking and finding ways to rape your wallet and earn bigger bonuses, they are now in the business of slumlording. All in the name of "profit." This is worth 330 points for the markets.

Around the world, nothing is more bullish for the economy than catastrophes and in Chile, the ongoing crisis caused by the Puyehue volcano is the second most bullish of them all - grounding hundreds of flights over the past two weeks alone, shutting down 80k square miles of farm land, closing up businesses across 4 countries, and covering thousands of miles in 2 foot deep healthy-for-you ash. It's all good for the global economy though. Just like Fukushima is proving to be.

- Healthy radioactive meat circulating around Japan. Hat tip to Ann Coulter for pointing out the health benefits of eating radiation.

- Healthy, freshly collected ash containing 70,000+ bq/kg of radioactive material found near Tokyo. Thank you PM Kan for letting hundreds of thousands of people return to this healthy ash area.

- Cover ups of healthy radiation in the U.S. The U.S. is just as good at covering up as Japan.

So what choice does the average Joe have but to buy gold and silver and prepare for the coming complete collapse of the global house of cards? You do the math. Connect the dots. Stay awake to the developments around the world. Question everything. Stay healthy.

Monday, July 11, 2011

Red Alert Monday- The EU in Meltdown Mode as Euro's Days Are Now Officially Numbered; Greece Completely Misses All Targets as Budget Gap Widens; PIIGS CDS Spreads Explode With Yields; China's U.S. Listed Stocks Are a Mess; Last Week's Rally Largest Since 1644 - Shortly Before Collapse; Gold and Silver Shines as Always; $2 For Every $10 in American's Wallets is Gov't Subsidy; Tiny Tim Says Put Your Crash Helmets On; Worst Chart Ever; Fukushima Screws The World; Much More

Update 1: Whoa nelly! Economists finally catching on to EU insolvency. Chief European Economist at RBS, Jacques Cailloux just said, "we believe the European sovereign crisis might be entering a new phase with contagion reaching the larger economies." Translation: "Buckle up! It's gonna be a bummmmmmpy ride!"
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Things are certainly heating up and accelerating much faster than we had anticipated. Although as of last week, we have entered Level 5 on the GEES, this is the point of no return for the global economy and we expect the developments to now occur very rapidly as the world sails through levels 5-7 in quick succession. Put your helmets on and strap in. This is going to be a bumpy ride.

Indeed, we have been warning, since this blog's inception, that the disintegration of the EU is imminent and the Euro currency has but a very, very short time remaining. As we said three months ago, the Euro has "months, if not weeks" remaining. With the most recent developments over the weekend pushing the Euro closer to the edge, we now conclude the Euro may only have "weeks if not days" remaining. Given the extreme stresses now placed on the core EU members, namely Germany and France, due to Italy and Spain, we wouldn't be surprised to see the Euro implode or enter a full crisis mode as soon as Wednesday.

Greece, as we have warned about a million times, is insolvent. Act surprised - Greek budget gap widens, misses all targets. As they are now caught in a death spiral with no way out, each counter move made by the gov't to meat meet EU bailout requirements results in further deterioration of the economy, which in turn then requires more reliance on bailouts to continue. Why they don't understand this is beyond us. Then again, maybe they do understand but would rather ignore reality.

Judging by the bond yields and CDS swaps today, we think investors are just starting to pick up on the fact that the PIIGS are insolvent and will default no matter how many times EU officials try to extend and pretend. The can can't be kicked any longer. The Greek 2yr bond is now yielding a astronomical 31.22% and is up almost 3% on the day. The Irish 2yr is yielding 17.32% and is up 5.4% on the day. However, the real excitement doesn't begin until you see the Portuguese, Spanish and Italian 2yr bonds. How does 18.31%, 4.17% and 3.99% respectively sound to you? In other words, Spanish and Italian bond yields  are up 10.1% and 13.1% respectively(!) and let's throw in another (!) for emphasis. Which is why the EU called an emergency meeting over the weekend as pieces of dung started to hit the fan early. Don't worry though - China said they are going to save the whole EU - right after they clean up this mess.

