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Jim Grant: "The Federal Reserve Is The Vampire Squid Of Vampire Squids"

Tyler Durden's picture




 

Munch's "The Scream" may be all the rage today, but to Jim Grant, in his latest interview on Bloomberg TV, the record price paid for the painting is not so much a manifestation of modern art as one of modern currency: "This is the flight into things from paper" . Thus begins the latest polemic by the Grant's Interest Rate Observer author whose topic is as so often happens, the Federal Reserve (for his latest definitive expostulation on why the Fed should be disbanded and why a gold standard should return, delivered from the heart of Liberty 33 itself, read here). The world in which we invest is a world of immense wall to wall manipulations by our friends in Washington. And people get off on Goldman Sachs because it has done this and this, it is pulling wires... The Federal Reserve is the giant squid of squids, it is the vampire squid of vampire squids."

He continues: "They - the vampire squids - have manipulated virtually every single price and valuation in the capital markets. People ought to recognize when they invest that one of the unspoken risks is the risk that this hall of mirrors, this Barnum and Bailey world that the Fed has created for us is going to vanish one day because they will not be able to hold it any more... It's not as if there is nothing to do in investing, but one must always keep in mind that the valuations that we see, that the prices that we watch flicker across the tape are prices that are fundamentally manipulated by these well-intended, dangerous people in Washington called the Federal Reserve". And to think that 3 short years ago Grant would have been branded a loony, tin-foil hat wearing gold bug, while now it has become trendy for hedge fund managers to bash the Fed with impunity. It is all downhill from here.

 

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Thu, 05/03/2012 - 18:20 | 2395372 Jerry Maguire
Jerry Maguire's picture

Soon the'll have to start raising rates like they're doing in Canada:

http://strikelawyer.wordpress.com/2012/05/03/interesting-developments/

 

Thu, 05/03/2012 - 18:33 | 2395403 Xibalba
Xibalba's picture

that truth will hurt. 

Thu, 05/03/2012 - 19:23 | 2395458 lineskis
lineskis's picture

"It is all downhill from here." - Except for Gold and Silver! :)

Thu, 05/03/2012 - 19:35 | 2395472 knukles
knukles's picture

Goldman and others of it's ilk are but a fronts, shills for the RedShield and kin, owners of the central banks, the bankers of the bankers. 
The shills shall be offered as sacrificial lambs to the peasantry whilst the true powers remain silent, in the shadows, to continue as they have for generations, silently, carefully, ever amassing more power and treasure.
Undoubtedly, the entire NWO's seen and heard, the Bildergergs, CFR, etc., are well removed from the throne, to be dealt with under unpleasant circumstances.

Thu, 05/03/2012 - 19:42 | 2395483 Thomas
Thomas's picture

"well-intended dangerous people" Well intended? Are you sure, Jim?

Thu, 05/03/2012 - 20:10 | 2395530 rosiescenario
rosiescenario's picture

.....more accurately, they think of themselves as being well intended......

Thu, 05/03/2012 - 23:37 | 2395815 flacon
flacon's picture

Gold and Silver will crash. In fact they must crash. When ZERO dollars buys you one ounce of gold then you will know that Voltaire was in fact correct. 

 

The target price of Gold is ZERO DOLLARS PER OUNCE and/or INFINITY DOLLARS PER OUNCE.

 

How many Zimbabwe dollars buys one ounce gold coin?

 

Infinity and/or Zero to Hedge it. 

 

There is a fine line between Zero and Infinity... you need to understand that.

 

As Mike Maloney says, stop measuring your gold in dollars and start valuing it according to things you can buy with it...

Gold must not be measured in Dollars, it must be measured in REAL STUFF. As soon as dollars disconnect from REAL STUFF then you will start to see the disconnect between dollar price of gold. 

Fri, 05/04/2012 - 02:28 | 2395964 Marty Rothbard
Marty Rothbard's picture

More accurately, they try to present themselves, as well intended.

Thu, 05/03/2012 - 21:25 | 2395623 Cabreado
Cabreado's picture

Required politeness of a polite-by-nature man, when speaking to the world, thru a corrupt medium, of a monster-like creature who has control.

Good for you, Mr. Grant, and thank you.

Thu, 05/03/2012 - 21:33 | 2395639 Yes_Questions
Yes_Questions's picture

 

 

Absolutely Correct.

Thu, 05/03/2012 - 21:43 | 2395660 economics9698
economics9698's picture

The gold standard helps the average consumer by keeping inflation at zero and prices declining. 

If there is $200 in the economy and company A builds a better mouse trap, lowering its price from $15 to $10 and increasing sales from 2 units to 4 units the total revenue for the company increased from $30 to $40. 

This is extremely important to understand and why the elite capital owners DO NOT want a gold standard.

When company A has good times not there is $10 less in the money supply and other companies, call them B and C, MUST lower prices to maintain market share or lose market share.

Understand what that means.  This was referred to as “messy competition” in the 19th century.  Industrialist hated having to constantly lowering prices and finding ways to save money whenever a competitor improved their productivity.

Competitor C must lower prices from $2 to $1.9 losing revenue (on sales of 20 units) from $40 to $38.

Competitor B must lower prices from $5 to $4.5 on sales of 10 units lowering total revenue from $50 to $40.

Is the picture becoming clear why capital elites do not like the gold standard?

Savings was $80 before the better mouse trap was invented but now there is a increased demand for money as consumers scramble to buy the better mouse trap.  Savings drop from $80 to $77 and more money is spent.

Under a gold standard with fewer savings available demand for loadable funds would drive up interest rates, attracting more savings, and so forth, the cycle repeating.

The key to the gold standard is it forces manufacturers to constantly strive to be competitive or they will price themselves out of the market by other, maybe unrelated industries.  Think of the implications in today’s world and the significance this would have on oil markets.

The gold standard removes the power of central governments, forced balanced budgets and trade, in the long run.

The main appeal is that in the 1880s to 1890s prices DECLINED 25% and wages ROSE 3% for the masses.  Compare that to today’s wealth concentration going to the top 20% and the bottom 30% stagnated for decades.

Simply put fiat allows governments to live unrestrained and wealth to be transferred from the bottom 80% to the top 20%.  This is the real reason central governments and elites want a central bank.  They simply hope the masses are too stupid to catch on to the con game.

Thu, 05/03/2012 - 22:00 | 2395692 Yes_Questions
Yes_Questions's picture

 

 

and an Absolutely Correct to you too.

 

+lucidity

Thu, 05/03/2012 - 23:16 | 2395793 Harlequin001
Harlequin001's picture

Well Economics, what you say is true, or half way there anyway.

I have said this many times, if I bring back my capital and invest it in these same business you speak of I am a credit to my country, providing jobs and income and greater assets to the betterment of the country AND MYSELF. This last bit is very important because if it's missing I'm not going to do it. If I now make two workers redundant I am out-voted, and democracy allows these workers to now vote themselves all my capital, profits and income through welfare paid for by taxes. The reason why we don't have a gold standard is because poor people want my capital and politicians are willing to give it to them. When they do, and we have a subsequent recession welfare cannot be cut without riots, so the government then borrows to pay consistent welfare thereby not only relieving me of my capital, profits and income but leaving me also with debts to be paid through currency debasement or more and higher taxes.

