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Guest Post: A Major Inflection Point Is Upon Us

Tyler Durden's picture


Submitted by Michael Krieger of KAM LP

A Major Inflection Point is Upon Us


Great things are done when men and mountains meet.  This is not done by jostling in the street.

Always be ready to speak your mind, and a base man will avoid you.

As a man is, so he sees. As the eye is formed, such are its powers.

Excessive sorrow laughs. Excessive joy weeps.

I must create a system or be enslaved by another mans. I will not reason and compare: my business is to create.
If the doors of perception were cleansed everything would appear to man as it is, infinite.
The weak in courage is strong in cunning.

What is grand is necessarily obscure to weak men. That which can be made explicit to the idiot is not worth my care.

You never know what is enough unless you know what is more than enough.

- All Quotes by William Blake

A Major Inflection Point is Upon Us

I have not commented on the financial markets in a detailed way for quite some time now.  This is not because I do not have strong opinions on them, rather it is because I see the current ongoing crisis as just as much a political and social crisis as an economic one and so I am compelled to address those concerns as I think it is in that arena that the greatest dangers exist.  Additionally, the major macro investment themes that I outlined well over a year ago remain the same.  Namely I think long investments in the United States stock market should be focused on precious metals miners, oil related energy shares and the agriculture theme.  Anything related to the ponzi economy like financials, real estate (commercial and residential) and traditional retail with little international presence should be avoided.  The final reason why I have not been more market focused is that with liquidity so bad and countless players seemingly exiting positions and taking risk down, sometimes I wonder who is really driving these markets.  Are the moves expressions of investors and their views on the future or is most of the trading actually related to sovereign interests engaged in financial warfare?  If it is indeed the later influence that is most profound then you can forget any possibility of rational moves on a day to day or even week to week basis.  Nevertheless, the market always wins in the end and this happens at major inflection points.  I think we are at one of those moments right now.    

When Oil Breaches $80/b Watch Out

I have mentioned time and time again that the broad stock market has never been able to rally sustainably once oil moves above $80/b.  We first saw this back in 2007 when the market top occurred just as oil was about to embark on its surge through the $80/b level on its way to $150/b.  Oil has since topped $80/b on several occasions, in October 2009, January 2010, and then the March/April 2010 period.  In every case the oil price correlated very positively to the market and in my view was a key factor preventing further gains.  Well here we are again with the S&P500 on a nice bounce to the 50 dma and oil at $79/b.  If what we have seen in the past occurs once again the market is about to run out of steam.  So the question everyone needs to ask themselves is what are the likely scenarios from here.  There are two in my view.  The first one would play out as many of the previous ones have.  Namely, oil and the stock market pull back meaningfully as the “risk on” trade evaporates.  This is what I think most people anticipate.  The other likely outcome would be the decoupling trade we saw between fall 2007 and mid-2008 where the dollar lost serious purchasing power and commodities and ROW stocks surged in value relative to all other asset classes.

Is a Decoupling Trade on the Horizon?

I think there is a much greater probability of the second scenario playing out than many anticipate and here is why.  First, very few are set up for such a trade.  It first started almost three years ago now and as we all remember it ended in tears for those that had it on with leverage and couldn’t get out.  Investors are now sufficiently conditioned to the idea that oil and the S&P500 are both part of a “risk on” or “risk off” trade.  This is likely what the computers are trading on and so it would actually be a huge surprise if that correlation was to break down.  That said, just because it would be a surprise to see oil rise and the market decline concurrently isn’t a reason for it to happen.  I think one of the reasons relates to the dollar.  The U.S. dollar should have completely collapsed versus many of the better managed and fundamentally sound currencies in the last year or so.  By these I refer to the Australian dollar, the Chinese yuan (and most emerging Asia currencies), the Swiss Franc and the Brazilian real.  While the dollar has certainly lost a lot of value to many of these currencies in the past year or so it would have been considerably worse if not for active intervention by central banks in other countries.  Effectively, when the crisis hit the U.S. still had a lot of credibility and so the leaders of all nations decided to support the U.S. and its currency in an attempt to get things “back to normal.”  This is why I have mentioned repeatedly that the dollar index is so useless as an indicator (also because the main components are the euro and yen and I do not believe these to be sound currencies either).  There is investing in the dollar versus the euro or versus the yen.  I think all three will end up in the currency graveyard. 

The U.S. has Lost All Credibility

The United States political and monetary authorities have lost ALL credibility in the eyes of the world ever since the crisis hit and for very good reason.  The main reason we are still held on life support is so that China can go out and buy up all of the world’s resources while the dollar still has value (and they allow us to bury ourselves) and we have a strong military.  We can see the loss of credibility in the fact that we went to the G20 talking about more stimulus and were rebuffed.  So when the crisis first hit all other nations defended our system and currency but now I think all nations are going to focus on what is best for them and believe me it will NOT be what is best for us.  China has already slowed itself down materially to deal with its irresponsible housing bubble but based on comments recently from authorities it is clear that they are committed to stimulating domestic consumption.  Furthermore, while the yuan has only strengthened slightly since they changed policy let’s not forget that it HAS strengthened.  While they are proceeding cautiously, this was a change of policy.  So to summarize I see a world emerging over the next few months where other nations publicly talk a nice game about the U.S. and its importance but in reality talks will go on behind our back as to how to gracefully cut the cord.  Any cutting of the cord would reflect itself in a decoupling trade in my view.  Unfortunately, politicians in the U.S. will never admit that they are the reason we are in this mess so they will likely start a war or create some other event (cyber attack to shutdown the internet?).  This is precisely why I call on all Americans right now to refuse to get involved in a war.  This would be a war to defend our empire plain and simple.  We do not need an empire.  China needs an empire to feed itself and to provide energy.  We are the most blessed large nation on earth as far as land, agriculture and water resources.  Plus we have a brilliant social document called the Constitution that the vast majority of Americans would die to defend if necessary against whoever would threaten it.  Let’s just get our acts together here and not fall for the trap that I see being set.  Also, remember that if the authorities are about to lose control of the precious metals and oil market the best thing for them to do would be to start a conflict so the rise can be blamed on that.  If you haven’t learned that Washington D.C is not to be trusted by now I do not know what it will take. 



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Thu, 07/22/2010 - 12:33 | 483751 Turd Ferguson
Turd Ferguson's picture

Right on, baby.

I hereby nominate Michael Kreiger for SecTreas in the new Sprott/Hendry administration.

Peter Schiff will be the new head of OMB and Ron Paul has accepted the job as Chairman of the Federal reserve.


I don't know why but I felt it was time to re-post this, too.!v=Ei2WhctlRHY&feature=related

Thu, 07/22/2010 - 12:37 | 483786 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

No Fed, but he can Chair the Committee to oversee the State Chartered Banks.

Thu, 07/22/2010 - 14:09 | 483996 almost_have_a_name
almost_have_a_name's picture

Nice !

Thu, 07/22/2010 - 21:38 | 484807 Translational Lift
Translational Lift's picture

"The Fed"  Which he will promptly and rightly desolve..............

Thu, 07/22/2010 - 12:43 | 483796 MichiganMilitiaMan
MichiganMilitiaMan's picture


Thu, 07/22/2010 - 13:03 | 483853 jomama
jomama's picture

yeah, right. and they all get 'suicided' as soon as they try to implement any kind of sweeping overhaul.

