Sunday, August 11, 2013

UNINTENDED CONSEQUENCES

Or perhaps one should call this post "what happens when you violate nature's laws". Kudzu was a Japanese plant that was introduced to regions of the south to "control erosion" . It can grow at an enormous rate and has virtually taken over entire forests throughout the South. It can actually destroy buildings as it proliferates onto their roofs and support structure. It was used by the government initially for a positive purpose BUT its ultimate result is a catastrophe for the environment. As old growth forests and productive land is destroyed, ground ozone levels rise precipitously.

We are under an assault on Nature's law in a wide array of areas in our lives. I'll focus just on the effect that "unintended consequences" are going to have on our economic system and I will do so in my typical simplistic manner. 

As most of you are aware the "system" had reached its bubble proportion in 2008 and the bubble burst. Whether it was intentionally or "naturally" burst is not really that pertinent, but the response to the implosion is important.  Instead of relying upon the laws of nature to "clear" the market and remove the excesses and malinvestment that had been allowed to proliferate, we decided to "double down" on the same forces that had brought us to the "edge of the abyss".  A decision was made that we would extend the leverage rather than "take the pain". Essentially, deciding that we would sacrifice the dollar and its reserve status to buy us a few more years of "imaginary recovery". Of course we will argue that the pain was going to be too severe and that the collapse would endanger our very way of life with its effects on our very social structure......nice arguments and ABSOLUTELY VALID!!!

Here's the rub. You certainly avoided a depression in 2009 but now you've created the necessary ingrediants for a MAGNITUDE larger catastrophe with unintended consequences one cannot imagine. You have now set in motion the "Kudzuing" of the entire World. You're looking at the collapse certainly of the Petrodollar and the empire it created here. We've already slipped in most measurable, meaningful categories like education, wages, health care etc....to almost third world levels. The news is we have much further to go. Once we lose the reserve currency status, we lose the ability to fund our military spending and the empire will collapse. This is good in the long run but it will be VERY destabilizing for us and our economy.  We have doubled down on a ponzi and now our price to pay will be unintended consequences that you and I cannot fathom. If you believe that our brilliant economic scientists can negotiate with nature then I will only remind you of our Fed Chairman's testimony to Congress in late 2007. There is no housing bubble and the economy is strong and there will be no recession. Yes my fellow proles.........I have the utmost confidence that these geniuses will beat nature......or.......maybe they have NO intention of beating nature. Maybe their economic kudzu was planted intentionally....gl






60 comments:

  1. Question: What will we see first?

    1). Hyperinflation

    Or

    2). Stock market crash

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    Replies
    1. engineered "crash" before hyperinflation to fulfill the deflationary cycle and reset with the "hope and a prayer" for the revival of the real economy......ie continue the con.

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  2. Looking like there are still unfilled gaps on those miners from around 7/12. Still, they look ready to break out.

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  3. Kli,

    Excellent as usual. Looks like the South needs to start on a serious weed whacking campaign.

    One of the big debates up here is whether Asian carp are in the Great Lakes. If they aren't yet, they probably will be eventually. Just another part of the Earth wrecked.

    Just to change the subject, I am predicting that New York will have "better" scores in the public education system next year. Why? Well, our education officials here decided to give a standardized test (grades 3 thru 8) which was much more difficult the previous years. Also, the teachers were NOT told how to prepare the kids for the test. Well, as you might predict, the test scores were abysmal. The test is scored 1 thru 4 (4 is the best). Even in my area where the schools are very good, only about 50% of students got a 3 or 4 (usually 80% will get a 3 or 4). The inner city schools did much worse.
    The various school officials were very quick to say, "don't worry about the low scores,...they are meaningless". It was all over the news for days. But, let's fast forward now to next year, when the teachers will be allowed to prepare the kids. Also, I wouldn't be surprised that a slightly easier test will be given. Thus, next year's scores will almost undoubtedly be better. I can't wait to see how the school officials spin in, and use these terrible scores which we are supposed to ignore and now proclaim that the students are doing so much better and that the schools are teaching more effectively.
    Maybe this is coming to a State near you.