There is a good reason why we do not have a gold standard, and yours is not it. It is called democracy, or put to put it other way, mob rule. What you say is fundamentally sound economics but it is not the reason we have no gold standard. Society will collapse and I will bring my capital back one day, but not until governments realise that giving my money to someone else to do nothing does not create wealth, or long lasting benefits.

Until then it stays in gold offshore... Sad, but there you go.

Thu, 05/03/2012 - 23:23 | 2395802 economics9698
economics9698's picture

In the 19th century the people in the Democratic Party understood the relationship and voted for “hard money.”  William Jennings Bryant broke with the party in 1896 and the rest is history.

Big government, and the inflation, ALWAYS favors the capital owners and government.  Look at the stagnant per capital disposable income and corporate profits at all time highs. 

Look at the wealth transfer acceleration since 1971 when Nixon removed the Fed from the Bretton Woods agreement.  You have it backwards my friend.

Inflation always favors the capital owners and government.  Government spending on social welfare programs is just a excuse to create that inflation.

Thu, 05/03/2012 - 23:53 | 2395832 Max Fischer
Max Fischer's picture

 

 

Inflation always favors the capital owners ......

*LOL*

RETARD ALERT!

Here's your comment, translated:  Devaluation of capital always favors those with capital.

*LOL*

mf

Fri, 05/04/2012 - 00:34 | 2395874 MeelionDollerBogus
MeelionDollerBogus's picture

Inflation clearly favors those holding / producing high-quality assets, rare and/or needed for life - clean water, energy, food, land for food, medicine. And of course precious metals as they pertain both to industry use and to monetary use in the face of a currency crisis (which we have now)

Fri, 05/04/2012 - 05:24 | 2396058 Ar-Pharazôn
Ar-Pharazôn's picture

trolling?

Fri, 05/04/2012 - 09:35 | 2396579 InjuredThales
InjuredThales's picture

Wow, this moron (Max) doesn't understand that there is a difference between money and capital. 

Why am I not surprised?

Fri, 05/04/2012 - 01:12 | 2395897 Harlequin001
Harlequin001's picture

Ok let's have a look at this. 'Big government, and the inflation, ALWAYS favors the capital owners"... That depend on how you hold your capital. If it is in cash and loaned out then inflation favours the debtor, since it reduces the amount that is repaid in real terms, which is not good for capital holders. Capital holders generally don't need mortgages to buy houses so in this case I'd say not, it benefits the borrowers who are the poor in most cases. If capital holders hold it in gold or other assets not already inflated by credit then you are correct, IF you can get it before the general economy.

"and government.  Look at the stagnant per capital disposable income...' This is a consequence of previous credit, or its now reducing availability which doesn't allow employers to pay higher wages when sales are stagnant or in this case, reducing. "and corporate profits at all time highs." - Again the consequence of credit, not inflation (and can we say some very dubious accounting practices?) 

If 'Government spending on social welfare programs is just a excuse to create that inflation." then why does the welfare come before the inflation, and by that I mean in some cases, fifty years before it?

I should say that your first post says it well, if I as capital holder and shareholder invest in an efficient company then I don't need inflation to make more money, just a more efficient business.

I agree that inflation favours the govt but only in the short to medium term, which, for as long as it's longer than the political life expectancy of a politician, will persist. But then that's how they pay for welfare isn't it?

Thu, 05/03/2012 - 23:14 | 2395794 brettd
brettd's picture

Since they control the education "system" it's easy to keep people "...too stupid to catch on to the con game."

Thu, 05/03/2012 - 23:49 | 2395830 Max Fischer
Max Fischer's picture

 

 

The main appeal is that in the 1880s to 1890s prices DECLINED 25% and wages ROSE 3% for the masses.....

Much to your embarrassment, you have this totally wrong.  Of course, you're just another hypocritical libertarian, so it's not surprising.* 

Wage differentials between the owners and laborers widened dramatically during the "Gilded Age." In fact, this period of time (from the end of the Civil War to the creation of the Federal Reserve/1913) marks one of the WORST periods for wage dispersion in American history.  There are many reasons for this including the rapid evolution of manufacturing during this time, enabling corporations to substitute skilled labor for cheaper, unskilled labor. This, coupled with an influx of immigrants during this period kept a tight lid on wage appreciation for the laborers (the 99%), while the owners and the titans of industry (the 1%) became richer and richer.  Furthermore, I'm sure the depression of 1893 and the myriad of bank panics during this time had an enormous affect on the 25% price deflation you speak of. 

The topic of wage inequality during the second half of the 19th century is rich with data and research, and for you to suggest that this was an era of prosperity for the masses because, for some cherry picked interval of time, wages rose a stupid 3% means one thing and one thing only:  YOU HAVE NO FUCKING CLUE WHAT YOU'RE TALKING ABOUT.

The gold standard had NOTHING to do with whatever 3% appreciation in wages you've referenced.  NOTHING.  The overwhelming majority of laborers lived in pure poverty during the last quarter of the 19th century. 

mf.

* Definition of hypocrisy: getting a paycheck from the government as a contractor, yet spending all day on the internet ranting against government socialism.

Fri, 05/04/2012 - 04:47 | 2396045 TWSceptic
TWSceptic's picture

Allegedly well-intended ;)

Thu, 05/03/2012 - 18:37 | 2395408 Starving Artist
Starving Artist's picture

I'd be very surprised if Carney raised rates this year.  He's jawboning to get households to stop borrowing - remember we don't have 30Y fixed up here - combined with putting the CMHC under the OSFI where they can crack down on subprime lending at arm's length from the politicos.  When the RE implosion really gets going in Toronto and Vancouver, there's no way he's going to be able to raise rates, it's already started and it's going to be a mess.  FIRE is about 20-21% of our GDP and the govt is already on the hook for $600bn in mortgage insurance.

Thu, 05/03/2012 - 19:15 | 2395452 CPL
CPL's picture

Nobody said that Canada wouldn't get it's ass handed to it.  If taking notes over the last four years, it's any country with a central bank.

 

Wait for the coming news on the OTPP being short in unfunded liabilities...The NBTPP is short 1.6 billion right now and they just started on the books.

Thu, 05/03/2012 - 19:42 | 2395485 jimmyjames
jimmyjames's picture

Soon the'll have to start raising rates like they're doing in Canada:

*************

Raising rates doesn't always translate into the long end of the curve reacting the way they want-

The long bonds stymied Greenspan and they very well could in Canada or anywhere else-

http://bit.ly/s86T8y

Thu, 05/03/2012 - 22:45 | 2395757 Sam Clemons
Sam Clemons's picture

Just like Japan has had to?  Once you reach the zero-bound, there is nowhere to go.  Can't go up or down.

Fri, 05/04/2012 - 00:01 | 2395845 jmcaule4
jmcaule4's picture

Like Zero Hedge? King World News?

Want to know when to expect the next round of QE?

Is it a good time to be long stocks? What about gold miners?

http://jmcaule-whatimlookingatrightnow.blogspot.ca/

Thu, 05/03/2012 - 18:22 | 2395374 i love cholas
i love cholas's picture

what a babe

Thu, 05/03/2012 - 18:27 | 2395387 rocker
rocker's picture

Even her name is sweet "Deirdre".   

Thu, 05/03/2012 - 22:34 | 2395741 Odin
Odin's picture

yeah....I`d definitely go long on her treasuries...

Thu, 05/03/2012 - 18:22 | 2395381 lolmao500
lolmao500's picture

And it should be nuked from orbit.

