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June 29, 2010

Issue 102  -  The Once Great USA

This country was the greatest experiment in the history of the planet.  Freedom, property rights, and the rule of law.  Sadly, these are slowly being eroded to the point of being unrecognizable.  As to why I chose my title this week, I point your attention to this sign that OUR government posted in Arizona.  No great country would ever have such a sign posted within its own borders:


Here's the accompanying story:

The Bureau of Land Management has confirmed that a total of 15  BLM warning signs were posted about a week ago on BLM land along the Interstate 8 corridor between Gila Bend and Casa Grande in Arizona (roughly 30 miles from the Phoenix Metropolitan area).

BLM also informed us that This is the same area (off I-8 and near milepost 150) where a Pinal County deputy was shot on April 30th, and where 2 bodies were found about 500 to 1,000 yards from a makeshift illegal immigrant camp  known as Antelope Pass.

Interstate 8 is far from the Arizona/Mexico border at about 120 miles by car.

Pinal County Sheriff Paul Babeu recently stated that Mexican drug cartels now control parts of Arizona .  It won't be much longer until they control the Phoenix Metro area, unless our politicians get it in gear and start reclaiming the land that they have already surrendered to drug and human smugglers.

Can you believe this?  Public officials warning citizens to not travel in one of the continental states?  How can this be?  What are we doing about it?  (other than posting signs)  Where is the tax money going?  Can you imagine this happening 20 years ago?  Me either.  This is the slippery slope we are descending at a faster and faster rate.  Now this is on the table:

Internet 'kill switch' proposed for US
By Declan McCullagh, on June 15th, 2010 (2 days ago)
government, us, internet, security

A new US Senate Bill would grant the President far-reaching emergency powers to seize control of, or even shut down, portions of the internet.
The legislation says that companies such as broadband providers, search engines or software firms that the US Government selects "shall immediately comply with any emergency measure or action developed" by the Department of Homeland Security. Anyone failing to comply would be fined.

Now, correct me if I'm wrong, and I may be, but don't we have a first amendment?  Now, with the passage of this bill, the government gets to decide, on its own terms, when the internet is "turned off."  I don't like that, not one bit.  What's next?  They decide when I can turn on the television?  Let's confiscate the mail.  Where does this end?  The ends to which this government will seemingly sink, is growing day by day.  From taxing the internet to suggesting a government takeover of 401k plans, the level of intrustion is never ending.  While at the same time, they continue to lie:

U.S. first-qtr growth revised down to 2.7 pct
WASHINGTON, June 25 (Reuters) - U.S. economic growth was slower than previously estimated in the first quarter as estimates of business and consumer spending were cut, according to government data on Friday.
In its final estimate, the Commerce Department said gross domestic product expanded at a 2.7 percent annual rate instead of the 3 percent pace it reported last month.

Don't think for a second that these "Revisions" are simple mistakes or honest oversights.  No, these are deliberate and planned.  Revisions are almost ALWAYS down.  What are the odds of the that?  Shouldn't it be about 50/50?  This is the state of the United States.   Continual erosion of rights, in this case, access to accurate tax payer funded research, and a general increase in obfuscation and misdirection.
While government grows more and more heavy handed and secretive, their oversight of the CRIMINALS on Wall Street seems to be fading into oblivion.  Another great post from

How HFT Quote Stuffing Caused The Market Crash Of May 6, And Threatens To Destroy The Entire Market At Any Moment