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    1. Morning Doc,

      Same down here with those Common Core (which by the way look up whose pushing that standard)

      http://www.thenewamerican.com/culture/education/item/16192-common-core-a-scheme-to-rewrite-education

      tests and your certainly correct by next year there will be marked improvement in the scores as the districts MUST justify the continued bleeding the proles pocket books......

      Common Core or not the majority of kids graduating HS can't do math or read at a sixth grade level. Just ask a few what's ten percent of 1367, you will be amazed not to mention there is zero teaching of financial basics ie: how to manage a checking account, how credit works, the consept of money and taxation ect...

      Never mind all the revisionist history being taught but look on the bright side at least in NY we have the "Dignity Act" so while they are all being dumbed down at least they can all get along!

      Lastly have you had the opportunity to look at one of those new code of conduct contracts given to the kiddies now a days? Rather Authoritarian to say the least.......

      btw: Teacher and Admin's giving out and or changing scores happens far more frequently than most think!

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    2. One more tied bit on education or control.....

      http://www.thenewamerican.com/culture/education/item/16193-orwellian-nightmare-data-mining-your-kids

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  4. My local school district just experienced a scandal with a teacher and principal involved in middle school giving answers to students to elevate scores in a standardized MAPS test......they're trying to cover it up but a nearby local tv station covered it.......anyway it shows just how bad a "rigged" system rates nationally...we're probably worse than our 27th...just ahead of Costa Rica

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  5. That's the problem guys...EVERYTHING needs a reset. EVERYTHING is so full of fraud and corruption. Great opening in the East, let's hope they don't kill it when London opens, followed by the usual kill in NY. OTOH, they may want to "kill" the shorts with kudzu. Great analogy Kli, no way we escape.

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  6. great video above with Don Harold....listen carefully

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  7. Kli, this looks like one of the days you've been predicting for literally years where a trader can't get in at a decent price after open. Kill the shorts for sure.

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  8. Nice day again... wow... when is the inevitable pullback coming though? :)

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  9. Maybe stupid but I took profits here. Will hopefully be able to reload. But this could very much keep running...

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  10. Gettin killed on my GLD short. This is painful.

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    Replies
    1. I *think* we will get a small rest here so could get slightly less painful. Where did you short it at?

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    2. I'm too embarrassed to say. Gold was under 1300 when I got in. :(

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    3. Personally I would cover soon, especially since gold trades in Asia and Europe while GLD is not available for trading. A big overnight move will make the pain much worse by 9:30am.

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  11. Not sure what you mean...all miners gapped up this morning. Are you just pointing out a good buy point? Thanks.

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    Replies
    1. been playing SSRI sister and just commenting on it as a trade either a sell at peak today and/or a "rebuy" if gap fills

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  12. AG is a weak miner for some reason. I think it may have gotten a bit ahead of itself... hoping my covered calls I sold still expire worthless by Friday.

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  13. just for fun look at the RBY weekly trendline going back to 2002 i posted above

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  14. Speaking of unintended consequences, this is truly frightening: http://www.zerohedge.com/news/2013-08-12/phantom-markets-part-1-why-tbac-suddenly-very-worried-about-market-liquidity

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  15. They closed at a nice point of indecision to either gap up or down on tomorrow I am sure... hehe they are good. Flip that coin ;)

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  16. Replies
    1. Motherf***er. I was playing options on that a while back when you had recommended it. Timing is everything.

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    2. probably a buy back in high teens...

      ISR just went thru a resistance line and has room to roam...

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  17. 10-year is at 2.70. Getting close to your magic number of 2.78 right Kli?

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  18. Hi, guys. What did Kli say about 2.78 on the 10-yr.? Missed it and would appreciate a reiteration. Thanks.

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    Replies
    1. 2.78 is pivot that shoots the bond over 3 as 30 year bond bull unwinds

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  19. Thank you. Got some shorter term bonds; maybe even need to unload those.

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  20. On the sidelines today. Not sure what to make of this action. Any takers? ;)

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  21. Bond market is there focus they don't want to lose it but they want to give the banks a spread so that when they begin to "taper" which is a "farce" they can give the banks enough spread to start to loan out fiat into the "market" and get the "real" economy moving...this is a big gamble since as silver is king has said and I agree that "true" tightening will collapse the faux economy and the "spread" will be destroyed as terror reenters the market........