Thu, 05/03/2012 - 19:43 | 2395486 Quisat_Sadarak
Quisat_Sadarak's picture

That's right, it's the only way to be sure.

...F**kin-A...

Thu, 05/03/2012 - 21:35 | 2395647 Yes_Questions
Yes_Questions's picture

 

 

Let's put him in charge.

Thu, 05/03/2012 - 18:23 | 2395383 rocker
rocker's picture

The FED is: "The Banking Cartel"  owned and run by the "Ruler of the World" called  "Goldman Sachs".

 

Thu, 05/03/2012 - 18:25 | 2395384 cherry picker
cherry picker's picture

During the Holocaust, the Nazis extracted gold fillings.  Jewlery was taken.

If Gold is worth anything, they will take it so you will still have nothing if you can't keep it.  If you find some in the ground, you have the same problem.  If gold becomes a standard, only the few will have it leaving the poor slob out in left field, the same place he is now with fiat.

So what benefit is gold to the 99%, except for the fact their fillings may pay for their funeral or shorten their timeline?

Thu, 05/03/2012 - 18:27 | 2395391 lolmao500
lolmao500's picture

In the Soviet Union, if they only THOUGHT that you had gold, they tortured you till you gave it all... but if you didn't have any, you were screwed...

And if you gave it all too quick, you were screwed too because they thought you had more.

The way to get out of it was to give enough at the right time so they believed you gave it all up... then they released you...

Thu, 05/03/2012 - 18:51 | 2395423 gmrpeabody
gmrpeabody's picture

Russian life seems complicated, at best.

Thu, 05/03/2012 - 21:17 | 2395614 savagegoose
savagegoose's picture

i hear thats how it worls in  ivory coast too. ruthless assholes are the same every where.

Thu, 05/03/2012 - 21:59 | 2395688 dogbreath
dogbreath's picture

you mean you know someone they released, I thought none were released.

Thu, 05/03/2012 - 19:20 | 2395456 juslen
juslen's picture

Very few people own physical gold, hell, I probably own more gold than the average person who makes 20x my income. If gold becomes money, people who have valuable skills will work for gold just like they work for fiat dollars. Money is a medium of exchange, stockpiling gold because it's shiny doesn't do you much good, it has to be exchanged for other things of value. So anyone who has gold will simply offer you gold for whaterver valuable produce or service you can provide. Gold would be circulated as money just like silver dimes and quarters were pre 1965. Imagine that, people will actually have to EARN real money once again. Anyone who holds large amounts of gold has accumulated that gold precisely because they realize fiat currencies will be inflated to their "intrinsic" value which is 0. Get off your ass and buy physical gold and silver, trade your fiat for real money and quit bitching.

Thu, 05/03/2012 - 20:04 | 2395521 Quisat_Sadarak
Quisat_Sadarak's picture

All very true Juslen, but what happens when TPTB re-instates executive order 6102 again:
http://en.wikipedia.org/wiki/Executive_Order_6102

If the fit-hits-the-shan, my guess it that they will come knocking on your door and demand that you hand the gold over, and hand you back fiat and then once they have all the gold, they can begin devaluing fiat again. We have been already seen this movie.

Perhaps the TSA will enforce this with their newly purchased 450MM 40-cal hollow point bullets they just purchased. ;-)

See here

Thu, 05/03/2012 - 21:22 | 2395620 Paul Atreides
Paul Atreides's picture

I have NEVER seen any records of anyone being convicted for breaking EO 6102. The turn in was mostly voluntary, if you or anyone finds any record please post the link as I am sure we would all like to read it.

Thu, 05/03/2012 - 22:34 | 2395720 Pegasus Muse
Pegasus Muse's picture

Go ahead.  Reinstate it.  There's plenty of folks who'll say, "If you can take it, it's yours".

http://www.youtube.com/watch?v=0X_JuKcjmf4&feature=endscreen&NR=1 

http://www.youtube.com/watch?v=OQnU1t7UzgM&feature=related

Don't tell Homeland Security but 40 cal. hollow point ain't gonna cut it.

Fri, 05/04/2012 - 03:28 | 2395994 AustriAnnie
AustriAnnie's picture

Even if they convict people, they have to catch you first.

They can't even stop black market trade in prisons under extreme surveillance and control.

The black market will never be eliminated.  Ever.  Period.

Thu, 05/03/2012 - 22:08 | 2395705 MeelionDollerBogus
MeelionDollerBogus's picture

What happens is a new era of Al Capone and immigrants to Canada. The USA would financially collapse like Americstan the eastern-bloc soviet nation.

Thu, 05/03/2012 - 22:25 | 2395730 Seize Mars
Seize Mars's picture

I don't think that there will be a door-to-door gold confiscation. It's too risky, when they could just seize various ETF holdings and mining company assets. Way easier and practically risk free.

 

Fri, 05/04/2012 - 05:33 | 2396060 Ar-Pharazôn
Ar-Pharazôn's picture

too risky for who? for the police officer coming to you perhaps, but do you really think that the "elite" is really caring about the life of a slave police officer?

Thu, 05/03/2012 - 22:35 | 2395746 brettd
brettd's picture

When TSHTF, and BHO calls out the National Guard...

will Haley Barber and Rick Perry's guards comply?

Fri, 05/04/2012 - 00:18 | 2395865 Beam Me Up Scotty
Beam Me Up Scotty's picture

If I can't have it, neither will they. I'll dump it into the bottom of a lake.

Thu, 05/03/2012 - 22:06 | 2395700 MeelionDollerBogus
MeelionDollerBogus's picture

Many more gold-holders, many Jews, got out with a golden-handshake. Many Nazi officers were willing to take a bit of gold to pretend no Jew was passing through.

Call it Ninjits-jew if you want but it proves the true purchasing power of gold - it's not just money, it's also your passport.

Thu, 05/03/2012 - 18:26 | 2395386 Comay Mierda
Comay Mierda's picture

VXX about collapse, SPX heading toward $1500.  the squid manipulation will continue.  you all are insane if you think it is going to stop.  at least gold will benefit from this too.  once it breaks out of its inverse H&S pattern it will rocket up to $2000

Thu, 05/03/2012 - 18:53 | 2395429 gmrpeabody
gmrpeabody's picture

And you've placed your bets accordingly... right?

Thu, 05/03/2012 - 19:26 | 2395464 Comay Mierda
Comay Mierda's picture

when VXX crosses 15.80 on volume, my put orders will trigger.  and i already own a bunch of gold

Thu, 05/03/2012 - 22:01 | 2395690 MeelionDollerBogus
MeelionDollerBogus's picture

Doubt it! If you want to do a high-yielding play on SPY try options. Be wary of course. Look this up& crunch some numbers: contract time > 120 days remaining, SPY call and VXX call.

VXX goes down fast when SPY goes up, almost a 4.2x ratio (log vs log).

Right now markets are rolling over, it could be hard. If the roll-down isn't stopped the VXX call will make you a bundle. If you'd like a better ratio perhaps FAS instead of SPY would suit you to the upside - the magical trampoline put under the market.

dow price prediction ivars zerohedge tfmetals adjusted

Thu, 05/03/2012 - 22:09 | 2395707 Comay Mierda
Comay Mierda's picture

lol you think the market is going to rollover? i got two words for you - facebook ipo. market will be choppy but in an upward direction until this deal is through.