Thu, 07/22/2010 - 14:01 | 483982 Cognitive Dissonance
Cognitive Dissonance's picture

NOT if WE do our job and start hanging them from the street lights down town. We are the power behind any change. Let's not shirk our responsibility.

Thu, 07/22/2010 - 14:18 | 484019 goldfish1
goldfish1's picture

"I must create a system or be enslaved by another mans. I will not reason and compare: my business is to create.
If the doors of perception were cleansed everything would appear to man as it is, infinite."

and, may I add, possible.

Thu, 07/22/2010 - 15:35 | 484167 Overleveraged_a...
Overleveraged_and_Impatient's picture

The Doors got their name from that quote

Thu, 07/22/2010 - 14:39 | 484055 Max Hunter
Max Hunter's picture

I've been saying it for over 2 years when I figured this thing out... "A light pole for every traitor".. and I mean EVERY !

Thu, 07/22/2010 - 15:35 | 484168 Pez
Pez's picture

Go long on light pole manufacturing (made in the USA).

Thu, 07/22/2010 - 13:18 | 483884 sweaty7
sweaty7's picture

turd, you just know Paul's first day would consist of him firing everyone, padlocking the doors and then resigning.

Thu, 07/22/2010 - 13:53 | 483965 cossack55
cossack55's picture

Ronnie would probably do a phys inventory of Ft. Knox before pulling the plug.

Thu, 07/22/2010 - 14:04 | 483984 Cognitive Dissonance
Cognitive Dissonance's picture

Ron Paul: "Let's see. Tungsten, tungsten, tungsten, Gold, tungsten, Gold, tungsten, tungsten, tungsten <sigh> tungsten, Gold. This is worse than I thought. Tungsten..........."

Thu, 07/22/2010 - 22:02 | 484828 Rotwang
Rotwang's picture

would go quickly with an ultrasonic thickness gauge.

Thu, 07/22/2010 - 14:17 | 484013 Turd Ferguson
Turd Ferguson's picture

To sweaty7: exactly!

Thu, 07/22/2010 - 18:08 | 484498 fiddler_on_the_roof
fiddler_on_the_roof's picture

Peter Schiff has lost a ton of money for a lot of people by investing in Foreign Stocks and his decoupling theory

He should not be anywhere near power. Have also heard about bad experiences dealing with his Euro Pacific capital from others. Hendry looks like a crook talking his book. Ron Paul is the only decent person on the Horizon. But the Tea Party movement will be hijacked and another elitist will be pertched at the top(may be Palin)

Thu, 07/22/2010 - 18:58 | 484596 ATTILA THE WIMP

Peter Thiel is one of Ron Paul's main advisors and Mr. Thiel is a Bilderberger.

PS: 911 Inside Job


Thu, 07/22/2010 - 19:49 | 484682 goldfish1
goldfish1's picture

PS: 911 Inside Job

Speaking of which, Paul's refusal to entertain the thought in the face of a mountain of evidence speaks volumes.

Thu, 07/22/2010 - 22:32 | 484803 Turd Ferguson
Turd Ferguson's picture

Rep. Paul denies the "truthers" because he wants to be seen as a serious political figure not a raving lunatic. 

Thu, 07/22/2010 - 12:25 | 483755 NOTW777
NOTW777's picture

this is the guy that has been spending time on his obama prayer rug.  now he wants to give advice???


foul - excessive blake quotation; any original, timely thots?

Thu, 07/22/2010 - 12:28 | 483762 unwashedmass
unwashedmass's picture


the fact alone that they pumped the market today to the moon -- up over 200 pts -- to save the Chairman more embarrassment shows exactly what kind of banana republic we've become.....

Thu, 07/22/2010 - 12:38 | 483787 Overleveraged_a...
Overleveraged_and_Impatient's picture

+ 1

Thu, 07/22/2010 - 12:53 | 483824 TeddyRoosevelt
TeddyRoosevelt's picture

exactly.  the equity market is a zombie.  i still think the energy market should be shifted to the ponzi list.  oil to $30.  pm's to new highs.  equities... DON'T MATTER.

Thu, 07/22/2010 - 12:54 | 483825 Chicago_CTA
Chicago_CTA's picture

Come on, guys!  Not everything is orchestrated; look at OIL and S&P futures.

Crude held very well above $76 and the S&P put in a nice reversal pattern the last few days.   There was simply more money to be made on the upside than the downside so 'they' pushed it higher.   Makes sense to me!



This said.....GREAT POST FROM THE AUTHOR.  I hope every US National reading this would literally 'die to defend the US Constitution.'   I know I would.


--The Chicago CTA

Thu, 07/22/2010 - 13:08 | 483856 TeddyRoosevelt
TeddyRoosevelt's picture

well first, i could care less if the 401k-ometer that is the equity market goes up or down.  second, depends on who your 'they' is.  if you think it is individuals, pensions, swf's, and banks (that are trading something other than your money) with legitimate interests, so be it.

I think it is my money, given to zombie banks, levered into equities at the direction of FRBNY, like a joystick that controlls whether joe u.s. is :) or :( when he opens his 401k statement.

Thu, 07/22/2010 - 13:10 | 483870 johnnyBoy
johnnyBoy's picture

Me, too!  I just don't want Barney Frank to be the one that shoots me!

Thu, 07/22/2010 - 13:15 | 483878 TeddyRoosevelt
TeddyRoosevelt's picture

barney frank should be entertaining children, not getting sore knees and mouth sores on K street.

Thu, 07/22/2010 - 13:36 | 483929 NOTW777
NOTW777's picture

LOL - letting barney near the children might not be a good idea

Thu, 07/22/2010 - 13:40 | 483939 Pegasus Muse
Pegasus Muse's picture

what he said. 

Thu, 07/22/2010 - 15:21 | 484132 Ripped Chunk
Ripped Chunk's picture

Frank should be no where near children. They should pass a law to that effect.

Thu, 07/22/2010 - 15:44 | 484185 TeddyRoosevelt
TeddyRoosevelt's picture

well i see your point.  but the blithering... it's out of warner bros.

Thu, 07/22/2010 - 15:35 | 484166 Geoff-UK
Geoff-UK's picture

Topic:  In a just and fair society, what would happen to Barney Frank next week?


Thu, 07/22/2010 - 17:23 | 484414 Sausagemaker
Sausagemaker's picture


Try this response:

Just sayin'

Thu, 07/22/2010 - 23:54 | 484917 Red Neck Repugnicant
Red Neck Repugnicant's picture

Topic:  People named Jeff, who - quite ridiculously - spell their name GeOFF, wear pointed shoes and socks with tassels. 


Fri, 07/23/2010 - 06:16 | 485037 jeff montanye
jeff montanye's picture

you get junked but pliers and a blowtorch for just another corrupt politician made exceptional by his temerity to be an out homosexual, nada.  somehow the entire republican party, which shares perhaps a touch more than half the responsibility for this fiasco but is more closeted, or the weasels dodd and lieberman don't stir the juices like "bawney".

Fri, 07/30/2010 - 15:51 | 496887 Geoff-UK
Geoff-UK's picture

Agreed--next week's topic should be "in a fair and just society, what would happen to a President (Bush) who admitted he was throwing his principles out the window to pass TARP"?



Thu, 07/22/2010 - 13:08 | 483863 SheepDog-One
SheepDog-One's picture

Thats why we at zerohedge should open our own FED short fund, watch what they pump, usualy very easy thats the top DOW components, then short the top of their pump. I have a feeling it would take much at all, a few million dollars and that should be EASILY coughed up by all the master wizard market gurus at zerohedge. So lets do it!