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    Replies
    1. this is their last chance at getting the velocity of money moving and if it fails then turn out the lights

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  22. Tried to get some miners at fill the gap prices, but no cigar. Shrug.

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    Replies
    1. Yeah I was hoping for the same. We'll see what tomorrow brings! Today's action confused me.

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  23. Protestors killed in Egypt but gold has a mini flash crash. On my watchlist, only RIC is red.

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  24. SVM also continues to rise. Maybe will go all the way to the 200 day.

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    Replies
    1. http://stockcharts.com/h-sc/ui?s=SVM&p=D&yr=0&mn=9&dy=0&id=p84149352595&a=242549376&listNum=1

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  25. Miners are now leading metals which is the type move I have been expecting if the "bottom" is in for the miners. Trading with this volatility is making me some nice side money as I maintain my 95% invested posistion..... 12% two day moves with 3% pullbacks all over the place....these swings can make you money fast.....vol is for volatility....

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    Replies
    1. Higher lows... damn shouldn't have closed out my position. Now I gotta get back on the train.

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  26. watta monster ssri is almost a double in less than 6 weeks

    http://stockcharts.com/h-sc/ui?s=SSRI&p=120&yr=0&mn=2&dy=0&id=p89979305811&a=242315566&listNum=1

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    Replies
    1. quality silver miners that are unhedged will be monsters going forward once silver does break out

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  27. I also maintain that COMEX default WILL occur sooner then later...which means essentially that resolution of any ponzi of this magnitude will end and end in default......since delivery of physical gold is accelerating I think it will happen within this then next couple of months.....it will be disguised as an "imbalance" or as a cash settlement on all claims due to "demand imbalances"....etc.....but it will be a default.....the "COMEX" may even continue as an entity but it will be paper only and virtually useless

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  28. ask and ye shall receive....

    http://www.zerohedge.com/news/2013-08-14/why-gold-spiking

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  29. Volume and Gold not punching through is bugging me...

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  30. IAG over the last couple days has been another monster miner...

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    Replies
    1. Earning season is over today with Cisco..

      Shorting into any push north might finally pay off...anyone shorting earnings season over last 2 years has gotten their clocks and bank accounts cleaned....

      taking position on RWM thruout the week...

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  31. Those trading robots are good. The high of the day so far for SVM is 3.79, which is exactly where the EMA is. Hit it right on the button.

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    Replies
    1. Wow forgot to look at that one. Nice volume... it seems they are rotating into each miner on seperate days. They don't seem to all have heavy colume all at once.

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  32. Can we name some quality silver miners other than SLW (not really a miner), SSRI and EXK? I'm thinking PAAS, any others?

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  33. FSM had a nice move today as well.

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  34. M.A. has new post on gold...should go higher next week but wkly. bullish reversal is 1423 and yr.end resistance is 1435. He sees Jan. as big turning point. He is disturbed that gold never got thru its 1980 adjusted for inflation price of $2300...All I can say it, I've waited this long, I can wait until January. Silver seems to always be slightly ahead of gold so agree with Kli that a breakout there very soon could be very soon. Best of Luck everyone. You are the best, Kli to keep this going for us.

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  35. He also warns to look for a custodian bank and says alto the metals may soar after his chaos date (10/15), our government may do as India has and shut down gold investing as much as possible. Just FWIW, but pretty much agress with Kli's assessment over the last several years.

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  36. Sorry for the typos..."altho" and "agrees"...

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  37. Sister,

    I find M.A's grammar/thought process sometimes hard to follow. I think what he is saying is that Gold will only go up by $100 more this year. Thus, we are almost there already, so, don't get too bullish yet. I thought his earlier posts still thought Gold could fall to the $1100-1200 range.
    So, I am still wondering if Gold could fall, but by the end of the year rise back to around $1435'ish.

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  38. Couldn't agree more Doc, sometimes have trouble interpreting his voluminous free thoughts! Your summary is appreciated. Actually, as of tonight, it is less than $100 by YE but will break out in Jan?... In 2011, silver did reach its high 4 mos. ahead of gold.

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