Yet somehow, we think the EU will come up with a last minute "heroic" move to save the banksters and prevent "default" - at least the definition of default we are familiar with (as the PIIGS are already insolvent). Nevertheless, we expect this will be yet another postponement of the inevitable and very soon the tensions will be too great for them to bare. Notice that each successive postponement is shorter and shorter in length as the inevitable draws near. Some investors though, are still a little slow in the brain to realize that EU banks are dangerous places to be.

Speaking of default, Charles Hugh Smith has written an excellent article about last weeks suspicious fake and manipulated "stock market rally" - which also happens to be the sharpest "rally" of fiat toilet paper since 1644 - shortly before the collapse of the Ming Dynasty and the epic plague of Europe. As we have been warning since, well - forever - the "stock market" indices mean nothing. Zilch. Zero. Nada. The "stock market" indicates nothing about the true health of economy. In fact, according to all of the available evidence, the larger the "rallies," the closer the world moves to the grand finale as the global house of cards implodes and the smoke screens evaporate. It is that simple - and as we are watching very closely, the banksters are now cannibalizing off one another as retail has left the building.

Moving on to gold and silver, we continue to observe central bank's appetite of gold and silver as voracious and yet they don't want you to own the shiny stuff. Which is all the more interesting, as we observe the last group of retail suckers investors who still think that gold/silver certs are as "good as gold." What they don't realize is, the global economy is now a deadly game of musical chairs. Once the music stops, everyone will want to exchange their paper certs for the physical - and realize at that time there is not enough gold/silver to satisfy all of the paper that is out there. How many times have we reported that the Comex is dry? Oops.

Here's one of those little tidbits of information that make your head spin - close to $2 for every $10 that went into American wallets last year were in payments of jobless benefits, food stamps, Social Security, disability, etc, according to Moody’s. Since last year's data was the last available, we are 100% Bernanke certain that amount is now closer to $3 for every $10. Oh, and that same article goes on to show that come this fall, those benefits will run out, leaving millions of angry Americans roaming the streets looking for food. And banksters.

Which could be why Tiny Tim is resigning said last night "hard [economic] times will continue for many for a very long time." duh! #winning! Did you notice the rats are fleeing the boat faster than ever? Oops goes the weasel. Don't miss Obama's 11 o'clock announcement today right before lunch. Just make sure you eat first. Wait. Before you do, look at this chart and then ask yourself, "what exactly is a jobless recovery?"

In other radioactive news, Fukushima continues to pollute the earth. Courtesy of Energy News, we learn that Fukushima is worse than a "meltdown" or a "melt through" - it is a "melt out" as radioactive materials reach the groundwater. We have unquestionably reached a point of critical mass with the ongoing catastrophes in Japan. Many Japanese are discouraged after finding that their gov't has been lying to them about everything, leading one elderly woman to commit suicide. She chose to "evacuate to the grave" instead on continuing to live in a land filled with filthy liars radiation. This is just the tip of the iceberg as more and more people discover the truth about Fukushima.

Forbes has an excellent article on the dangers of radiation being a matter of perspective. We know radiation is cumulative and dangerous on all levels yet, officials around the world claim even the high amounts of radiation that exceeded the safety limits are suddenly ok for you. You do the math. They are not about to tell the public not to drink radioactive milk or not to eat radioactive meat - there is simply too much money involved, especially now that the economy is in the trenches. Then again, soon money won't mean a thing.

Friday, July 8, 2011

FryDay Weekend Countdown- Wood For Breakfast is Served; Wall Street's Finest Serve Up Ludicrous Predictions on NFP; NFP a Total Disaster; Buffett Needs to Retire, Here's Why; Each New Job Created Cost Only $278k per; QE3 Almost Certain; War on Terror Costs More Than WWII; Up and Coming Job Cuts; Reuters Explains Fukushima Cover Up; The Weekend Update- Our GEES Scale; Much More

Considering that Too Big To Fail multinational corporations wouldn't blink an eye at serving you wood for breakfast, it goes without saying they also have no problems with laying off thousands of workers in the name of profit - profit that goes right into their pockets.