Fri, 05/11/2012 - 03:57 | 2416432 MeelionDollerBogus
MeelionDollerBogus's picture

So, looks like the market is rolling over and oil with it as per my calculations.

2012 03 26 dow vs oil | Flickr - goldpricemodel

2012 05 03 oil vs dow | goldpricemodel

VXX since May 3rd is up 4% but has been higher, a peak of +10.6% on may 10th at 10:25 am of 18.30

Thu, 05/03/2012 - 18:27 | 2395388 Stackers
Stackers's picture

So the Fed is like Blade 2 The Movie ???

Thu, 05/03/2012 - 18:38 | 2395411 SheepDog-One
SheepDog-One's picture

Yep, basically. 

Thu, 05/03/2012 - 18:27 | 2395389 DoChenRollingBearing
DoChenRollingBearing's picture

FOFOA has written that fine art shares certain positive characteristcs with gold.  People WANT it.  Wealthy people own most of the good stuff.  Fine art (through time) preserves its value, as can be seen by the painting that just sold.

Gold, however, gives you liquidity and high value in very little space.

fofoa.blogspot.com

Disclosure: I am not FOFOA, but do contribute to his blog.

Thu, 05/03/2012 - 18:31 | 2395396 dick cheneys ghost
dick cheneys ghost's picture

Gold, Art and Land.............

Thu, 05/03/2012 - 20:36 | 2395496 hedgeless_horseman
hedgeless_horseman's picture

 

 

Wealthy people own most of the good stuff.

Ah, reminds me of coal-seam trusts.

Today, if you want paper, consider Reg D private placement offerings of local businesses that...

  1. have a proven management team
  2. have the ability to rapidly increase prices
  3. have a short collections cycle
  4. whose customers are not reliant on credit
  5. whose supply chain is short and robust
  6. do not have a public offering as their only exit strategy
  7. et cetera and so forth...you know the DD drill people.

As an example, small companies that make oil field tools have been a good investment in Texas for the last several years.  Coming to a shale play near you?

Thu, 05/03/2012 - 21:12 | 2395600 margaris
margaris's picture

1) Our gold was created billions of years ago in supernova "explosions". Its value is derived by its scarcity and beauty.... (if gold were dark brown and stinking it may not have worked)

Many civilizations on different continents came to this conclusion that gold is special.

2) Our Land is what feeds us and gives us a place to live. Everthing is done on land. Undeniable value.

3) But art?

I dont agree with art. Who decides the value of art?

Can I at least create my own art? And then con some rich people into paying me millions for it, because it "defines the new era of spungiflixbarglanism" ?

Art is like fiat money. It has the same principles of make-believe and mostly NO intrinsic value (except if created with valuable materials, or because it is hundreds of years old and a relic of lost times).

So dont mention it near real valuable things like gold, land, science etc... 

Most art is shit. I myself could create shitty art, and with a little luck after my death some idiot club deems it extremely valuable.

This very possibility makes it very FIAT and SUBJECTIVE to manipulation.    

Real value does not have those attributes.

Fri, 05/04/2012 - 06:27 | 2396075 Sathington Willougby
Sathington Willougby's picture

Art's a status symbol, like a cell phone or car.  It takes skill and talent to make those things but they have a shelf life and some have dubious value.  You can't deny the talent of the master's.  Modern art where some hippie pastes trash and bubble gum is what you're describing.  It's not even shit, it's f grade art.  Art by F students.  Fart.

Thu, 05/03/2012 - 18:34 | 2395404 Manthong
Manthong's picture

I like my calimari rings the size of mine hauler tires.

http://i48.tinypic.com/2i2beac.jpg

Thu, 05/03/2012 - 18:38 | 2395409 JR
JR's picture

Central planning has trumped individual rights and, as a result, will destroy long-term world economic growth.

The Chinese dictators are working with the U.S. and allowing economic growth because they need the U.S. relationship; if that dims, then the totalitarian hammer will strike again in China. The reason: there is no guarantee the people of China are the Chinese government. Contrary to the prognostications of some world economists, China will not lead the world in economic opportunity and growth.

The strength of America centered around two words – inalienable rights. That’s what’s different between China and the America that created the American Dream. There can be no Chinese Dream or a continuation of the American Dream without inalienable rights.

Neither Chinese nor American government-metered opportunity, with universities engaged primarily in the business of "marketing social status," affords the freedom to seek the Constitution's God-given rights of life, liberty, and the pursuit of happiness that allow individuals to choose exactly how they will undertake anything they wish to do in this life, provided the rights of all others to do the same thing are protected.

The idea behind the American government and the U.S. Constitution was as Jefferson said, rights given by the Creator.  In all other major governments throughout history, the Government gave out the rights. The protections of all the provisions in the Constitution and Bill of Rights relate to these God-given inalienable rights.  Ours was a contract society, protected because of those rights.

If you want to know what’s going to happen to China in the future you can observe what is happening to the U.S. today.  The removal of our rights is beginning to hamper U.S. growth.  Those same restrictions eventually are going to shut China down because the rights of individuals will interfere with what the rulers want.

The United States’ manufacturing base and the inventions and the sales…and all those things our multinational corporations gave China are nothing compared with giving up what made those things, i.e., the protection of man’s inalienable rights so that individuals could invent and grow on their own without their property and efforts being taken by government at a certain point.  To give that up -- and China never had it -- means China doesn’t have a chance to grow like our Founder’s America that birthed  the American Dream, and its miraculous economic growth.

China is not a free country. There’s an example currently playing out in the world arena regarding Chinese freedom – that of blind dissident Chen Guangcheng who’s been  through intimidation, beatings, jail, and extralegal house arrest.  His plea: “Let me leave China!”

The U.S. has dropped to 9th place in the Heritage Foundation/WSJ 2011 Index of Economic Freedom.

Thu, 05/03/2012 - 18:55 | 2395435 Dapper Dan
Dapper Dan's picture

The strength of America centered around two words – inalienable rights.

JR, great stuff, cogitative, cerebral and concise.

New bumper sticker,

The Strength of America = Inalienable Rights!

 

Fri, 05/04/2012 - 02:54 | 2395979 Oh regional Indian
Oh regional Indian's picture

Enjoy and try not to weep.

http://www.civil-liberties.com/books/main.html

ori

Fri, 05/04/2012 - 04:29 | 2396041 Clashfan
Clashfan's picture

Or embrace the future. Once re-educated, we won't be as disturbed by all of this: http://www.infowars.com/alex-jones-pentagon-prepares-re-education-camps-...

Fri, 05/04/2012 - 05:50 | 2396066 Ar-Pharazôn
Ar-Pharazôn's picture

mmmmm alex jones? the one abut extra dimensional reptilians taking over the world? yeeeeeeeeeeeah hahhahahahahahhahahahahahahah

 

go elsewhere with your jokes

Fri, 05/04/2012 - 06:21 | 2396074 Sathington Willougby
Sathington Willougby's picture

One eyed 4D ET's?  Sounds like a job for Krugman.

Fri, 05/04/2012 - 13:27 | 2397457 Clashfan
Clashfan's picture

I think you have Jones confused with someone else, Pharazon. He has never said any such thing.

Thu, 05/03/2012 - 20:08 | 2395527 Quisat_Sadarak
Quisat_Sadarak's picture

That's a well thought out assessment. I agree completely.

Thu, 05/03/2012 - 22:49 | 2395765 brettd
brettd's picture

Thats the most encouraging thing i've read in two months.  Thank you.

