Good morning, worker drones: This Week in Mayhem

Good morning, worker drones: This Week in Mayhem
by Project Mayhem

Project Mayhem reviews the most important financial and geopolitical news of the past week and takes a look at the week ahead.

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LAST WEEK IN MAYHEM

Economic:

1) SEC report finds no internal corruption in Madoff scandal, despite near zero money being recovered. Zerohedge calls in the roflcopters in response to this pathetic SEC whitewash.

This was our reaction upon reading the SEC's bullshit report

"SEC inspector general David Kotz's report found no evidence of any improper ties between agency officials and Madoff"  
http://www.mainstreet.com/article/moneyinvesting/news/sec-madoff-oops-our-bad?cm_ven=msunited

Status: Fail.  Level: Epic.

Bob Chapman writes:
"The Inspector General has found the SEC incompetent, but not corrupt. We disagree - the SEC is corrupt, particularly in the Madoff scam. The current SEC Madoff probe is another scam. Money has yet to be found in any substantial amounts. The Fed, the NY fed and the Treasury know where all the money went and that is to offshore havens and Israel. That means high-ranking members of the SEC were in on it. We have not heard the end of this yet, and the results will be shocking."

http://globalresearch.ca/index.php?context=va&aid=15076

Attorney Representing Amerivet Securities Makes Claim FINRA Insider Confirms Investment in Madoff
"There were a few bombshells that came out of our discussion, including a claim by Mr. Greenfield, the Amerivet Securities attorney, that somebody well-placed within the organization (FINRA) that told us, in no uncertain terms, there was an investment with Madoff."

"Did we just find the smoking gun which indicates that FINRA (Financial Industry Regulatory Authority) actually invested in the Madoff Ponzi scheme?"
http://www.senseoncents.com/2009/09/attorney-representing-amerivet-securities-makes-claim-finra-insider-confirms-investment-in-madoff/

If you have not watched Harry Markopolos' testimony before Congress on SEC and FINRA corruption, we highly recommend you watch it in its entirety. To be honest it is rather sick the SEC can get away with issuing a report which is obviously lies.

An American hero tells us the goddamned truth for once

[markopolos video]
part1: http://video.google.com/videoplay?docid=-2001237832838852193
part2: http://video.google.com/videoplay?docid=7042347976248432607

2) U-6 'real' unemployment skyrockets to a 26-year high of 16.8%

[u6 image]

This is what recovery looks like

http://www.zerohedge.com/article/real-unemployment-rate-hits-168

3) Gold-To-Dollar ratio reaches July 2008 levels; Hong Kong calls gold back home; Project Mayhem secretly defects to the gold bugs.

PM issues gold price target of $1200 or higher for Jan 2010; prepares to lol @ Prechter. 

Jim Willie writes:
"The Chicago trading pits integrate much more brain wattage than the NYSE floor, and far less bias based in crippling propaganda. The wisdom that emerged from Chicago pointed to the gold price rise as a result of two important factors that seem SPOT ON. Chicago buzz centers upon the perceived Chinese demand for gold, both at the official government level (sovereign wealth funds) and the popular street level (retail coin & bar buyers). The other buzz centers upon what could mushroom as one of the biggest stories to date, as it matures and develops. It is difficult even to describe accurately this factor. The Chinese announced they will permit their state-owned firms to dishonor elements of futures derivative contracts, and thus limit their losses, on a selective contract basis."
in Gold: Separation before Liftoff

Tyler writes on the ancient metal of kings
http://www.zerohedge.com/article/gold-dollar-ratio-back-july-2008-levels-surging-au-collapsing-usd

Gold and Systemic Crisis
http://www.zerohedge.com/article/gold-and-systemic-crisis

4) Insider Selling/Buying Ratio Doubles to 61.8x

" TrimTabs earlier disclosed that the ratio of insider selling to buying had averaged about 31x for August, with $6.3 billion of insider sales matched by only $210 million on insider buys. Insiders apparently decided to exit August with a bang, with the last week of insider transactions doubling the sell-to-buy ratio to 61.8x! Over half a billion in stock was sold, while a whopping $8 million was purchased."

http://www.zerohedge.com/article/insider-sellingbuying-ratio-doubles-618x

5) This Week In Mayhem Issues Congressman Pete Stark "Idiot of the Century" award

Pete Stark, brain damaged Congress Critter extraordinaire, makes the claim that debt is wealth before telling a reporter to "get the fuck out". Maybe this helps explain the garbage coming out of Washington DC.

http://www.zerohedge.com/article/congressman-pete-stark-explains-leverage-tells-reporter-get-fuck-out