Thu, 07/22/2010 - 14:06 | 483994 Cognitive Dissonance
Cognitive Dissonance's picture

Zero Hedge Hedge Fund bitches!

Thu, 07/22/2010 - 12:31 | 483769 Manipulism
Manipulism's picture

I just discovered the site -

Maybe journalism is not complete dead.


Thu, 07/22/2010 - 12:55 | 483828 trav7777
trav7777's picture

Kate Graham is a member of the Tribe and a bilderberger.  She's big shit elbow rubber dyed in the wool elite.

Never trust anything emanating from the 3 major rags in this country, they are all controlled by cousins of the financial titans

Thu, 07/22/2010 - 13:22 | 483891 tip e. canoe
tip e. canoe's picture

agreed, just a continuation of the masonic pissing match between meister obumma & grand master dick C.   will get interesting only when the real bones start to fly out of the closets.

Fri, 07/23/2010 - 06:26 | 485039 jeff montanye
jeff montanye's picture

katherine graham is nine years dead and was, by u.s. msm standards, a fairly good newspaper publisher.  her granddaughter, katherine weymouth, current publisher of the now execrable washpo, not so much.  your skepticism about msm is well founded.

Thu, 07/22/2010 - 13:41 | 483944 doggings
doggings's picture

that's a pretty amazing link. did you watch the video and see this?

Thu, 07/22/2010 - 12:35 | 483776 anarkst
anarkst's picture

It's interesting when people finally begin figure out the illusion, but the thing is that it has always been an illusion and will ALWAYS be an illusion.  Systems are created by human beings for the express purpose of defrauding the rest.  It's never been any other way.

Thu, 07/22/2010 - 12:50 | 483811's picture

Folks just have to realize that living in Galt's Gulch would provide a much richer existence than living in Hollyworld.

Thu, 07/22/2010 - 12:52 | 483820 Ms. Erable
Ms. Erable's picture

+1 shrug.

Thu, 07/22/2010 - 13:10 | 483869 Gully Foyle
Gully Foyle's picture

Did Galts Gulch have tranny Hookers?

Thu, 07/22/2010 - 13:23 | 483898's picture

Finding that out for yourself would be more in the spirit of the thing.

Thu, 07/22/2010 - 17:24 | 484418 Sausagemaker
Sausagemaker's picture


Thu, 07/22/2010 - 12:36 | 483777 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Great Piece!

I would like to point out that the oil sector has not posted good on stock price either, and maybe they have been waiting to take gains.  Is that time upon us?  Could it move the whole equity market?  What would happen to future oil prices?  And what happens to currentseas, specifically the doelarr?

Thu, 07/22/2010 - 12:54 | 483827's picture

And what happens to currentseas...



PHLEBAS the Phoenician, a fortnight dead,  
Forgot the cry of gulls, and the deep seas swell  
And the profit and loss.  
                          A current under sea  
Picked his bones in whispers. As he rose and fell  
He passed the stages of his age and youth  
Entering the whirlpool.  
                          Gentile or Jew  
O you who turn the wheel and look to windward, 
Consider Phlebas, who was once handsome and tall as you.


T.S. Eliot (1888–1965).  The Waste Land.  1922.

Fri, 07/23/2010 - 06:43 | 485043 jeff montanye
jeff montanye's picture

water water every where

and all the boards did shrink

water water every where

nor any drop to drink

s.t. coleridge. rime of the ancient mariner. 1798.

Thu, 07/22/2010 - 12:37 | 483779 Shiznit Diggity
Shiznit Diggity's picture


Thu, 07/22/2010 - 12:36 | 483780 tony bonn
tony bonn's picture

hear hear! - thank you mr krieger.....the united states needs to dismantle its massive empire now....and someone needs to find out how much the cia budget is....that asshole organization is the cause of ALL of our is a murdering wicked organization which has destroyed this country.

of course the blood thirsty obama is not about to disobey his masters so the blood sucking will continue. the usa is hauty arrogant and evil. i hope we are isolated and forced to come back to life size stature.

Thu, 07/22/2010 - 13:00 | 483842 ZakuKommander
ZakuKommander's picture

Heh.  Ask the average American what he thinks of our Empire, and you'll get blank looks.  The only empire in history whose populace disclaims empire status.  "Gee, we just mind our business, and only defend ourselves and help others."

Thu, 07/22/2010 - 14:16 | 483969 Popo
Popo's picture

But if the public knew that their treasure was going towards empire building, they might start to wonder why none of the spoils trickle down to them.

America is an oligarchical empire.  And as such, it is better policy for the common citizen to be unaware that there is 'conquest' at all -- because where there is conquest there are the fruits of conquest.  And those are reserved only for the elite.

The nature of America's empire is that it has two fronts:  One is the world, the other is the American people -- who are regularly fleeced (as the peasantry always is, historically) to pay for operations which in turn generate profits for individuals and not the nation as a whole.

And when America becomes unsustainable, that wealth will leave -- as historically always happens -- and a new base of wealth will be created elsewhere in the world, while America enters a long cycle of decay, infighting and eventually collapse.  

Rome -->  Constantinople, redux.



Thu, 07/22/2010 - 14:57 | 484084 merehuman
merehuman's picture

The rains bearing sickness are befouling the Gulf and north of the gulf coast as far as the wind and rain can carry the poison. Folks are reporting the rain causing skin burns , diarreah, severe headaches. Any of you living on the east coast and eastern states should look into this. Repercussion of this will certainly affect economics of our country. Mass migration is not inconceivable

Thu, 07/22/2010 - 16:44 | 484336 Turd Ferguson
Turd Ferguson's picture

Been waiting for weeks for a chance to link this...!v=JeQ-wjDH4F4&feature=related

Thu, 07/22/2010 - 17:35 | 484435 tip e. canoe
tip e. canoe's picture

future lyrics:

"even ol' New Constantinople was once New York..."

Thu, 07/22/2010 - 17:40 | 484445 tip e. canoe
tip e. canoe's picture

"while America enters a long cycle of decay, infighting and eventually collapse."

you forgot rebirth.  otherwise, great post.

Thu, 07/22/2010 - 14:18 | 484020 Helix6
Helix6's picture

Re: someone needs to find out how much the cia budget is....that asshole organization is the cause of ALL of our problems....

Uhhh... well, that may be a bit extreme.  Let's not forget private greed, bought-and-paid-for public officials, lax oversight, and delusional economic policy.  Which are all part and parcel of the same can of worms.

Absolutely nothing will change as long as private and corporate sponsorship is a necessary prerequisite for political office.  Which means that nothing is going to change.  Corporate and wealthy private interests are going to continue running the show for their own benefit, aided and abetted by their political sycophants.  The public will continue to be propagandized and diverted by corporate-controlled media.

Don't look to government for help, and understand that banks and corporations are in it for themselves and have the clout to rig the game to their benefit.  "Your" government serves its paymasters -- corporations and financial institutions -- not you.  You will never know what the CIA's budget is.  Secrecy and corruption are bedfellows.

Seek the refuge of of your local tribe -- family, friends, neighbors.  The "system" out there is on the road to ruin.

Thu, 07/22/2010 - 12:36 | 483782's picture

Yes, while we shoot ourselves in the foot, China goes about global domination. We're so stupid!