Fri, 05/04/2012 - 00:24 | 2395870 Big Slick
Big Slick's picture

Complete clarity, JR!  The dog wags its tail - not the other way around. 

Not sure about the encouraging part above... I don't see big moves in the unalienable rights department for a while.

Giving thumbs up to JR and any post associated with it!

Thu, 05/03/2012 - 18:45 | 2395421 DavidPierre
DavidPierre's picture

 

"SOMETHING" is too big to bail!

 

Too big to fail, everyone has heard this one just like too big to bail. Spain, during this year, 2012, will need to be bailed out.  In effect they already are being bailed out by the LTRO and the 3+ Trillion $ ECB balance sheet.  But can they really be bailed out?

Yes ... maybe no.

Spain is a walking financial zombie and the 12th largest economy in the world. Their banking system is multiples upside down compared to the U.S. because their real estate bubble is multiples of the USSA if you can believe it.  The bubble was blown by credit provided by a largely unregulated banking system and now, these bad loans just sit on the books of dead banks that cannot be buried without causing a chain reaction of bankruptcies.  Their unemployment rate is over 24%, probably much higher in truth and the economy is shrinking and in recession.

Propping them up or bailing them out is merely throwing good money after bad while austerity is also not an option because outright default would follow.  They are the definition of too big to bail.

Spain will require north of $1 Trillion.  They are Greece times 10 and cannot be ring fenced.  Or can they?  If you grasp the term "QE to infinity", then you can understand that anything and everything will be done (printed) to avoid a Spanish collapse.   Their situation is so big and so bad that the danger is that the market place will finally get slapped in the face with reality.

It is not that the ECB, with help from the Fed, cannot conjure up enough magic money, they can.  The problem is perception or the view down the road.  If Spain gets bailed out, then it is on to Italy and then newly socialist France. The bond markets will, already has, seen this and the biggest bull market in bonds in all of history will panic.  The logical progression, Greece then Spain then Italy/France (while putting out Portuguese and Irish fires along the way) will spread to Britain, Japan and the U.S.. The logical thought process ends up being "can the U.S. bail itself out"?

This chain of progression will not last with each sovereign being bailed out one by one, I don't believe it possible.  Not that the central banks won't try, they will, but somewhere along the way (Spain?) the market will figure out that there is no end to the bailouts because there cannot be.  Hand in hand with this is the fact that as you get bigger up the chain, the bailouts are multilples larger until the you reach the U.S. which by definition cannot "bail out itself". 

Do you see the problem of logic and why, long before the end of the chain is reached, that bond market participant will mutiny?  Catch 22 or whatever you want to call it, ALL central banks will hyperinflate in their efforts to prop up sovereign bond markets to keep the system alive.

Maybe Spain is not "too big to bail", maybe it is Italy, Britain or Japan. 

SOMEONE, SOMEWHERE IS "too big to bail". Not from a mechanics standpoint because any amount of Dollars, Euros Pounds etc. can and surely will be created to keep the game going.

Look at it from the standpoint of the average mind.  Once it grasps what is happening and HAS to happen, then and only then is the "game" truly over.  Once we reach this point, you will not need to ask "is this it"?  No, you will know without a shadow of a doubt that "this is it".

It is quite simple, Jim Sinclair's call of a "gap" market to $3,000 Gold (bank holiday?) will tell you all you need to know.  Whether it is within days or weeks (making Sinclair's call one of the greatest in history) or later this year or some time the next, the GAP is going to hapen as sure as the Sun will rise tomorrow.  A huge gap is mathematically carved in stone because a panic out of the global sovereign debt bubble will happen. 

You do not need to be wearing a tin foil hat to think this one through.  Once it is grasped that sovereign debt is not only "not safe", but hugely risky, where does the "money" go? Where will FEAR drive it?  Money will be driven by fear to where it has always gone throughout all of history, Gold.  Not rocket science, so easy, even cavemen did it!  Maybe not cavemen but you get my drift.

The only things in question are when and what. When will it happen and what will be the catalyst.

Spain is surely a likely candidate for what (as is a newly socialist France), very soon is a likely guess as to timing because each problem is getting bigger and bigger, harder and harder to hide. 

Spain or someone else?

Next week or next year?

Does it really matter? All that matters is that you know for sure where the road ends.

It ends with Gold being fully remonetized back into the system and hopefully with you owning as much of it as you can possibly afford!

http://www.lemetropolecafe.com

Thu, 05/03/2012 - 18:49 | 2395422 skepticCarl
skepticCarl's picture

Didn't he play "Lurch" in the Adam's Family?

Thu, 05/03/2012 - 18:54 | 2395427 Acorn10012
Acorn10012's picture

You rang?

Thu, 05/03/2012 - 19:05 | 2395424 ebworthen
ebworthen's picture

The FED is the enabling Parent to a dysfunctional addiciton riddled brood of bastards (banks);they own a plantation with us plebians as the slaves.

Thu, 05/03/2012 - 18:53 | 2395426 Acorn10012
Acorn10012's picture

Ass-Munch! Glad I got that out of my system.

The babe is sweet.

Thu, 05/03/2012 - 18:56 | 2395437 zerotohero
zerotohero's picture

babe is sweet tis true - expensive as well.

Thu, 05/03/2012 - 19:33 | 2395459 NuYawkFrankie
NuYawkFrankie's picture

Geez - what's with the hyperventilating with you guys?   "Babes" like that are a dime-a-dozen in my neck o' the woods...  Y-a-w-n.....Zzzzz......

On another note: did Jim Grant borrow that Coco-the-Clown outfit off Jim Rogers - or maybe join  a travelling circus?

 

Thu, 05/03/2012 - 19:33 | 2395471 Likstane
Likstane's picture

Women like that name their own price in my neck o' the woods.  Maybe it's time to leave the forest. 

Thu, 05/03/2012 - 20:40 | 2395558 donsluck
donsluck's picture

A perfect example of marginal advantage. The cornerstone of trade. Value is achieved through transfering what is common in one location to where it is scarce. It even works for people. For example, the world over recognizes Americans as the best husbands, and American females as the worst wives. Expensive indeed!

Thu, 05/03/2012 - 22:28 | 2395735 Seize Mars
Seize Mars's picture

Is it me or does she look a lot like Jenna Jameson?

Fri, 05/04/2012 - 11:26 | 2397029 kekekekekekeke
kekekekekekeke's picture

lol maybe by divorced loser American guys

Thu, 05/03/2012 - 19:39 | 2395479 zerotohero
zerotohero's picture

redneck in the woods plays with own flute.

Thu, 05/03/2012 - 21:15 | 2395611 Acorn10012
Acorn10012's picture

I'll concede she's no Hillary Clinton, but I'd still give her a pearl necklace. Maybe I'm just (sl)easy.

Thu, 05/03/2012 - 18:54 | 2395430 PaperBear
PaperBear's picture

There's a special cell in the FEMA internment camp for this guy.

Thu, 05/03/2012 - 18:54 | 2395433 zerotohero
zerotohero's picture

no ticky no laundry - hold gold and silver - when China lands hard the impact will rock us all.

Thu, 05/03/2012 - 18:57 | 2395439 Shadowsil
Shadowsil's picture

Find out who bought the SCREAM and you might be onto who sold the market May 2 2012 for everything they had?