6) Dennis Kneale continues to be paid by CNBS to promote vile economic tripe (Kneale you may need to look up these words; remember v comes after t, mkay?). Denninger responds -- and nails the fail whale to the rail. Must watch.

http://market-ticker.denninger.net/archives/1406-Kneale-Abuse.html

7) China agrees to buy $50bn in SDR bonds
"The International Monetary Fund(IMF) said on Wednesday that China has agreed to buy the first bonds issued by the agency for about 50 billion dollars." "According to the agreement, China would purchase up to 32 billion (around 50 billion dollars) SDR, or Special Drawing Rights, in IMF notes."

http://english.people.com.cn/90001/90776/90883/6746736.html

8) S&P P/E ratio is at 127.43. Nope that's not a typo. Hail mary, full of grace...

Mean-reversion is gonna be a bitch!

And here is the spreadsheet in case you can't believe your eyes, supposing you have a labor day hangover or whatever...
http://www2.standardandpoors.com/spf/xls/index/SP500EPSEST.XLS

Geopolitics:

1) CDC Forced Quarantine Docs Leak

FL Quarantine to Detention Facility Order Apr 09 252

http://www.zerohedge.com/article/cdc-h1n1-forced-quarantine-docs-leak

H1N1 Swine Flu Pandemic: Iowa Contemplates "Forced Confinement" in a "Quarantine Facility"
http://globalresearch.ca/index.php?context=va&aid=15064

2) US Rules Out Negotiations With New Japan Govt on Base Deal 

"Japan's incoming Prime Minister Yukio Hatoyama has called for a review of the bases agreement, as well as a broader review of the Status of Forces Agreement (SOFA) with the United States and the complete closure of the Okinawa base. The party has also promised to end the Japanese military's role in the Afghan War by the end of the year."

http://news.antiwar.com/2009/09/01/us-rules-out-negotiations-with-new-japan-govt-on-base-deal/

3) Georgia/Abkhazia-Russia naval blockade row escalates again

As was predicted in last week's column, the Georgia row has escalated further. MSM is still MIA. We suppose they will only report on this if and when carnage begins. You can be assured if this occurs, some percentage of Americans will confuse Georgia the country with Georgia the US state.
 
[saakashvilli image eating tie]

Saakashvilli, mentally unstable President of Georgia, eats his tie for the cameras.

Abkhaz rebels threaten to destroy Georgian ships
http://www.dailystar.com.lb/article.asp?edition_id=10&categ_id=2&article_id=106037

[georgia image]

Abkhazia threatens Georgian ships as possibility of Black Sea naval skirmish rises
Mike Rivero notes:  Sergey Bagapsh would not be making these threats without the implicit backing of Moscow.
http://www.telegraph.co.uk/news/worldnews/europe/georgia/6127798/Abkhazia-threatens-Georgian-ships-as-possibility-of-Black-Sea-naval-skirmish-rises.html

Russia condemns Georgia's attempts to seize ships off Abkhazia
"The Russian Foreign Ministry said on Thursday Georgia's attempts to seize ships off the Abkhazian coast could lead to new armed conflicts."
"Aside from interrupting international maritime shipping, these actions of the Georgian leadership are an attempt to impose a blockade of the Abkhazian coast, which could lead to the deterioration of the situation in the region and new military conflicts," the Foreign Ministry's spokesman Andrei Nesterenko told a news conference in Moscow.
http://en.rian.ru/russia/20090903/156011368.html

Russia warns Georgia against Abkhaz 'sea blockade'
"A Russian official has warned Georgia that attempts to block ships from reaching a Moscow-aligned separatist region of Georgia could end in military intervention."
http://www.google.com/hostednews/ap/article/ALeqM5hMwNwByhP9L89m6jkmQOXgM6etqQD9AFRT503

4) This week in Mayhem nails it -- Arctic Sea was likely carrying stolen weapons

The individual who originally disclosed that the Russian vessel Arctic Sea was likely carrying weapons rather than Finnish timber receives death threats and is forced to leave Russia.

[picture of ship route]

Russia ship mystery editor flees
http://news.bbc.co.uk/2/hi/europe/8235647.stm

Let's hope he does not receive a gift of Polonium-210 in his drink like Alexander Litvinenko.

