Will Mankind Get Lucky?

Greek-Referendum-Trafalga-009What do all nation's citizens have in common with the Greeks? The Greek people have no influence over their government's spending. Neither do the citizens of Germany, United Kingdom, France, or the United States. Why would the Greek people feel a moral incentive to pay back money that was spent without their permission?

Like the American's Greeks have never reined in government. For that they deserve to consequences of allowing their government's spending to get out of control. Still, they feel no moral imperative to impoverish themselves to support a system that does nothing but exploit them.

If mankind is lucky, the Greek referendum will begin a reckoning process and a crash of asset prices. If such a thing happens it will be after a worldwide emergency buying spree by the Federal Reserve and other central banks.

On Monday morning, all central banks will be in the save the stock market mode. Saving the stock market is not as easy as it used to be.

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Worst Period in U.S. History?

GDP_economy_DOWNThe worst period in United States history has begun. Bad times like the one we are entering, like the Great Depression and the World Wars, are caused by dishonest government policy.

Quantitative easing has destroyed the viability of the economy. From the beginning, there has been no reason to expect, quantitative easing to be of benefit to the economy. Government tampering with the financial markets began in 1987 and has continued without interruption. Faith has been placed in econometric models while such models have not once produced usable results. This has been nothing short of complete stupidity on the part of the public and wishful thinking on the part of others with more savy.

Now most Americans can expect to lose everything they own. Losses will probably accrue rapidly. Jean and I are positioned as well as possible to weather the storm. I as still 75% cash and 25% short positions and bear ETFs. I realize that even cash in this kind of situation is not all that safe but there simply are no assets that are not vulnerable to a horrific washout. It is better to fore-go a 2% return that can only be achieving by taking a chance on a 40% decline in price.

The world is over financed and clouds of stupidity are engulfing the populations of all developed countries in the world. The bottoms are going to fall out from underneath every economy in the world. The consequences of stupidity are always suffering. I am sorry. Americans have been completely stupid and are going to suffer in ways that aren’t currently fathomable,

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The Role Of Government

EconEdLink-190-the-role-of-government-the-federal-government-and-fiscal-policyDifferent countries assign different roles to government but in practice all governments do primarily just one thing. Government provides a way for super smart people to exploit the stupidity and instinctive behavior of the general population. So far a 50,000 year time line of history provides no exceptions.

Being stupid, the human animal insists its government performs the tasks with which it is assigned. Common Sense Economics is constantly right where others are wrong because institutions and people are studied according to how they functions and not according to how they are defined. Those who base their lives on euphemisms always end up disappointed.

“You can’t cheat an honest man. Never give a sucker an even break or smarten up a chump.“. _W.C. Fieldswc fileds

In the above quote, Fields adequately describes the approach of presidents, congress and just about everyone who gets elected to public office.  The public doesn’t seem to mind.


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World Series of Stock Market Manipulation

indexFirst understand these things. Quantitative easing is a political agenda not an economic remedy. Economic forecasts coming out of the Federal Reserve have been wrong 100% of the time. Greek debt exceeds the assets of the Greek banking system. Friends of the Fed trade risk free as a reward to assisting the Federal Reserve in the execution of  its political agenda.

When there is an issue overhanging the market, central banks buy with both hands for the purpose of providing confidence to investors who still believe the financial markets are largely pristine. The worst time to short stocks, therefore is on a day or days when a global financial problem is in the process of running its course. As long as Greek insolvency is in the news, do not expect the market to drop.

Prior to the resolution of something like Greek insolvency, negativity is encouraged up until a particular day. This is to draw in shorts so that their stops can be run, driving prices suddenly higher. Short positions serve as demand for stocks on a day when bad news comes out.

After a strong opening, the averages are held in a consolidation pattern giving the impression that demand will soon give way to supply. All during the consolidation short sellers take positions waiting for the inevitable decline. Instead they get their stops run again and the market moves higher with a nice white candle.

Strangely, bears still haven’t adapted. They still use traditional technical analysis which only works in a market that is largely free from manipulation. This will change but it hasn’t changed yet. Usually the only cure for stupidity is suffering. Apparently bears have not suffered enough.