Thu, 07/22/2010 - 13:17 | 483880 JLee2027
JLee2027's picture

No worries, China is over-rated.  

Thu, 07/22/2010 - 14:53 | 484075 Max Hunter
Max Hunter's picture

China is about to get screwed by the U.S. so hard they won't be able to walk straight for a month..

Thu, 07/22/2010 - 15:22 | 484137 Monkey Craig
Monkey Craig's picture

Please explain how the US would screw China?


And "by the US", I'm sure you don't mean the middle class who gets screwed every way by every empire.


"By the US" you must mean the elite / corporatocracy ??

Thu, 07/22/2010 - 16:42 | 484331 Max Hunter
Max Hunter's picture

First, the USD will be reduced significantly in value therefore reducing all of China's holdings in U.S. paper.

Second, our economy is going to take a huge shit and we won't be able to (or willing to) by shit even from China.

Third, when the American people finally wake up, we aren't going to care who "owns" what. It will be fresh in our minds how we got here.. Yes, it will be that bad and the majority WILL wake up..

Once we bottom out, we will manufacture here again. We won't care about debts that were made by criminals or industry given away by corporate elites.

It's all going to change.  Actually, it's simply an imbalance. It's a law of nature that the imbalance corrects itself. China should have known this imbalance would cause a severe depression and possible revolt. It's partially their own fault.. They are certainly not all to blame, but if people with common sense can figure out this game, so should the Chinese government..  That goes for any other idiot that buys our debt.

There will come a day when those whose sole ability to earn (steal) money from others is by a model that simply moves paper, will be seen by the public for what they really are; parasites !

This fake wealth created by paper debt and not production will go up in smoke with the buildings that house the aforementioned paper debt.

China will be a victim like many others that invested in stealing this countries wealth and manufacturing.

They can't put 25 million people to work without making things.. It's that simple.. The 25 million will eventually be a huge problem.. HUGE problem.. Along with the people that have 2 brain cells to rub together and have figured out how we've been fucked for the past 40 years out of our middle class.. It's taken that long.. You can point to a middle class today.. but I don't think it has much life left in it at all..

That's the reason benefits were extended.. Don't kid yourself.. Revolution by November had they not.. It's still coming...

The people will eat cake.. eventually..


Thu, 07/22/2010 - 17:20 | 484401 Monkey Craig
Monkey Craig's picture

Well, I certainly think we are headed down the shitter. I just am not sure if we get there via inflation or deflation.


Do we need a revolution or just a revelation that printed money is not wealth, and debt destroys society?

I think within the 'Manifesto" section of this blog, the creator states that society must deleverage. This , in my opinion, would unleash an economic renaissance.



Thu, 07/22/2010 - 17:56 | 484478 nevket240
nevket240's picture

You idiot !!

China can survive on rice & pedal power. Can you ????

The majority of Chinese are still labourers working like your grandfather idid 80 years ago. Hard & with little reward. They are not worried about losing the house & the LCD, because they haven't got them.

Been there, seen that, have you ???


Thu, 07/22/2010 - 18:16 | 484520 fiddler_on_the_roof
fiddler_on_the_roof's picture

True. Dirt poor people need no credit and hence no collapse like an African or majority Indians.

But Chinese have the worst Oligarchy. Govt + corporates steal people over there. Seen Chinese Elites buying properties in USA ? People over there will revolt if things get very bad.

Thu, 07/22/2010 - 14:07 | 483995 trav7777
trav7777's picture

Sorry, having a bout of deja vu here...wasn't JAPAN supposed to be globally dominating and owning us all as serfs by now?

I remember seeing movies where we were all portrayed as stupid and hopeless in the face of mighty you tell me it's the chinks with their melamine and lead and counterfeit Louis Vuitton bags that are gonna do it???

I just can't keep up!

Thu, 07/22/2010 - 15:06 | 484104 ATM
ATM's picture

Only problem with yout thesis is that when the Japs were going to buy up everything they didn't own enough dollars to do it. The Chinks are Japs on steroids and our economic prowess is far less secure.

Your talking Asian pears v. Mandarin oranges.

Thu, 07/22/2010 - 15:25 | 484144 Ripped Chunk
Ripped Chunk's picture

+ 100

Thu, 07/22/2010 - 17:44 | 484458 tip e. canoe
tip e. canoe's picture

funny trav, the 'chinks' that i know would agree with almost everything you're saying.

perhaps you're a 'chink' in a white robe disguise?

or maybe you're having a past life regression repression?

Thu, 07/22/2010 - 19:09 | 484616 ATTILA THE WIMP

China has nukes and Japan didn't so we got to rape Japan via Yen carry trade.


PS: 911 Inside Job

Thu, 07/22/2010 - 12:37 | 483783 contrabandista13
contrabandista13's picture

Uh... uh...  Duh....?





Thu, 07/22/2010 - 12:41 | 483785 Eally Ucked
Eally Ucked's picture

I agree wholeheartedly with that post and I would like to add just one point; China will buy all that shit from Tresury as long as all those monies are wasted in wars. The moment when policy changes and money starts to be used for developing economic base, manufacturing and R&D, the flow will stop.

They are not stupid!

Thu, 07/22/2010 - 12:58 | 483838's picture

Very interesting supposition.

Thu, 07/22/2010 - 12:44 | 483799 traderjoe
traderjoe's picture

"The main reason we are still held on life support is so that China can go out and buy up all of the world’s resources while the dollar still has value (and they allow us to bury ourselves)..."

Exactly. The Chinese will take the long-term view. They'll use our Treasuries to buy resources and production. They know that our time is past. They don't need to accelerate it. We'll do that on our own. 

Thu, 07/22/2010 - 13:44 | 483925 B9K9
B9K9's picture

The truth is right out there in front of anyone willing to acknowledge its presence: mono-cultures sustain/thrive while multi-cultures decline/collapse. The Chinese don't dick around with PC, so it isn't an issue with them. They look apon us as ridiculus hairy apes for even entertaining such a notion.

In comparison, everything else is nonsense: fiat currency, gold backed money, credit, usury & compound interest, etc, etc.

My only question is related to the chicken & egg conundrum. Did the power-elite realize that dilution was occurring naturally (eg our open southern border) & made the appropriate bets to hasten & accelerate the decline or did they engineer it from the git-go to derive the same benefit (ie profit from what was/is going to occur)?

Either way results in the same set of outcomes. Actually, it was all rather simple - democracies are an automatic fail, so the trick was to convert the republic to a democracy. The first & most important objective was to increase the franchise, all else would follow.

I do not doubt that we will eventually prevail, it's just that we're gonna go through a real nasty race war to get there. In the meantime, the Chinese are just waiting for us to become sufficiently (internally) distracted in order to make their global move(s).

The only thing I am absolutely convinced of is that we will get a future Washington. It will take a leader of that magnitude to preserve (or reassemble) what we have.

Thu, 07/22/2010 - 14:12 | 484001 trav7777
trav7777's picture

Move?? WHAT move?  The chinese don't have the pieces on the board.  They have pawns.  You're asking them to traverse the entire board as if they had a rook.

China has an incompetent military, nonexistent navy.  What "move" are they gonna make?

We have made the House of Saud an offer they can't refuse.  The US Imperial power rests upon the petrodollar which orbits around KSA.  We let China bid on iraq petrol for going along with our wars.