The 54 seconds of sell sell sell

I would think they need that money asap to pony up for pretty pictures like this thing..

Just an observation..

Thu, 05/03/2012 - 18:58 | 2395440 Freeskier
Freeskier's picture

"Communism is when you are starved.  Fascism is when you are dinner." - Freeskier

http://freeskierpov.weebly.com/

Thu, 05/03/2012 - 19:10 | 2395449 Wakanda
Wakanda's picture

Nice to see both Jim Grant and Ron Paul, two of Ben's biggest detractors, get some quality facetime on the tube today.

Are the sheeple being prepped for something?

Is it possible something revolutionary, a real change is being introduced?

Nah...

I've had too many beers...

Thu, 05/03/2012 - 21:54 | 2395678 Treason Season
Treason Season's picture

Paul recenty warned of a false flag.

Fri, 05/04/2012 - 11:27 | 2397033 kekekekekekeke
kekekekekekeke's picture

this summer's gonna be hot hot hot

Thu, 05/03/2012 - 19:21 | 2395455 Solonsays
Solonsays's picture

We need to stop blogging about the problem we know about and start blogging about what to do about it.  A one penny fee charged on every dollar of leverage used by the financial community for the privilege of using leverage can eliminate the entire budget deficit.  Why not tax leverage, the food of the vampire squid, before taxing honest wealth created in the organic economy.  Leverage is artificial capital and no one’s wealth.  Blog this demand and maybe we can get a wave cheer going. www.solonsays.com

Thu, 05/03/2012 - 20:03 | 2395519 wisefool
wisefool's picture

I like where you are going with this. A consumption tax instead of a labor based tax.

Thu, 05/03/2012 - 20:04 | 2395520 Withdrawn Sanction
Withdrawn Sanction's picture

Interesting idea....

Leverage, however, is not capital (artificial or otherwise).  It's just OPM (other people's money).  It's credit, borrowings, deposits, call it what you will, but dont call it capital.  It is in fact anti-capital and puts the firm that employs a lot of it that much closer to insolvency than a simiar firm that uses less leverage.  And it does precisely because it is not capital.

Thu, 05/03/2012 - 20:21 | 2395537 Everybodys All ...
Everybodys All American's picture

It's not a bad idea.  Niether is term limits on politicians. Probably need term limits first before one can get something like this passed.

Thu, 05/03/2012 - 21:12 | 2395605 donsluck
donsluck's picture

Term limits is like making it illegal to be a dentist for more than 8 years. Why would any constituency want to shoot themselves in the foot by eliminating their representatives just when they start to have influence?

Thu, 05/03/2012 - 21:42 | 2395657 New World Chaos
New World Chaos's picture

Because power corrupts.

Fri, 05/04/2012 - 11:27 | 2397035 kekekekekekeke
kekekekekekeke's picture

NEWSLETTER :@

Thu, 05/03/2012 - 20:28 | 2395541 no cnbc cretin
no cnbc cretin's picture

Yes, stop blogging, stop watching a CPU, and rise up. People need to take to the streets. America has become the frog in the pot of water, set to boil, it to death.

Thu, 05/03/2012 - 19:24 | 2395460 Temporalist
Temporalist's picture

For what it's worth, I thank Bloomberg news for actually having the balls to sue the Fed and put on opposing viewpoints.

Thu, 05/03/2012 - 19:26 | 2395463 km4
km4's picture

Goldman Sachs May Play Pivotal Role in American’s Fate - Bloomberg http://bloom.bg/IJPSDg

Doom......

Thu, 05/03/2012 - 19:31 | 2395468 Likstane
Likstane's picture

This is the second time I've heard Jim call Bernanke as "bernarky".  HAHAHA.  I wonder if he does it on purpose?

Thu, 05/03/2012 - 20:11 | 2395532 wisefool
wisefool's picture

Kudlow and the CNBC crew jumped on  "the bernank" nomenclature right after the zerohedge silver bears years ago.

Our new rally must be around "Timmay"  and his yankee white SS squad. Hopefully Obama wont be so arrogant to put a tax cheat incharge of the IRS for his second term.

Thu, 05/03/2012 - 20:29 | 2395543 no cnbc cretin
no cnbc cretin's picture

Kudlow and the CNBC -- They SUCK!

Thu, 05/03/2012 - 20:45 | 2395566 wisefool
wisefool's picture

Yup. one of the last things I remember about CNBC was when Joe K, Sorkin and Michelle C^2 interviewed Buddy Roemer. After the interview, they could not refute any of his points, so they said "He's got a Harvard MBA, but not a Harvard MBA like we all have"

Kinda most people with their taxes. You cheat you go to Jail. Timmah cheats, they put him in charge.

Thu, 05/03/2012 - 19:35 | 2395473 Strike Back
Strike Back's picture

Swear to Christ, I have an unnatural fear of squids. 

Thu, 05/03/2012 - 19:42 | 2395482 zerotohero
zerotohero's picture

They should at least make each Fed Head go five rounds in the cage with Anderson Silva - he at least earns his money honestly and would knock their egos into the stoneage.

Thu, 05/03/2012 - 19:46 | 2395495 NotApplicable
NotApplicable's picture

This makes the BIS ...?

Thu, 05/03/2012 - 19:50 | 2395500 l1b3rty
l1b3rty's picture

oh the good ole fed, that public private endeavor as stated by our torch bearers in Academia.

 

http://silvervigilante.com

Thu, 05/03/2012 - 20:10 | 2395531 Withdrawn Sanction
Withdrawn Sanction's picture

...torch bearers in Academia.

Well certainly instigated by a pseudo-academic and former president of Princeton, all around bigot and bankster boot-lick Woodrow Wilson.  Funny, the bernank was also at Princeton...something in the water in NJ makes people go all statist, or what?

Thu, 05/03/2012 - 21:40 | 2395653 wisefool
wisefool's picture

Dont forget UChicago where former SEC-TRES Hank paulson is now, after they "forced" him to become treasury secretary and he "had" to sell his positions, so naturally he was exempt from taxation.

These are the people that are educating our youth.

Thu, 05/03/2012 - 20:09 | 2395528 Dr. Gonzo
Dr. Gonzo's picture

What would we ever do without Central Planners and Central Bankers always their the "help" us? Always at the ready to lend us money (with interest and title to our property of course) from a key stroke on their computer in their ivory towers. Why thank the Good Lord it's illegal for people of the world to use any thing other than THEIR synthetic irredemible money to conduct our personal and public business in. 

Thu, 05/03/2012 - 20:23 | 2395539 no cnbc cretin
no cnbc cretin's picture

They should all be put in prison, GS, WS, the FED, Congress, and Repugs.

Thu, 05/03/2012 - 20:26 | 2395540 insanelysane
insanelysane's picture

I disagree to a point.  No one noticed the point of no return when we passed it some time a few years ago but I believe all central bankers realize that the "modern" world has passed the point of no return.  The point of no return being that all countries combined have borrowed more money than the amount of money available in the world for borrowing.  With this realization, the central banksters will ease, twist, and print together for as long as they can.  I believe that this can go on longer than most of us at ZH think.  The collapse may not occur for decades.

Thu, 05/03/2012 - 20:31 | 2395545 JohnKing
JohnKing's picture

Muppet Nation.

Thu, 05/03/2012 - 20:32 | 2395547 Change-In-Trend
Change-In-Trend's picture

TIME CYCLE ANALYSIS

  • We have been down day the last couple of days as the cycle progression chart forecasted which has enabled me to close my short position at a small gain after sideways consolidation.