5) Gates requests more troops for Craptakistan; dead soldier photograph leaks; 90 killed in NATO strike

Aug. 14, Lance Cpl. Joshua Bernard is tended to by fellow U.S. Marines after being hit by a rocket propelled grenade during a firefight against the Taliban in the village of Dahaneh

http://wearestjohns.com/ap-photo-of-lance-cpl-joshua-bernard.html

The United States now has more troops in Afghanistan than the Soviets ever did. ED NOTE: Let me let you in on a little secret: This war is about Caspian energy reserves and protecting the drug trade.
http://www.alternet.org/world/142388/obama_is_leading_the_u.s._into_a_hellish_quagmire/

US commander's report paves way for military escalation in Afghanistan
"The commander of US and NATO forces in Afghanistan, Gen. Stanley A. McChrystal, has issued a dire assessment of the state of military operations there. The classified report sets the stage for an expansion of US troop levels in Afghanistan by as many as 45,000."
http://uruknet.com/?p=m57567&hd=&size=1&l=e

90 killed as NATO hits Afghan fuel trucks

"On August 22nd, a US air strike killed 90 Afghan civilians, mostly women and children, according to on-the-ground reports. The US has vehemently denied that claim saying instead that 30-35 Taliban militants were killed and only 4-5 civilians. After mobile phone video footage contradicted those claims, the US now plans to open a joint investigation along with the Afghan government into the incident. "

http://uprisingradio.org/home/?p=3226
http://rawstory.com/news/afp/About_90_killed_as_NATO_hits_Afghan_09042009.html

6) Iraq-Syria Row Escalates. Keep in mind Syria is aligned with Russia, who is renovating a deepwater port in Tartus on the Mediterranean Sea.

[syria tartus image]

Maliki Points Finger at Syrian Government for Baghdad Bombings
Iraqi Prime Minister Nouri al-Maliki today formally asked the United Nations Security Council to launch an inquiry into last month's Baghdad bombings, and in particular into 'outside forces' who supported the attacks, an obvious reference to its publicly broadcast confessions implicating Syria in the attack.
http://news.antiwar.com/2009/09/03/maliki-calls-for-un-inquiry-into-baghdad-bombings/

[syria map]

 
Iraq Masses Security Forces Along Syria Border as Tensions Mount
"Iraqi Prime Minister Nouri al-Maliki has ordered thousands of additional national police deployed to the border with Syria, saying it was needed to prevent insurgents from infiltrating into the nation. Tensions between Iraq and Syria have been rising in recent weeks as Iraq has sought to implicated Syria in last month's major Baghdad suicide bombings."

http://news.antiwar.com/2009/09/04/iraq-masses-security-forces-along-syria-border-as-tensions-mount/

7) Man leaps into river to escape wife's nagging

A man jumped into a fast-flowing river because he couldn't take his wife's nagging anymore.

Members of the ship's crew saw the man suddenly run out of his cabin with his hands covering his ears, and shouting: "I can't stand it any longer."

ED NOTE:  This sound like my ex-girlfriend. Eva is that you??

http://www.news.com.au/couriermail/story/0,23739,25912783-5013016,00.html

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THIS WEEK IN MAYHEM

Economic:

1) Watch gold; particularly how it behaves during any sort of systemic deleveraging. PM forecasts a breakout above $1000 but with worst-case possibility of short-term decline to $800-850 during an equity crash. End-of-year forecast is $1200 or higher. And we will definitely get an equity crash. The only question is when.

Chart from Dr. Jim Willie's latest article

2) Weekly calender.  Rather uneventful.

It's mostly foreign news this week, except for Jobless Claims on Thursday and Consumer Sentiment / Treasury Budget on Friday.

source: cmegroup.com

Geopolitics:

1) Russia/Georgia and Af-pak: both these continue to destabilize. Hopefully we can remove them from our watch list soon, but that may be an opimistic assessment, particularly for Af-pak.

2) The Iraq-Syria row is slowly heating up. Remember these countries share a large porous border. There may be something to this or it may be more hot air. ZH eyes are open.

3) H1N1 spread. Governments may use this as a pretext for expanding control. Don't fall for the lies, because there is plenty of that these days.

In summary: We're all f*cked, it's getting worse, have a great weekend!

P.S.
Oh and if you are wondering what our fearless leaders are doing lately -- well let's have a look at Connecticut, shall we?  I have your answer!

House Minority Leader Lawrence F. Cafero Jr., R-Norwalk, far right, speaks while colleagues play solitaire on their computers as the House convenes to vote on a new budget for the fiscal year in the Capitol, in Hartford, Conn., Monday, Aug., 31, 2009.

Comments

[SWRichmond]

Great read, PM, thanks!

Caspian-Caucasus / Georgia-Abkhaz / Afghanistan-Iraq-Pakistan, what a freaking mess.