When will the market crash? Quantitative easing provides profits to those with the political power to control government. That is what Fascism is and it will eventually destroy even those who are reaping its early but temporary benefits. Misery starts at the bottom rung of the ladder and then starts moving up until the ladder just collapses. That could happen any day but on any given day, chances are that it won’t.

Never short. Just take positions in bear etfs on the S&P, Nasdaq and the Russell 2000. For now do not trade on margin and only use one third of your capital for etf positions. Odds still favor the Fed’s political initiative. Having cash is a priority. The best time to buy a bear etf is on a completely sponsored day such as what occurred on Monday. The market is being manipulated and this initiative will not be discontinued. It will end when it stops working. Then the market will crash.





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Strength Of the Russell 2000

Do not be confused by the strength in the Russell 2000. For anyone who does not follow the stock market, this is an index 0f small capitalization stocks. I have explained over and over again the folly of treating the stock market as a Market.

indexThe larger the capitalization of an index, the harder it is to manipulate. The capitalization of just one of the Dow 30 components is as large as the capitalization of all of the Russell 2000 components put together.

The political agenda that determines Federal Reserve policy calls for pushing asset prices higher. The Russell 2000 is is the easiest index of all to manipulate. The first choice is always the large capitalization indexes like the Dow 30 and the Standard and Poors 500. Moving one of these indexes is like moving a boulder. Moving the Russell 2000 is like throwing a pebble. When the big indexes can’t be moved, the efforts shift to moving the next largest index, the Nasdaq 100 and then the Nasdaq Composite. If these can’t be moved, then the focus is on the Russell 2000. It is as simple as that.

When placing trades, do not be fooled into believing market direction is determined by ordinary buyers and sellers. On a day like today, the Russell 2000, closed much stronger than the lager capitalization indexes. That is not because there are better opportunities in small companies. It is because the Russell 2000 could be supported and no other reason.

The Grazin’ is Good by Curbside Jimmy, It is all about our herding nature.

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What Can Greece Do?

150129greekdebtGreece cannot pay its bills and given its current economic system cannot grow. As part of the European Union. Greeks will have to get used to being poor. The alternative is to leave the European Union, replace their government, disavow all debt from the old government and start over. This will not automatically work. The new government must guarantee a free market system. The new constitution would have to separate government from the economy. Economies fail most often because the rich take control over government and rig markets. Rigged markets are great for a few but allocate resources so inefficiently that the economy eventually collapses. In absence of preventive measures, any democracy will morph into a Fascist system. In a Fascist system small players start failing. Greece is the first in the European Union. After Greece fails the next weakest nation will follow and so on. This is the only possible outcome.

Any country can easily become an economic power simply by guaranteeing a perfect free market system. Contrary to popular belief, a free market is a poor man’s best friend and guarantees a population with very few people. That is all it takes. As of now the world has no free market systems.

Which countries are most likely to turn to free market systems? The answer is none. Why? The mass of cannon fodder of which the world is inhabited are simply too stupid.00_logo_1

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Fed Meeting Update

D36908F4AB994830BDDA5EACFA55CB19.ashxAs far as I know, I am the only economist in the world who is and always has understood that Federal Reserve policy is a political agenda only. Quantitative easing has never had the potential to right the economy. In a fair world, this kind of theft would draw a criminal penalty. Unfortunately such financial crimes are perfectly legal. This is all about transferring wealth, power, and income to the wealthiest interests in the world.

The populations of participating nations are being played for suckers which is exactly what they are. Rather than wait for the Fed announcement, we should all be waiting for the cannon fodder of the world to wake up.

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Stock Market Weakness

41FYlngQFgL._SY300_This is a reminder that when genuine weakness occurs, central banks here and around the world will buy heavily to stop any downside momentum. Big money is largely holding tight. As we all know pigs will not leave the trough while the farmer is still filling it with slop.