We have been saying for some time now (like, forever) that the unemployment situation in this country is spiraling out of control. Despite the outrageous and ludicrous "estimates" by Wall Street's finest (and over paid) imbeciles, anal-cysts, analysts, we are not fooled. On the contrary, we have proven them wrong again and again and again and made the right investment decisions (trade the green paper stuff for shiny stuff) based on current events (TSHTF), not Wall Street hype (buy stocks and real estate).

Today, we present to you the NFP (non-Farm Payrolls) report, which shows how horrific the employment situation in this country really is and there is no hiding the fact - even after a kobe beef massage. The highlights:

Total NFP jobs was +18k on expectations of +105k (That's one of those laugh out loud moments). Private jobs was +57k on expectations of +132k (Another laugh out loud and roll on the floor moment). But wait! It gets better. Last month's data was revised down from +52k to +25k and the imagined Birth/Death adjustment was +131k, which means we essentially lost 77k jobs if you remove the smoke screen. Even the official unemployment headline rate of 9.2% can't help spin that report. Looks like the U6 unemployment will be hitting 20% this year after all, along with a 24,000 Dow(n) Jones of course.

But wait! There's more! The Labor Force Participation Rate drops to a fresh 25 year low and will soon break the all time low in 3... 2... 1... Courtesy of ZeroHedge. We couldn't explain it any better. And just in case you don't under stand what that means, we present another killer from ZeroHedge, this time a chart that shows the U.S. now needs to create 250k every month for 65 months in order to get back to pre-depression levels. The U.S. "economy" can't even generate 75k jobs per month with the Birth/Death model helping to massage the numbers. We ask again, how is this jobless recovery working out?

What a joke. Then again, the joke's on the Wall Street analysts who bought into the Fukushima radioactive bullish Kool-Aid. Time for them all to retire - and for Deutsche Bank to hire better help. Preferably DB can find someone without a poison Ivy League PhD that can still use common sense and add 1+1. Wait! Pay me $1.4 million per year plus record bonuses to be wrong, all the time. Never mind. Sorry, I don't kiss ass I like to sleep soundly at night, so that might not work out too well. I heard Tiny Tim is looking for work though. Oh, you mean Goldman Sachs already hired him? Well, then maybe when Dr. Deficit retires, Duetsche Bank can hire him? No? You mean Goldman Sachs hired him as well? duh! #winning!

Speaking of winning, perhaps Mr. Buffett who is clearly senile and delusional, should pull a Heff - marry a young beautiful blonde and just retire already. Today, after the NFP, he announced that "jobs will come back once housing recovers." Well, Mr. Obvious, that's downright profound. But you forgot to mention, housing will never recover.

You figure it out. Maybe he didn't hear that each "stimulus job" that Obama created has cost $278k per? Nope. He didn't.

With the big NFP out of the way, we can almost be certain that QE3 is a given in one form or another. Of course, everyone with a half a radioactive brain already knows it takes ever larger and larger and larger amounts of fiat to keep this house of cards up (due to the nature of a death spiral ponzi). Then again, as we have already stated, the house of cards has already begun to crumble - it's only the illusion of smoke and mirrors that makes it appear it is still standing. Hey, who's going to get kicked off American Idol this week? OMG! So exciting!

Of course, they'll never know that the ongoing and accelerating "War on Terror" has now officially cost more than WWII because Jersey Shore just took two hours of their lives. Think how many jobs the Three Amigos could have created with that $6.2 Trillion! Of course, with all of the up and coming job cuts, Dr. Deficit will simply ready the printers and everything will get better like it did the first time around.

Before we forget - as we predicted long ago, the handling of the Fukushima disaster will lead to social problems as the people uncover the truth and discover they have been lied to. Today, Reuters drops another nuclear bomb. If you read one thing about Fukushima today, make this the article. Best quote - "The more the media pulls back the veil, the angrier the public is getting." They will be angry when their children develop cancers in the coming months.

Being that today is FryDay, I thought it would be appropriate to leave you with a little something we have been working on for some time. So...

... you know how Goldman Sachs and the big boys have their expensive algorithms to front run orders and churn the markets for money? And thanks to Fukushima, you also know the INES scale that is used to determine nuclear emergencies? Well...