  • I have now taken a small long position into Monday on anticipation of a reversal to the upside.

  • It is now possible that the initial projection for a low into the 6-8 May time frame will now be a high. 

  • The low was initially projected after analysing the individual stock & ETF cycles within the context of a Gann Master Cycle which i do not show. 

  • WD Ganns cycle also appears to have inverted and is now in confluence with the other individual cycle progression charts for a high into this timeframe 6-8 May.

  • With French elections over the weekend the iShares MSCI France Index EWQ is showing strength into 7-8 May.

  • Here in Australia the recent interest rate easing by the RBA is an indication that they want inflation. Generally the Australian government is no different than any other in terms on manipulating official interest rate figures, however in Australia with the economy propped up by the mining boom and overseas investment in this industry, interest rates have historically remained high when compared to other developed countries. Therefore the RBA has had no need for quantitative easing as a means of lowering interest rates, the RBA have just lowered them and the banks have drip fed easing through to households and businesses. So what's my point, well the doctored CPI figures are contrary to energy, food and clothing inflation that is beginning tot take its toll on households. Lowering interest rates will only stimulate more spending thus increasing price inflation. So it is of my opinion that we are moving into the final stages of a stock market fuelled by global inflation in commodities, so for the time being it may well be worth switching to energy stocks which at the height of inflation may well turn parabolic.
  •  

    https://www.dropbox.com/sh/s22nwpm85xk9x0b/J0CPgRkShy

    To subscribe email change.in.trend@gmail.com

    Thu, 05/03/2012 - 20:39 | 2395556 bploeger
    bploeger's picture

    "

    It is unwise and inexpedient to place in the hands of a few wealthy individuals who are irresponsible to the people an immense moneyed power such as the Bank of the United States enabling it to control the commerce of the country to fix the price of labor and the value of products at their pleasure at its will to spread distress and ruin through the whole country and in a season of public calamity to control the government" -Resolution of the Georgia Senate, 1834

    Thu, 05/03/2012 - 20:48 | 2395569 hornster
    hornster's picture

    A sign of the times when so many billionaires are around that they can bid this painting up to $120,000,000, while food stamps usage is thru the roof.

    Thu, 05/03/2012 - 21:01 | 2395588 realtick
    realtick's picture

    "How does this all unwind", Deirdre asks.

    In a devastating debt-demolishing deflationary depression:

    http://i49.tinypic.com/bi8r48.png

     

    Thu, 05/03/2012 - 21:11 | 2395602 penisouraus erecti
    penisouraus erecti's picture

    Where is the obligatory Krugman response......

    Thu, 05/03/2012 - 21:32 | 2395634 Sweatyfingers
    Sweatyfingers's picture

    Talented photography.

    Thu, 05/03/2012 - 21:34 | 2395641 UP4Liberty
    UP4Liberty's picture

    When Ron Paul becomes our next president, he should nominate Jim Grant to be the head of the US Treasury.  Eliminate the ESF, and then abolish the Fed.  Thank you.

    Thu, 05/03/2012 - 21:42 | 2395659 dolph9
    dolph9's picture

    I've never seen so many sheeple bystanders in one clip like this.

    Thu, 05/03/2012 - 22:00 | 2395689 hellas4life
    Thu, 05/03/2012 - 22:10 | 2395709 cherry picker
    cherry picker's picture

    I am finally going to do something about this problem we all face, and I am not going to buy gold as it cost too much in fiat dollars and I am broke.  I think I am going to make some money the same way Bernanke makes it.  After all, if he can, why can't I?  :)

    Thu, 05/03/2012 - 22:27 | 2395728 wisefool
    wisefool's picture

    Dont do it. You will come face to face with his underling timmah and his respective lords of the cartegena underworld. Many people dont know this, but Timmay was in charge of the NY Fed and the illuminati hacked his copy of turbotax.

    Thu, 05/03/2012 - 22:35 | 2395742 bugs_
    bugs_'s picture

    everybody is using this term "vampire squid"

    Fri, 05/04/2012 - 07:32 | 2396124 TheMerryPrankster
    TheMerryPrankster's picture

    I even saw the term "vampire squid" used in an article by some guy named Matt that was in the Rolling Stone magazine.

    Thu, 05/03/2012 - 22:49 | 2395768 RoadKill
    RoadKill's picture

    Thought you guys would appreciate this - its my investment thesis for the rest of 2012.  I wrote it for a couple of investing buddies of mine.

    XYZ and I were talking earlier about the jobs report tomorrow and why its a big deal for stocks.

     

    My hypothesis is that the jobs data we got in December, Jan and Feb showing 250k jobs added per month was complete BS.  It was the result of taking historical seasonal adjustments and using them to modify numbers that were the result of the warmest winter on record.

     

    You have to realize that in the winter months the economy ALWAYS sheds jobs - particularly in construction.  The BLS uses an estimate of how many jobs are "normally" lost to seasonality and adds those back.  For example in Feb 2012 government data actually showed 140,684,000 people working, but the government reported it as 142,065,000 "Seasonally Adjusted".  That’s an addition of 1.4mm jobs.  So when the government says 240k jobs were created "seasonally adjusted" in Feb 2012 - we are really arguing about whether their adjustment factor is right or not, because its 6x greater than the reported jobs number.

     

    Anyway, IF I am right then there will be payback over the next few months as the BLS seasonally adjusts its numbers the other direction.  IE in April, May and June the seasonal adjustments are negative and so the government will be subtracting too large of a number.

     

    IMO this has happened in both of the last 2 years.  In 2010 we added 944k jobs in March April and May and then lost 303k in June-Sept.  In April and May, this, combined with fears of a Greek default, led the SPX to go from 1,200 to 1,000.  In 2011 we added an average of 239k jobs in Feb, March and April followed by only 80k a month May-August.  Again the SPX fell from 1,365 to 1,100 (again aided by Greek default fears).  So I am betting that if we post a bad number tomorrow, the big money managers will get scared that what happened last year and in 2010 is going to happen again and they will all run for the exits.  And since this run up has been on no volume, there will be no one around to buy either.

     

    The other thing XYZ and I talked about were earnings.  IE why would the market go down if companies were beating estimates and earnings were rising.  A couple of points.  First, companies were massively beating estimates in both 2010 and 2011 and the market still corrected 20%.  For example, the market sold off in April and May of 2010 but the SPX posted 132% YoY EPS growth in Q1, 46% in Q2 and 32% in Q3.  In 2011 the market sold off April – August.  Q1 EPS was up 23% YoY, Q2 13% and Q3 16%.

     

    In fact this will work for us this time.  EPS growth has DRAMATICALLY decelerated.  0% in Q4 and 3.8% in Q1.  You are hearing about a lot of beats, but in actuality the beat rate is just a bit above the 10 year average and the size of the beats is not huge.  Analysts expected Q1 EPS to be up 1%.

     

    While estimates for Q2 are modest (+3%) analysts expect 16% YoY eps growth in Q3.  That’s unlikely for 2 reasons.

     

    First there is a great research piece out there that compares corporate profits as a % of GDP and the next 5 years EPS growth in equities.  Google it.  It basically shows that we are currently at an all-time high in corporate profits as a % of GDP and that everytime that has happened in the past you end up with 5 years of 0% EPS growth or worse.  This matches up with the fact that corporate margins appeared to roll over in Q4 of last year.