Cooperation within the news media has broken down slightly. AP is putting out a few truthful articles and so is Yahoo finance. On the political scene, Hillary Clinton is pitting the masses against the top one percent. Of course this is completely phony but it will change the discourse and break down other alliances. Up until know criticism of the financial sector has been off limits in the political arena. She would not be taking this approach if their influence was not already waning.

So, at any time the system can fail. Cracks are starting to appear. Just know that the selling has to be considerably more than the central banks can handle. Can they handle all of it? Yes, but only for a short time. Every organized effort to elevate the stock market also destroys the economy’s ability to grow.

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Be Careful Shorting

short_selling_stocksAm I sure the market is going to crash? Of course I am sure. That is how tension in rigged markets is resolved. Does that mean everyone should start opening short positions? Another attribute of rigged markets is that the rigging mechanism always fails in the end but it is extremely hard to identify the point where it happens. There may be no way to actually profit from the crash unless one is lucky.

Right now stock market bears of all shapes and sizes are still using traditional technical analysis to guide their trading. This means taking a short position and placing a stop or buying a bearish exchange traded fund and placing a stop. There is no way to win using this strategy. Supply and demand lack relevance in a rigged market. When a short position is taken, high frequency trading firms know all about the position and immediately start trying to run the stop. Retail brokerage firms, give them all they want to know about customers’ positions and trades. This information is used in much the same way as ordinary traders used  odd lot statistics and put/call ratios to study sentiment of small traders. Is this a fair and legal practice for retail firms to engage in? Of course not, but one of the characteristics of a Fascist system is that laws are not enforced against a corporation if the corporation is supporting the goals of the corrupt government. Retail brokerage firms are assisting in driving the market higher, so any information they give about trades and positions is not even noticed by the S.E.C. or anyone with authority. If this issue gets exposed in the mainstream press, then it becomes a lot safer to short outright. With each each pillar of manipulation that is removed a reckoning becomes more likely. Take special notice of any evidence that the relationship just described is being exposed. Someday, only God knows when, short sellers will change their trading approach so they are less vulnerable to exploitation. There is no point in shorting and placing a stop. Shorting in this kind of a market is an all or nothing exercise. Any change in the mentality of short sellers is part of this equation.

Another situation to monitor is the level of awareness that central banks are now buying stock and holding it. Corporate buy backs began ceasing as soon as a few corporations start taking large losses on the shares they have repurchased. These are all tools of manipulation and a change in any of them can usher in the reckoning. Never forget that the initiatives to elevate asset prices for the benefit of the rich also destroy the economy at the same time. They will lose big time also. It is mathematically impossible for the majority to sell at a profit in a market where true value is honestly not present.

Yesterday, I added just a slight amount to a bearish position (Long TZA) but am still slightly over 80% in cash. As far as investing is concerned, having cash on hand for going long after the crash is still the most important thing and the eventual crash is a sure thing.00_logo_1

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New Cannon Fodder For Big Pharma

High cost of healthcareFor many decades the pharmaceutical industry has used government to rig their markets in such a way as to keep drug prices as high as is humanly possible even though the same drugs are sold for just pennies in other countries. In the old days advertising in the health care industry especially with respect to drugs was not legal. This was kind of a trade off since government was keeping the pharmaceutical industry competition free.

Why stop with the United States? There is cannon fodder all over the globe just waiting to get screwed by congress and our president on behalf of the largest drug companies in the world.

Well guess what? Along comes the Trans Pacific Partnership. Remember, this is that bill congress is bent on passing and no one knows what is in it. All that is known is that it is a trade bill. It turns out that the purpose of the bill is to rig markets overseas the same way the drug market is rigged in the United States. So, who gets hurt? When a market is rigged, starvation in third world countries always increases. Starvation in the poorest of countries is largely invisible, so it goes unnoticed.

Suffering in the following countries will be noticeable.  Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam.

Lets hear a round of applause for the big pharmaceutical companies! It takes a high level of genius to fool the Americans for so many decades and then figure out a way to do the same thing with all of the other countries in the world. What is even more amazing is that the cannon fodder of the world have no idea why nothing is going right for them these days. Some even think it is their fault.

We have some reliable sources.00_logo_1

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