China is no more an antagonist than the USSR or Japan.

Look at all the friction and shit over the supposed JAP takeover!  They were the rising sun menace going to take over the world, I saw tons of 80s movies about this.  And it was all this talk about predation and everything and they racked up ALL of our debt, OMG, they are buying Rock Center, they own us!!

Then, they turned out to be a bubble, hit the wall, and now they're pretty much a vassal state.  Who owns who?

The japs got as much of our debt as the chinks THEY own us?

Thu, 07/22/2010 - 15:19 | 484128 B9K9
B9K9's picture

Ah Travis, I usually agree with you - not so much this time.

First, China's sphere of influence is Asia. They could take S Korea, Taiwan and/or Japan at their leisure. The question then is why would they do such a thing? And the answer is they won't (not yet anyway) because they don't have to.

As the old saying goes, possession is 9/10s of the law. Or, in other words, it's awfully tough to dislodge a defending force. That's why the Chinese are in the process of building a large presence in many strategically important resource areas. The USA, of course, as you note holds the trump card(s) in the ME. Still, there are many secondary markets which the Chinese are quickly placing in their kitty.

I think you err by using the Japanese as an example. They were always a chimera, existing merely @ our pleasure. A small, island nation with -0- resources and 95% unusable mountain terrain is the exemplar of world domination? Sorry, I'm not buying it.

As for the Saudis, I believe FOFOA - they demand gold, not just $USD. (Which is another reason Ben cannot print.) Like any whore, they'll stick around as long as their pimp daddy protects them. Anyone with any sense knows the US is in terminal decline. A smart gold digger can smell death & decline long before their mark. They begin to sniff around for a suitable replacement.

Take the worst case scenario: we have a nuclear exchange, but the Chinese lose 2:1. So they take out 250m Americans, but they lose 500m. Hmm, that would leave us with 50m and them ... around 1 fucking billion.

The way to understand the world in which we live is to visit any natural history museum. It's all there, writ large: competition for scarce resources, resource depletion, environmental degradation and species transformation & die-off.

Thu, 07/22/2010 - 17:52 | 484472 tip e. canoe
tip e. canoe's picture

equating the chinese people with their govt masters is like equating the american people with their govt masters.   what is going on now all over the world is beyond cultures, races and ideologies, although TPTB would like all of us to think differently.

you guys are masters at game theory, but maybe you're playing on the wrong board?

...just a thought from a chinky at heart...

Thu, 07/22/2010 - 18:21 | 484528 fiddler_on_the_roof
fiddler_on_the_roof's picture

+1000. The Chinese Govt Masters are worse than American. Who knows how many prison labour camps for corporate profit runs over there ? Pure corporatism against command man. Hope Some day something will change.

Thu, 07/22/2010 - 18:15 | 484517 tip e. canoe
tip e. canoe's picture

too bad monocultures are completely fucking boring to live in.

Thu, 07/22/2010 - 19:15 | 484634 ATTILA THE WIMP

You do have a point, Mr. Canoe.

I fought in (the former) Yugoslavia in '91 and '92 as a merc and that multi-ethnic wonderland was certainly not boring.

PS: 911 Inside Job


Thu, 07/22/2010 - 21:27 | 484790 DarkAgeAhead
DarkAgeAhead's picture

Monocultures create an illusion of power.  They are however much easier to destroy, inherently weaker.

Efficiency, which monoculture societies, ecosystems and economies tend to elevate as an end, is ultimately death.

Thu, 07/22/2010 - 12:48 | 483809 Waterfallsparkles
Waterfallsparkles's picture

Yes, China will eventually own America.  All of their Debt, their Companies, their Real Estate.  Very soon we will be Serfs in our own Land.


Thu, 07/22/2010 - 13:03 | 483852 Walt Whitman
Walt Whitman's picture

"I believe that banking institutions are more dangerous to our liberties than standing armies . . . If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] . . . will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered."


-----Thomas Jefferson: The Debate Over The Recharter Of The Bank Bill (1809)

Thu, 07/22/2010 - 13:32 | 483919 Greater Fool
Greater Fool's picture

Easy for the slave-owning landed gentry to say.

Thu, 07/22/2010 - 14:26 | 484030 Real Estate Geek
Real Estate Geek's picture

Yet not as easy as contemptuously applying modern mores to statesmen who lived hundreds of years ago.


Thu, 07/22/2010 - 15:00 | 484089 DarkAgeAhead
DarkAgeAhead's picture


Thu, 07/22/2010 - 13:09 | 483864 Gully Foyle
Gully Foyle's picture


Funny I remember when the Japanese and Arabs were supposed to wind up owning the US.

But I think the Dutch actually bought a shitload of it.


Thu, 07/22/2010 - 13:19 | 483886 Waterfallsparkles
Waterfallsparkles's picture

China seems to have a lot more financial sense that our Government.  They are stockpiling Oil, Copper, other precious metals.  They are Buying our Stragetic Companies.  They took over our Steel Industry.  They are slowly Buying our Real Estate.  The own most of our Debt.

I remember when they closed Bethlem Steel here in Baltimore County Maryland.  It really hurt Eastern Baltimore County economy.  Steel operations are now overseas.

Chinas policys seem to equate more to my own rather than the "Create More and More Debt" policy of the Fed and our Government.  It just seems so obvious to me what is happening.  Yet, our Government does nothing about it.

I cannot see how American will come out of this without giving up our Soverenty.  That would be a sad day for all Americans.

Thu, 07/22/2010 - 14:38 | 484043 goldfish1
goldfish1's picture

Repudiate all debt national and private. 


Nationalize our natural resource owning corporations.


Close our borders and deport non-citizens.


Start over with what we have.


Hang the traitors in public. All of them.


Stop the flow of harmful illegal pharmaceutical drugs to our youth. Start at the manufacturing facilities.

Thu, 07/22/2010 - 14:56 | 484083 Max Hunter
Max Hunter's picture

+ 1000  .. and yes.. it could happen..

Thu, 07/22/2010 - 16:27 | 484295 Geoff-UK
Geoff-UK's picture

But pretty unlikely.  Better to buy a $20 silver piece than 20 lottery tickets.

Thu, 07/22/2010 - 16:52 | 484357 goldfish1
goldfish1's picture

Better to buy a $20 silver piece than 20 lottery tickets.

Excellent practical advice.

Thu, 07/22/2010 - 18:14 | 484516 Max Hunter
Max Hunter's picture

I have been buying silver pieces.. and a lottery ticket here and there.. :)

Thu, 07/22/2010 - 15:33 | 484162 trav7777
trav7777's picture

so did the japs

you think CHINA has no debt??  HAAHAHAHAHAHAHAHA.

Just like Japan, right?

Thu, 07/22/2010 - 15:54 | 484211 robobbob
robobbob's picture

But while we were being all PC, thinking we could pass whatever feel good laws we wanted without suffering any repercussions.....the coke battery was being cut up and shipped to China because the EPA rules were too strick, or when the rod and wire mill was shipped to India where there is no OSHA

....and now the enviromentalists are protesting against the LNG plant. Jobs?, we don't need no stinking jobs.....we'll live on the kindness of strangers.

Thu, 07/22/2010 - 15:22 | 484135 Treeplanter
Treeplanter's picture

China has enough internal conflicts to muddy any predictions about their future.  They also have economic central planning and a totalitarian police state.  And they need Western markets to keep the cash flowing.   Not a paper tiger but more like Tony.