     

    Secondly, I think the fiscal cliff at the end of the year is a 300+ bps headwind to GDP next year.  I think that’s enough to throw us into a recession.  If that happens all the analyst numbers go out the window.

     

    Like I said to XYZ, in the near-term I think the market is ready for a pull back of 5%-10%.  Today we put in a VERY clear Head & Shoulders pattern for both the week and 3-months.  Support is at 1,340.  Near-term hopefully means some-time next week.  If we get a 100k print tomorrow and Hollande wins in France on Sunday.

     

    In the Medium-term I think the opportunity is for a 20% correction like 2010 and 2011.  I don’t know when that happens exactly.  Maybe it happens right now.  Maybe we rally back to 1,450 after the 5%-10% pullback and we have an exciting summer just like last years 5x round-trip between 1,100 and 1,250 (only this time between 1,200 and 1,450).  But I expect it in the “Sell in May and go away” period (May-Sept).

     

    And in the long-term I put on my tin foil hat.  I expect multiple defaults in Europe.  Portugal for sure.  Italy and Spain are >50% odds.  We will also see massive bank bailouts in every country.  TARP-esq stuff.  I also expect the Arab spring to spread to Europe this summer as 50% youth unemployment and austerity give rise to violence on the streets.  Finally Germany will pull the plug on the Euro and it will all fall apart – but that might be 2013.  EUR going to parity and maybe back to all-time lows around $0.75.  Add in a hard landing in China (<5% growth) and the fiscal cliff and you get a pretty decent double-dip recession in the US.  IF and I restate IF this is correct you are looking at a SPX under 1,000.  I think it revolves around Germany’s willingness to bankrupt its taxpayers to save the Euro and the US consumers reaction to the massive tax increases or austerity that kicks in in 2013.  Some people are really convinced that raising taxes on the top 10% will have little to no impact on the economy.  To me if we are growing at 2.2% right now with a 10% deficit/GDP then a balanced budget would have GDP falling at (7.8%).  If we kick the can another year, our ultimate problems will be FAR bigger, but maybe 2013 will mimic 2010, 2011 and 2012 – IE A LOT of volatility within a trading range that adds 100 points per year to the ceiling and the floor.

     

    Ohh and did I mention a default in Japan before 2015?  That will be really world changing.

     

    See the attached for supporting analysis.

     

    Thu, 05/03/2012 - 23:18 | 2395797 Stock Tips Inve...
    Stock Tips Investment's picture

    We have left ourselves to be manipulated. During the past 20 years, our governments have spent beyond their means. This money has funded retirement pensions, public services (including health), military spending and infrastructure spending. We have allowed the increase bureaucracy and politics involved increasingly in our lives.

    Now, to level the accounts would have to lower government spending (reduce pensions, health benefits and education and so on. Etc.) While increasing their income (plus tax).Who wants that? ... no.

    Then comes the Fed and says ... I have a solution (if only for a while). We will inject a lot of money for the government to continue spending without raising taxes. For wall street up and people feel they have greater wealth and begin to spend more. For companies with more demands for their products. Ah ... and that banks will not fail.

    Ha ha ha!!!, the ideal world. And now, who ends the play?

    Thu, 05/03/2012 - 23:19 | 2395798 Bearish News
    Bearish News's picture

    My uncle sells antique maps. Says they're an excellent way to pass down family wealth w/o taxation. The value is subjective and subject to change. I'd imagine the same is true with art.

    Thu, 05/03/2012 - 23:35 | 2395817 banksterhater
    banksterhater's picture

    Im an artist, that is a piece of CRAP crayon drawing I could do several while after 4 glasses of wine, Grant is a PIMP, delusional scumbag promoter even if he's right about the Fed, he is still a sellout pimp. That is not ART, look at Sargent's watercolors. Grant, GFY.

    Fri, 05/04/2012 - 00:11 | 2395859 indio007
    indio007's picture

    Bad advice on real estate Mrs Grant. You better get a double payout title insurance.

    Nevada "buyers" are finding out the hard way.

     

    Fri, 05/04/2012 - 00:26 | 2395872 wisefool
    wisefool's picture

    +1. Dont know how there is better prose given the context in the vidgraph.

    But I really would like this guy (Grant) to be SEC-TRES/IRS. You could negotiate without sending the tanks to the streets.

    Ron Paul 2012.

    Fri, 05/04/2012 - 00:40 | 2395878 chump666
    chump666's picture

    ah damn here it comes:

    -- Most Asian markets pressured by caution ahead of U.S. jobs data
    -- Resources stocks fall regionwide
    -- Property stocks' losses limit gains in Chinese equities

    Mad Mario and Bernanke "The insane in the membrane" will let this roll down at least 10% neg or  oil floating below 90.  Those two geniuses will try and regulate a stock sell off.  Problem is, they will lose control amidst the global economy imploding in all directions.

     

     

    Fri, 05/04/2012 - 00:56 | 2395890 Bastiat009
    Bastiat009's picture

    All that seems very good and interesting but the US$ is getting stronger everyday against gold, a currency that is losing value rather rapidly these days.

    Fri, 05/04/2012 - 01:03 | 2395894 chump666
    chump666's picture

    Asia is looking worst for wear, India is sinking, now Indonesia, BRICS take down in effect:

    http://pdf.reuters.com/pdfnews/pdfnews.asp?i=43059c3bf0e37541&u=2012_05_...

    Indo outflows. 

    America should be sh*tting it's undies, why?  It's creditors are f*cked.

    Fri, 05/04/2012 - 03:14 | 2395988 Incubus
    Incubus's picture

    Too bad you don't know about the extra terrestrials. 

     

    We'll have an entire space-faring civilization to buy our shit.  Imagine their awe when we unleash HDTV in all its glorious 1920x1080 pixels upon them.  They'll only want to buy, buy, buy;  and of course they'll need some plastic surgery to bring themselves closer to western media's definition of 'beauty.'

     

    Imagine those hawt tanned-green/gray fake n'bake alien midget girls.

    Fri, 05/04/2012 - 03:54 | 2396018 Sandmann
    Sandmann's picture

    But the New York Fed belongs to JP Morgan and Goldman Sachs so no surprise there. Without the New York Fed Jamie Dimon would not be sitting so comfortably. He is like one of Putin's Pet Oligarchs sponsored to win.

    Fri, 05/04/2012 - 05:49 | 2396065 Seorse Gorog fr...
    Seorse Gorog from that Quantum Entanglement Fund. alright_.-'s picture

    The person who bought The Scream (aka 'Oh My God! I've Got A Lightbulb For A Head?!') bought it as an investment (with the bonus of it being a work of art). It was the vogue not long ago amongst hedge fund managers and financial types who thinly veil their investment decision with a faux artistic appreciation. Well done that man anyway.

    Fri, 05/04/2012 - 08:06 | 2396166 Sandmann
    Sandmann's picture

    Hermann Goering built up quite a collection at bargain prices....but he never got to enjoy it.....

    Fri, 05/04/2012 - 11:04 | 2396958 Youri Carma
    Youri Carma's picture

    Link above worked at my end but in case if not:

    Grant on `Scream’ Painting, Fed’s `Hall of Mirrors’ http://www.youtube.com/watch?v=7rMY17sL34g

    Do NOT follow this link or you will be banned from the site!