We have created the GEES scale, or the Global Economic Emergency Scale. The concept and design is similar and the interpretations are strictly our opinion. It is a 7 level triangle based on certain "events" to determine the level of emergency the global economy is in at any given time, in real time. We then created a simple algorithm based on certain metrics such as unemployment rates, oil prices, gold prices, food prices, overall inflation, global debt to GDP ratios, and even other less numerical statistical data such as bankster bonuses, climate catastrophes and other data from Transparency International. It's quite amazing how these metrics fell into place.

Level 7 is obviously the highest level of danger and implies imminent global financial meltdown whereas level 1 is the lowest danger level and represents only minor turbulence for the markets. More details of the levels are listed below the diagram.

The basics for now are worked out and the diagram you see below is a rough edition of what we are going to have completed soon. In the coming days, more data will be analyzed and extrapolated, and then we will play with the models to see what its predictive capabilities are. Also as the weeks go on, we will delve further into the details of the this scale and the geopolitical/socioeconomic metrics we look for. Without further ado, we present to you the Fiat's Fire GEES Global Economic Emergency Scale.

Level 1- This is the lowest state of emergency. It indicates that minor risks and/or shocks to the financial system are possible but not expected with certainty. Most events are predictable and easily avoidable. Unemployment increases slightly. Central Banks still have plenty of leeway and flexibility. Interest rates are generally stable. Gold and silver prices remain low and generally stable. Insiders of publicly traded companies begin to sell their shares at an above normal rate. Economic contraction commences.  However, since the impact of the contraction is still minimal, this remains a "risk on" environment. This level signals the peak in real estate markets as home owners prepare to sell ahead of the curve. Caution is advised. 

Level 2- This is the second lowest state of emergency. Minor risks and/or shocks to the financial system are now a certainty. Most events are still predictable but avoiding all problems associated with the events are more difficult. Unemployment increases sharply as businesses begin to "cut to the bone" in an effort to save profits early. Insiders of publicly traded companies increase the pace of selling of company stock. Central Banks still have leeway but generally by now have begun to make corrective changes to the system by cutting the discount rate. Interest rates may climb, despite slowing economic growth and negative outlooks. Gold and silver prices rise. Minor volatility in oil, gasoline prices. Residential real estate prices decline. The "risk on" trade slows as investors shift to neutral. Additional caution is necessary.

Level 3- This is a mid level emergency. Moderate risks and/or shocks are expected. Events are less predictable and less controllable. Central Banks hold special meetings to coordinate efforts and discuss risks. The rate to the discount window is cut sharply. Quantitative Easing is introduced. Interest rate volatility increases dramatically and prices become unstable despite slowing economic activity as Federal Reserve becomes buyer of last resort for gov't bonds. Gold and silver prices rise sharply, along with oil, gasoline and other commodities as investors anticipate looser economic policies. Investors begin to take profit in real estate and stocks and shift into cash and bonds. Residential and commercial real estate prices decline dramatically. Bigger shocks to the RE markets later become apparent. The investing environment shifts sharply to "risk off," but the possibility of future economic stimuli adds some investors to shift back to "risk on." Added volatility. Social unrest becomes noticeable in many areas. 

Level 4- This is the highest mid level emergency and the last stop before the point of no return. It is very similar to a level 3 emergency in its structure, but on a larger scale. Moderate to major economic risks and/or shocks become the norm. Investors take profit on stocks and real estate. Insiders of publicly traded companies exercise options, sell their shares at record pace. Central banks enact emergency measures to lower interest rates, implement broad stimuli programs, cut discount rate to zero, provide unprecedented emergency lending to banks and institutions and try to avoid deflation at all cost. Gold and silver prices increase dramatically as demand picks up as a true safe haven. Oil prices increase on speculation that stimulus programs will have an inflationary impact on prices. Food, gasoline and other commodity prices increase. Stock fundamentals plummet as investor sentiment shifts into "risk off" and go into gold and silver and other tangible commodities. Quantitative Easing is implemented fully to artificially keep interest rates low and to keep stock prices artificially high. The unintended consequences of QE programs hit the commodities markets as prices skyrocket. Real estate prices however, continue to decline sharply and broadly. Unemployment continues to increase steadily as companies defend profits and bonuses. General strikes occur on a regular basis. Risk on/risk off trading environment. In general, everything still appears to the public as operating as normal despite sharp rises in unemployment and inflationary pressures. Official statistics reported by the Main Stream Media are massaged for consumer psychology and social purposes.