Thu, 07/22/2010 - 12:50 | 483815 BlingBlingBen
BlingBlingBen's picture

The weakness in this argument is that ALL governments lack credibility and ALL currencies are in a debasement arms race. The tallest midget, best house in a bad it whatever you want. The dollar will be volatile in a very tight trading range as the deck chairs on the Titanic shift. The Titanic takes a long time to can see it coming but you can never make any money trading it.

Thu, 07/22/2010 - 14:04 | 483972 B9K9
B9K9's picture

See my comment above - the only winner will be a mono-culture. Compared to the US, Russia & W Europe, China has the narrowest "trading" range. That is, China is comprised primarily of two major factions, but to outsiders they appear monolithic.

Western multi-cultures survived only to the extent that a dominant group utilized  superior technology to suppress/repress the others. Whether foreign and/or domestic, the Rhodesian imperial philosophy held sway.

The entire history of mankind is one of constant upheaval and tremendous ethnic/racial cleansing. Shit, we sapiens wiped out an entire competing hominid species, along with countless mega fauna throughout the world.

The only thing fossil fuels & endless fiat accomplished was a temporary respite from our natural evolutionary tendencies.

I was touring Chinese mfg facilities/cities years before Hendry. If there is one recommendation I can make to anyone who cares, it's to understand this snippet from Apocalypse Now (referring to the NVN):

Charlie didn't get much USO. He was dug in too deep, or movin' too fast. His idea of a great R&R was cold rice and a little rat meat. He had only two ways home: death or victory.

Americans were tough & hard bitten like this in the 30s - it's the only way we prevailed in WWII. TV, electronic toys & a willingness to ignore reality is the only reason things still appear to be "normal". They aren't.

Thu, 07/22/2010 - 12:56 | 483831 MGA_1
MGA_1's picture

Wow... well, here's come phase 2 of the great recession....

Thu, 07/22/2010 - 12:57 | 483835 carbonmutant
carbonmutant's picture

 China does not benefit from killing the goose that laid the golden egg.

Thu, 07/22/2010 - 13:09 | 483860 RockyRacoon
RockyRacoon's picture

I think they see the U. S. as a hen house full of laying chickens, not a golden goose. 

Mo eggs, mo eggs, mo eggs.

They feed us cheap feed (do-dads and knick-knacks) and use the eggs to trade with our neighboring farms for beef, grain, and hardware.  We are the low-end producers.

Thu, 07/22/2010 - 13:18 | 483881 faustian bargain
faustian bargain's picture

The eggs are getting smaller and the goose is killing itself. Not much China can do about it.

Thu, 07/22/2010 - 13:21 | 483890 Waterfallsparkles
Waterfallsparkles's picture

Unless China ends up owning the Golden Goose.

Thu, 07/22/2010 - 12:58 | 483839 Oh regional Indian
Oh regional Indian's picture

Refreshing truth telling, told in a soothing, non-panic inducing tone.

Well done sir.

Also, oil above 80 is a major signal. A pattern fulfillment, hard down.

Might begin this weekend.


Thu, 07/22/2010 - 17:59 | 484482 Cathartes Aura
Cathartes Aura's picture

full moon, hmmm. . .

(among many other indicators, yes.)

Sat, 07/24/2010 - 22:26 | 487212 Oh regional Indian
Oh regional Indian's picture

Full moon, grand crosses, alignments and what have you.

Plus a fundamentally broken system.



Thu, 07/22/2010 - 12:59 | 483840 Turd Ferguson
Turd Ferguson's picture

Stolen from JSM, this needs to be understood by everyone, particularly the bulls.

Dear Jim,

Last Friday, July 16, 2010, the FDIC announced six more bank failures, making the total 96 so far this year. These were relatively small banks. Collectively, they had assets of $2.03 billion and deposits of $1.78 billion.

The FDIC’s estimated cost of closing these six banks was 334.8 million, about 19% of deposits. All six were resolved with the FDIC entering into loss share agreements covering a high percentage of the assets taken over by the successor banks. In connection with these closings, the FDIC entered into new loss-share agreements covering an additional $1.5 billion in assets.

That brings the FDIC’s total losses for 2010 up to $18.11 billion. The total face value of assets now guaranteed under FDIC loss share agreements has grown to $178.66 billion.

Each failure announcement allows us a peek into how extensively bank management have been exaggerating the value of their least liquid assets since the FASB’s roll-back last year of fair value accounting requirements. The worst offenders from the past week were as follows:

Main street Savings Bank, FSB, had stated assets of $97.4 million and deposits of $63.7 million. The FDIC estimated its closing cost $11.4 million. Based on that estimate, the bank’s assets were really only worth $52.3 million, and had been overvalued by 86%.

Turnberry Bank of Aventura, Florida, had stated assets of $263.9 million and deposits of $196.9 million. The FDIC estimated its closing cost $34.4 million. Based on that estimate, the bank’s assets were really only worth $162.5 million, and had been overvalued by 62%.

Woodlands Bank of Bluffton, South Carolina, had stated assets of $376.2 million and deposits of $355.3 million. The FDIC estimated its closing cost $115 million. Based on that estimate, the bank’s assets were really only worth $240.3 million, and had been overvalued by 57%.

Metro Bank of Dade County of Miami, Florida, had stated assets of $442.3 million and deposits of $391.3 million. The FDIC estimated its closing cost $67.6 million. Based on that estimate, the bank’s assets were really only worth $323.7 million, and had been overvalued by 37%.

Keep in mind that since the FDIC is resolving all these failures by way of granting loss share agreements, the assumed value of each failed bank’s assets is being skewed to the upside. Were the assets being sold without any future obligation on the FDIC’s part the prices realized would be much lower and the extent of overvaluation much higher.

Respectfully yours, 
CIGA Richard B.

Thu, 07/22/2010 - 13:07 | 483861 Gully Foyle
Gully Foyle's picture

Turd Ferguson

I just read that the FDIC started reimbursing for the 2008 bank failures.

Can't find it again.

Thu, 07/22/2010 - 13:07 | 483862 Yikes
Yikes's picture

That's good (scary) stuff.  To consider what the implications are on the entire banking system is mind boggling.  Let's just hope these banks were just badly managed. Yea, thats the ticket!

Thu, 07/22/2010 - 13:15 | 483873 Turd Ferguson
Turd Ferguson's picture

Unfortunately, these are not isolated. This Richard guy has been summarizing the closing every week for about a year and its the same shit, week after week. 

You know its the same way all the way up the food chain. You don't think Citi and BofA are using the same tricks?

Thu, 07/22/2010 - 13:20 | 483887 JLee2027
JLee2027's picture

All the major banks are badly broken.  I see no possible recovery for them.  It's time to let it all burn down.

Thu, 07/22/2010 - 14:17 | 484018 jailnotbail
jailnotbail's picture

And the total indictments so far this year for fraud, perhaps under the RICO statute,  that resulted from the closing of these criminal enterprises masquerading rather poorly as banks is?

Thu, 07/22/2010 - 14:45 | 484066 Cognitive Dissonance
Cognitive Dissonance's picture


Thu, 07/22/2010 - 17:56 | 484476 tip e. canoe
tip e. canoe's picture

i'll take Farcism 2.0 for $200 please Alex

Thu, 07/22/2010 - 13:01 | 483841 iinthesky
iinthesky's picture


No more debt based counterfeit facsimile of a facsimile of money! State issued interest free money!