Even as the idiots at the SEC mope about cluelessly, confirming they deserve not one cent of taxpayer money to fund their massively overbloated budget, and should all be summarily fired to collect tarballs in the Gulf of Mexico (and soon Maine), our friends at Nanex have conducted an exhaustive analysis (must read for everybody concerned about market structure), in which they identify the various parties responsible for the market crash, and, drumroll please, High Frequency Trading stands at the pinnacle of culprits for the 1,000 point Dow drop. From their findings: "While analyzing HFT (High Frequency Trading) quote counts, we were shocked to find cases where one exchange was sending an extremely high number of quotes for one stock in a single second: as high as 5,000 quotes in 1 second! During May 6, there were hundreds of times that a single stock had over 1,000 quotes from one exchange in a single second.
Even more disturbing, there doesn't seem to be any economic justification for this. In many of the cases, the bid/offer is well outside the National Best Bid/Offer (NBBO). We decided to analyze a handful of these cases in detail and graphed the sequential bid/offers to better understand them. What we discovered was a manipulative device with destabilizing effect." In other words: enough with all the bullshit about HFT as a liquidity provider mechanism: in reality this is just a facade for the most insidious, computerized market manipulative device ever created. Nanex' conclusion: "What benefit could there be to whomever is generating these extremely high quote rates? After thoughtful analysis, we can only think of one. Competition between HFT systems today has reached the point where microseconds matter. Any edge one has to process information faster than a competitor makes all the difference in this game. If you could generate a large number of quotes that your competitors have to process, but you can ignore since you generated them, you gain valuable processing time. This is an extremely disturbing development, because as more HFT systems start doing this, it is only a matter of time before quote-stuffing shuts down the entire market from congestion.
We think it played an active role in the final drop on 5/6/2010, and urge everyone involved to take a look at what is going on. Our recommendation for a simple 50ms quote expiration rule would eliminate quote-stuffing and level the playing field without impacting legitimate trading."
We present the Nanex' full report (please focus particularly on Part 4 and the provided evidence) and urge all readers, as we have many times before, to end all stock trading activities immediately (which at the macro level are nothing but a reflection of the EURJPY trade anyway) until such time as the SEC, CFTC, Finra, and every other corrupt and captured agency finally does something about the HFT menace. Doing nothing is merely inviting certain disaster yet again, and a guaranteed market crash, which next time wipe out the entire market permanently and destroy all confidence in US capital markets in perpetuity.
I've talked about this high frequency trading before and how it's one giant scam to fleece normal investors like you and me.  This article shows how some of these firms are generating 1000es of bids a SECOND!  How does that help?  The talking heads, who are mostly on the take, speak of the increase in "liquidity" and making the markets more fluid, but there is no logical reason for this except what Zerohedge points out.  These bids are only to slow other firms down.  These tactics are just allowing the crooks to skim off pennies by the millions to fatten their profits. 
The New York Stock Exchange has recently leased space in New Jersey to these firms so they are as close to the action as possible.  These guys are talking in very tiny fractions of a second when competing with their competitors.  Believe it or not, they are very concerned about CABLE LENGTHS!  Even though electric signals travel at close to the speed of light on wires, these guys are so concerned about speed that they were arguing about locations in the building.  This was in regards to being as close to the data bus link as possible.  To eliminate squabbling, the exchange equalized all cable runs.
These high frequency traders, as the article points out, could literally collapse the market.  Remember also, that a lot of the trading done of these securities is conducted on "off exchanges."  These off exchanges can set the price of any security, so the curbs instituted in New York could be ineffective in another crash scenario.  This will, in all probability, happen in the next couple years. 
How else does the government dupe you?  How about that wonderful government program, "Energy Star?"  Well you won't be surprised to hear, it's bogus.  I bought a brand new front door and surround recently.  The Home Depot told me it was eligible for a tax credit.  I received 1/3 off from the GOVERNMENT for buying this very ornate GLASS door which was supposedly "green."  How is it possible that a glass door saves you energy?  Here's how(or not):
So this program is essentially self regulating.  Couple that with the millions and millions of dollars of rebates associated with it, including $750 for my "efficient" door, and we're left with an incredible circumstance.  Tax payer money funding nonexistent energy savings.  Well, they could be real, but because no one is checking, they could be lying too.  The energy star seal means NOTHING.
Listened to a podcast and a mortgage expert was discussing how the mortgage modifications are failing at a 70% rate!  This is truly scary as the mods are generally at VERY favorable terms.  When the mod fails, there is no option but to foreclose.  This is a giant "shadow" inventory waiting in the wings to hit the market.  This is in addition to the 8 million homes already in the pipeline.  Also, just so you don't think that the banking industry has cleaned up its act, in April, 60% of new buyers put down 6% or less.  This is NOT how mortgages are supposed to be done.  Further falls in housing prices are unavoidable.  The evidence grows stronger and stronger:
US home loan demand drops even as rates fall

NEW YORK, June 23 (Reuters) - U.S. mortgage applications fell from a six-month peak last week as the lowest interest rates in over a year failed to foster demand for refinancing or home purchase loans.
Interest rates on 30-year fixed-rate mortgages, the most widely used loan, reached their lowest level since mid-May 2009, the Mortgage Bankers Association said on Wednesday.
While low rates and high affordability helped the housing market gain ground over the past year, the sector has struggled since popular home buyer tax credits expired on April 30.
The MBA said its seasonally adjusted index of mortgage applications , which includes both purchase and refinance loans, for the week ended June 18, decreased 5.9 percent. The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was down 0.5 percent.
The MBA's seasonally adjusted purchase index , a tentative early indicator of home sales, decreased 1.2 percent, the sixth drop in seven weeks and not far from a 13-year low set two weeks earlier.
Demand is down nearly 39 percent since the tax credit expired…
As I expected, the housing market has slowed DRASTICALLY since the Obama house coupons have expired.  Couple that with the economy now showing strong signs of slowing:  (from GATA)
Baltic Dry Crashes
On May 26 the Baltic Dry Index, a key indicator of future international trade activity and the U.S. economy, closed at 4,209. Less than a month later it has collapsed to 2515, a loss of 40%. The shipping market clearly feels the world economy is on thin ice and I would hazard a guess that Europe's austerity program is a major factor here. Shippers are not looking for the US consumer to pick up the slack, either. The Baltic's slide recalls its performance in late Spring of 2008, shortly before world equity and commodities markets convulsed. This latest drop in the index is a major red flag that big, big trouble and volatility lies dead ahead. I doubt the summer of 2010 will be remembered fondly except by the shorts and gold investors.
Best wishes,
Peter R
Yet, people are being told the country is strong.  This isn't true.  This country has been dumbed down to the point of believing almost anything.  We have no hope of resurrecting this republic without properly educated citizens.  Alas, we have far too many like this from the Michael Savage show: (thanks to Linda :)
Yes, this a real call, and some are really that misinformed.  This leads me back to my favorite investment as it is the ONLY thing that will save your arse, if the stuff hits the fan.  I know it's "high", and it may very well go down, but the trend is up.  Remember the trend is your friend, and gold's trend is up.  I'll close this entry with a video you can watch when you are at your breaking point.  Watching this may make you rethink things and calm down a little, or you could end up like this guy.  Have a great week!