Level 5- This is the "point of no return" zone and the rate at which events accelerate rapidly. Most damage caused in this area tends to be permanent and irreversible. Moderate to major economic risks and shocks continue to erode investor and consumer sentiment. Unemployment rises steadily. Central Banks enact further emergency measures and begin to use other measures of which the consequences and side effects are unknown. Inflation increases sharply as the positive feedback loop now perpetuates the cycle - speculators bet on inflation from continued and increased use of Quantitative Easing and its many forms. Bond yields increase despite actions taken by Central Banks to contain rates and sharply declining global economy. Food and oil prices increase dramatically as the unintended consequences of Quantitative Easing really hit the markets hard. Social unrest increases and stirs violent protests. Gold and silver become the only investing safe havens.

Level 6- This is the final stage before imminent collapse. Governments continue to drown in debt and sovereign defaults begin. Central Banks enact all emergency measures available to them. Fiat money "printing" increases dramatically and Quantitative Easing returns in other forms and under another name. Social unrest and tensions are explosive. Violent mass protests erupt around the world. Bond yields of insolvent peripheral nations skyrocket. Central Banks attempt to contain the contagion. Financial risks are very high. Municipal defaults occur. Unemployment increases dramatically. Economic activity slows rapidly. All emergency measures are implemented to keep economy alive as hyperinflation spreads rapidly across the globe. Gold and silver skyrocket. Oil prices become nearly  unattainable to most consumers. Tensions between ally nations rise, leading to political rifts.

Level 7- This is the highest emergency level. Total economic collapse is now imminent. As the great unwind begins, the pace of sovereign defaults accelerate leading to mass bank runs. Stock markets plummet and all trading is halted. After days/weeks of on/off halting, stock markets are closed indefinitely. Central Banks now enter COG mode and print limitless amounts of fiat. Violent protests lead to anarchy and social disorder. Looting becomes commonplace. Social systems breakdown as workers chose not to work. Martial law goes into effect. Gold and silver confiscated. 

Please note that this scale is exponential by nature and not linear, meaning each level is greater than the next on the order of magnitude. There are no clear cut definitive lines per se, that separate the individual levels, as all emergency levels are confluent in form.

Levels 1-2 and 3-4 are closely related in many areas in the sense that many of the signals are interchangeable. The transitions between them are barely perceivable to many. However, levels 5 though 7 are unique in sense that the transitions between them become immediately more harsh and distinguishable. However, the most important factor that distinguishes levels 5-7 from the previous is the time frames during which they appear and occur. Where levels 1-4 may have occurred over a period of many months or perhaps years each, levels 5-7 appear and develop rapidly. For example, using these same metrics, the global economy entered in a level 1 emergency in early 2005 and this lasted throughout all of 2006 - almost a span of two years. In early 2007, the global economy entered a level 2 emergency and this changed into a level 3 by mid 2008. By late 2008, we entered a level 4 emergency and have been since - until now. We have now entered level 5, the point of no return.

During levels 1-4, the economy, although very unstable still had room to grow and recover. However, greed again ruled and disrupted the natural healing process of a free market. Because TPTB could not allow the free market to self-correct, they intervened and by doing so created a moral hazard similar to what Europe faces as it bails out member nations (besides the bailouts being illegal under EU rules, it became a major moral hazard). Because of their vested interest in the declining markets, they could not allow the markets to correct. Once they did that, there would be no end to their manipulation of the markets to keep it going - until they lose all control. It's a mathematical certainty that Level 6 will be here soon enough.

Over the weekend we invite you to read though the information and please post your comments and opinions here. We enjoy all of your emails, but we're sure others would also like to read your thoughts and opinions - and you can do it anonymously if you choose. Have a safe and happy weekend.