Thu, 07/22/2010 - 13:00 | 483843 10044
Thu, 07/22/2010 - 13:21 | 483888 RockyRacoon
RockyRacoon's picture

Dr. Paul -- gotta love him.  Bless his pea pickin' heart. 

When will the early birds of this debacle be listened to?

Thu, 07/22/2010 - 13:30 | 483916 faustian bargain
faustian bargain's picture

nice. Saved by Barney's gavel on that last question.

BB doesn't like Ron Paul very much, does he.

Thu, 07/22/2010 - 13:01 | 483846 bruiserND
bruiserND's picture

So, at what price level higher will all the "smartest guys in the room " pull the plug on their cataclysmic overview of the stock market and just buy the friggin' thing?

being an enraged, profane, unmoderated, unmediated, hit-loving, trash-talking rage monkey is no way to go through life

Thu, 07/22/2010 - 15:47 | 484196 PhattyBuoy
PhattyBuoy's picture

Been out of the stock market for more than a decade ... will NEVER be back in ... it is a sucker's game for suckers ... and one of the greatest wealth destruction charades the world has ever seen !

And the US has the market cornered on wealth destruction.

If your 401K is trapped in the market, you have lost big time, and you will lose again ... so anty up sucker!

Thu, 07/22/2010 - 16:24 | 484284 bruiserND
bruiserND's picture

So basicaly Phatty,

You've just announced to the planet, that despite 20,000 total Dow Jones range points for the decade, you've been on the sidelines ?

Opinions are like ass holes ; everyone has one and they all stink.

On the other hand you just may be a coward instead of have anything that can be construed as a valuable opinion. 

Thu, 07/22/2010 - 13:01 | 483847 DarkAgeAhead
DarkAgeAhead's picture

For the deeper scale, more fundamental inflection point, really better described as a "pulse" event, check out:

That makes most all of this fictionally inconsequential (that's my bad attempt at outdoing the "unusually uncertain" verbiage), save for the fact that today's economic fiction destroys Life.

A preview:

"This is a moment of great volatility and instability in the world system. We need urgently to do what we can to avoid deep collapse. We also need to figure out how to exploit the opportunity provided by crisis and collapse when they occur, because some kind of systemic breakdown is now almost certain."

We can see the danger of the tectonic stresses in a new light if we think of humankind-including all our interactions with each other and with nature and all the flows of materials, energy, and information through our societies and technologies-as one immense social-ecological system. As this grand system we've created and live within moves up the growth phase of its adaptive cycle, it's accumulating potential in the form of people's skills and economic wealth. It's also becoming more connected, regulated, and efficient-and ultimately less resilient. And finally, it's becoming steadily more complex, which means it's moving further and further from thermodynamic equilibrium. We need ever-larger inputs of high-quality energy to maintain this complexity. In the meantime, internal tectonic stresses-including worsening scarcity of our best source of high-quality energy, conventional oil-are building slowly but steadily.

So we're overextending the growth phase of our global adaptive cycle. We'll reach the top of this cycle when we're no longer able to regulate or control the stresses building deep inside the global system. Then we'll get earthquakelike events that will cause the system's breakdown and simplification as it moves closer to thermodynamic equilibrium."


Thu, 07/22/2010 - 14:36 | 484049 Marla And Me
Marla And Me's picture

Hmmmmm... do I know you?  It appears we are on the same page...

Thu, 07/22/2010 - 15:04 | 484100 DarkAgeAhead
DarkAgeAhead's picture

Ha...this same virtual page or another?

I'd guess not, unless you're the one person who recommended I check this site out.  I'm a new poster here, and don't get out and about that much electronically (intentionally so).


Thu, 07/22/2010 - 15:23 | 484139 Marla And Me
Marla And Me's picture

I was recommended this reading by a family member a couple of hours ago.  I added it to the discussion below, only to find out that you had already posted it.  It is a rather obscure source, so it struck me.  If you say you don't go out (electronically) much, then we may very well have gotten it from the same person.  In the interest of staying anonymous, I'll leave it at that.  Maybe it's that instantaneous spread-of-knowledge-once-it-reaches-critical-mass thing...

Thu, 07/22/2010 - 15:56 | 484217 qussl3
qussl3's picture

Collapse of Complex Societies - Joseph Tainter?

Thu, 07/22/2010 - 16:18 | 484241 Marla And Me
Marla And Me's picture

I was referring directly to the link that DarkAgeAhead posted.

Thu, 07/22/2010 - 20:13 | 484704 DarkAgeAhead
DarkAgeAhead's picture

Fair enough.  I've had my head in Resilience for a few years now, but definitely the worldwatch source is relatively uncommon.

Anyway, Holling's researched and written some really powerful integrative study based on ecology.  I'd recommend his paper, "Understanding the Complexity of Economic, Ecological and Social Systems" - Ecosystems (2001) 4: 390–405  DOI: 10.1007/s10021-001-0101-5.

Also good are the books Panarchy and, easier, faster reading, Resilience Thinking.

The Resilience Alliance has some fantastic resources as well.  The Practitioner's Guide could easily be adapted for market research and scenario building.  Similar to what Shell has done over the past few decades, with its scenario planning/futurist group.

Thu, 07/22/2010 - 22:35 | 484858 UnBearorBull
UnBearorBull's picture

Your avatar... is that a silhouette of that famous Adams photo of the colonel shoot a guy in Vietnam on top of the BP 'green' logo?




Your earlier post describes evolution, and that always marches on with no respect for any imagined 'exceptionalisms.'

Was great while it lasted!




Thu, 07/22/2010 - 13:03 | 483850 jomama
jomama's picture


Thu, 07/22/2010 - 13:03 | 483851 Gully Foyle
Gully Foyle's picture

Is it Doom and Gloom day again already?

Someone wake me when Bartertown rises.

Thu, 07/22/2010 - 13:04 | 483854 SheepDog-One
SheepDog-One's picture

So lets actually do something and form a Zerohedge Ultrashort FED fund...certainly all the MASTER traders on zerohedge forum with their constant massive trading gains could open such a fund with many millions of dollars, and the next time the FED ramps futures to the moon, attack and short what they pump on open. 

Thu, 07/22/2010 - 13:05 | 483857 DarkAgeAhead
DarkAgeAhead's picture

I would like to invest my 2 cents in that.

Thu, 07/22/2010 - 15:26 | 484149 Treeplanter
Treeplanter's picture

When gold hits 1260 again I want to sell half my miners and bet on ETFs that profit from shorting the crashing markets.  I know about FAZ.  Anyone know some others that would make sense?

Thu, 07/22/2010 - 17:11 | 484391 Turd Ferguson
Turd Ferguson's picture


3X short Dow

Thu, 07/22/2010 - 13:08 | 483859 JR
JR's picture

“Unobserved,” that’s how Keynes described a key mechanism of inflation; and, IMO, this leads to the politcal, social and economic crises upon us.  Is this why the deflation talk is brought on to cover our eyes?  Here’s an interesting story that relates to the mechanism--

Blasting With Boyles: The Wealth of Nations Or How the Invisible Hand Smacks You in the A… Glendale Cherry Creek Chronicle:

As the story goes…  In the darkest jungle, two men show up and tell the native populations that they’ll buy all the moneys that they can capture for $2.50 a monkey.  Because the village was swarming with monkeys, the native population captured every monkey they could for $2.50. The man and his assistant brought an enormous cage and each of the monkeys, after payment, was then put inside the cage.  Then the man announced that he would now pay $5 for every monkey they could bring to him.  So, the population went out further into the jungle and captured more monkeys at $5 per monkey.  Then the man declared that he would pay $12 per monkey, so the population went as far as they could to find more monkeys and bring them back to the man that put them in the cage.

One day, the man who ran the monkey cage announced that he was leaving, but when he came back he would pay $50 for every monkey the native population could catch.  While the man was gone, his assistant told the native population that while the man would pay $50 per monkey, he would sell them each a monkey from the cage for $35, so they could then sell them back when the man returned for $50. All the people lined up (some were monkey catchers and some were not) and bought a monkey until all the previously captured monkeys were gone.  Later that night the assistant disappeared and neither he, nor the man who initially bought the monkeys, ever returned to the village.

Now you understand the stock market, the Federal Reserve buyout, the helicopter Ben Bernanke and George Bush (written pre-Obama).  Except now, you’re the idiot waiting with the $35 monkey.  Soon, your neighborhood will be crawling with monkeys—local monkeys, close-in monkeys and far away monkeys.  The question now is: Can you smell the Vaseline in the air?  Or, is it too late because that stockbroker is never going to buy your monkey?

Here’s another story: During the great American Depression, a farmer had a dozen eggs.  He sold them to his neighbor for a dollar and then the next day his neighbor sold them back to him for $1.50. The next day he sold eggs to his neighbor for $2 and then the next day bought them back for $3. Are you starting to get the picture?  You’ve got to have real chickens that are really laying eggs and people who line up to buy the eggs.  That’s real production, real money and by the way, real chickens, not passing the buck to the next sucker.  You may have noticed that all the chickens, all the real production and all the real money are outside the country.  And now all you get to do is buy and sell egg futures.

Here’s one more parable: You have a 1952 original Mickey Mantle rookie card.  The last one in really good shape sold for $165,000. One day, the Federal Reserve prints 10,000 original Mickey Mantle rookie cards, indistinguishable from yours, so now, how much is your card worth?  Can you find the elephants and the giraffe in this picture? Now for the people playing the game at home, how’s that 401K? How much is your dollar worth? And when is the last time you went somewhere and actually saw a chicken lay an egg?  The only eggs being laid around here are the eggs being laid on Wall Street and now it’s become a huge scam.

The basic truth of it all is, we’ve been buying and selling eggs to each other, investing in monkeys that some day we thought would be worth a lot of money, and holding on to our Mickey Mantle rookie card, thinking that no one else had one and that it was actually worth something.  When people wake up and realize that the monkey buyer and his assistant aren’t coming back, it’s going to be a really bad day for us all.  My advice is this: get a handgun and a really mean dog.  God bless you all.

Uncle Ebenezer

Thu, 07/22/2010 - 13:21 | 483889 IrishSamurai
IrishSamurai's picture

So you want to spank ...  er-uh ... buy my monkey or not?

- Al "Sex Poodle" Gore

Thu, 07/22/2010 - 15:03 | 484096 Max Hunter
Max Hunter's picture

best comment in quite some time.. absolutely great analogies!!..

Thu, 07/22/2010 - 18:51 | 484586 tip e. canoe
tip e. canoe's picture

chickens bitchez

Thu, 07/22/2010 - 20:53 | 484706 Terra-Firma
Terra-Firma's picture

I agree. The war drums are beating. We have China, Russia, Most of the Middle East, Most of Middle and South America and Most of Africa on one side. On the other: USA, UK, Europe, India, Israel, Canada, Japan. The first group is itching for payback. I won't go into the historical details. On the other, mercantile nations plundering the former group using modern finance i.e., debt. Read "Confessions of an Economic Hit Man" for a good introduction to the mo-dis operandi.

Now, the roles are getting reversed and North America, Europe et al. are want to change the rules e.g., mark-to-fantasy and the other GAAP etc... to avoid the political backlash of diminished standards of living eg. 200 weeks of unemployment benefits and counting.

I suspect China told the USA that devaluing the US dollar to inflate its debt away would be a declaration of WAR! hence Bernanke's pale face after meeting with your president after his trip to China a month or two ago.

Where are we now then: Well this is what I see.

1. SUPER Extended unemployment benefits (forever at the rate of employment creation) This takes care of the lower classes so they won't pick up guns.

2. Manipulated stock exchanges to keep the middle class subdued.

3. War in Afghanistan and Iraq to control oil reserves, access to them and their transport via pipelines. Hence Afghanistan's strategic location between Iran and China.

4. Food Crisis in China. China lacks arable land. Hence it's been buying up land in Argentina, Africa and just about anywhere else it can. Soon you'll see an international Chinese agricultureal corporation birthed to bring the food home.

5. Energy crisis in the USA. It's harder to find oil these days (except in the gulf coast - God bless you all for your patience. I would have started taking BP officials out by now I think). The return on energy investment and access to energy PERIOD is stinking hard. It's doubly hard now that the USA has to compete with China for it. Think conflict!

6. China has time on its side. the USA does not because it's a democracy; at least we think so. Dam elections. Think November.

7. We have Iran. Speaking of, who is kidding who. With digital technology I am sure the blueprints for all the advanced designs were emailed from North Korea. Besides they can call each other. At least one Phone must work in Iran and North Korea. So overcoming technological and design limitations for a nuclear bomb is ZERO. I suspect Iran has a few nukes already or else the USA would have kicked its ass already. It has not. Why? think BOOM!!!

8. If and when China significantly boosts the value of its currency, it will buy up USA corporation like 3M, Intel, GM, IBM etc... on the cheap with it's increased purchasing power.

9. When the public find out their politicians and financiers sold them down the road a civil war will erupt. Actually, I think the USA is probably about a year away from the beginnings of just such a war if President Obama continues on his current policy choices.

10. Public awareness of the shift in geopoliticalal and economic power to China et al (CNBC, FOX Will shout it from the roof tops) 

10. Alternative ending....WAR!!!!!!!!!!!! Unless the USA cleans up its act or graciously hands the mantle of power to China.

Thu, 07/22/2010 - 13:09 | 483865 SDRII
SDRII's picture

China has now protested 6 times about the planned exercises in the Yellow Sea. The NK issue is a strawman; an over the horizon look at China. Debka reporting this AM that the US is looking to convert troops to blue helmuts in Iraq as necessary for stability/security as Gen flaots talk of Iranian backed militia planning attacks. Furthermore, Iran on the wire talking about breaking oil dollar nexus (& euro). Then there is the OESC deployment to Kyrgyz despite rebuke in Osh. Finally, another report this am on Myanmar and its nuke problems set up a nice point of convergence for the US/China over the strategic important location. tactic re Somolia. Yemen, Kyrgz (eurasia) in full effect.




Thu, 07/22/2010 - 13:11 | 483871 Gully Foyle
Gully Foyle's picture


DEBKA? Gonna back that up with MEMRI translations or maybe sourced at Rense.

Thu, 07/22/2010 - 13:47 | 483958 SDRII
SDRII's picture

DEBKA is rumor rich, but no worse than NYT. And since you didn’t understand the gist, here goes again: China warning over US exercises in Yellow Sea, The Myanmar story sourced from Janes, The Eurasia police deployment, or Ray Odierno implicating Iranian militias? When your get done loading up on APPL, try using Google

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