Saturday, March 27, 2010

Images of Universal Heath Care

Insurance beneficiary:

Doing what must be done to stay covered:

A medical screening:

Many were able to choose their own doctor:

Children that benefited from automatic coverage;

Wednesday, March 24, 2010

ZOOM..... ... . ... . . .. .

From my Nov and Dec 2009 article USD: Shape of things to Come:

And off we go...

In the big scheme of things, time is short. As usual, I recommend a one year (minimum) cash reserve under your own roof, enough to pay all bills and essentials. Keep the rest in a US Treasury account--no longer term than the end of your hard cash and ladder the rest. Simple enough.

There is No Party of No posted another pro-movement piece today, titled "Party of No Fails" cocerning universal health care. My response follows:

There is no "Party of No." Both parties desperately want this and are both part of the ongoing Socialist/Marxist coup.

The Repubs are on the story board to make people feel like they have a voice. You don't.

The predetermined vote margins are an important clue. By barely passing this bill, the Supreme Court (also on the Fed dole--look no farther than Justices now taking their paycheck in private-issue Federal Reserve bank notes--a woefully unconstitutional act) can easily pin the tail on each and every State suing the Federal government as solely responsible for passage in the first place. Nebraska suing up front is a perfect example.

The purpose of flooding the Supreme Court with law suites filed by the same States who were responsible for shoving the bill down peoples throats, is to quickly establish a pro-coup precedent that prevents citizens from taking court action.

Tuesday, March 23, 2010

The Dow Jones Marketing Index

I think some people believe the Dow Jones Industrial Average has something to do with stock performance. That's not exactly the case. The Dow is a sales gimmick, a trick that is played on people to steal their money. Take the following quiz to see if you understand the DJIA:

Directions: Please assume nothing changes exept the Dow components in question, then pick the BEST answer. Don't scroll down until you are finished, the answers are listed below.

1.) If Citigroup stock went to $0 tomorrow, the Dow would:
a. Not change
b. Drop 360 points
c. Drop 180 points
d. Drop 712 points

2.) Citi stock goes to $0, at the same time IBM announces a new CEO and rises 4%, the Dow:
a. Goes up
b. Goes down
c. Stays the same

3.) GM was replaced by Cisco on June 1, 2009. On June 2, 2009, Cisco needed to climb ___% to equal the effect of GM's stock plunging -50% just a few days prior.
a. 3
b. 115
c. 50
d. 200

4.) If Microsoft stock goes from $30 to $60 tomorrow, the Dow will climb:
a. 135 points
b. 410 points
c. 40 points
d. 1,200 points

5.) If every Dow component rises $1 tomorrow, the Dow will rise:
a. 240 points
b. 30 points
c. 300 points
d. 90 points

6.) Which relationship is true with respect to making the Dow move:
a. Alcoa + BofA + Citi+ GE + Intel + Kraft + Pfizer = IBM
b. J&J = Kraft
c. Citi + BofA = JP Morgan Chase
d. Caterpillar + Chevon + Disney = Exxon

7.) If a given Dow component falls today:
a. Tomorrow it is weighted less
b. Tomorrow it is weighted more
c. Tomorrow it is weighted the same

8.) How many of the original Dow components are still part of the Dow?
a. 0
b. 1
c. 7
d. 12

9.) 3M is 5 times more important than Pfizer.
a. True
b. False

10.) If 3M goes from $82 to $83 at the same time Pfizer goes from $17 to $16:
a. The Dow will not change
b. The Dow goes up 50 points
c. The Dow goes Down 50 points

I added one more question to clarify a comment...

11.) If 15 of 30 Dow components go down 1% per day, and the other 15 components go up 1% per day, after 30 days the Dow would
(hypothetically assuming all Dow components started out equally weighted, and the index started at 10,800):
a. Go up to 11,240
b. Go down to 10,400
c. Not change

Answer (a) is always correct.

Sunday, March 21, 2010

Waves of Human Civilization

Anon wrote: "FDRAOA, any chance could you post some longer-term charts showing your wave counts - maybe one showing the count from the market top in 2000 and one that includes the 1930s and maybe even a multi-century one?"

Great question, thanks for asking. I'm not sure a chart would be of much use, since accurate price data is iffy beyond a century or so. But general trends are pretty clear. There are lots of potential very long wavelength EW possibilities and interpretations, so which ones you buy into are obviously up to you.

Wave personalities are important and should align with the time period. As we talk through each set of waves, remember that all (W1-W2)s should be fractally self-similar to the larger degree W12345ABC, of which they form the first two waves.

With that in mind, these are my thoughts. I've never seen EWs dissected quite this way before, but I'm sure it has been thought-through by many.

Biggest picture (the Waves of human civilization):

W1 - Roman Empire
W2 - (Deep Zig Zag) Dark Ages and Crusades
W3 - Renaissance
W4 - (Sideways) Exploration and consolidation of the New World
W5 - Era of Modern Central Bank Looting (BoE counterfeiting model)
WA - Now forming

Lesser degree discussion:

In W1, we see a frenzied, extended top that culminates in the severe overconfidence of a single Global Super-Power, the Romans, followed by a total currency collapse as money evolves from hard precious coin to banker-fiat, finally ending in barbaric warfare against an "invincible" professional army; the barbarians eventually win outright.

In W2 we have centuries of lost culture, suffering and famine, seemingly endless wars and unthinkable brutality. W2 is a fractal match to the era we are slowly slipping into today.

In W3 mankind rediscovers culture and civility in an explosion of creativity and scientific competence.

In W4 we explored new worlds and consolidated them into existing economic relationships.

In W5 the Bank of England invents and asserts itself for the purpose of royalties paid by the globally less sophisticated to the lazy, inbred global king pins of a massively corrupt criminal underworld. W5 culminates with the rise and (coming) fall of the modern Federal Reserve system.

Lesser degree discussion:

Let's only talk the internal structure of W5, above, the Era of Modern Central Bank Looting.

W1 of W5 - BoE creates the South Sea Bubble (1694-1725)
W2 of W5 - (Deep Zig Zag) Crash of 1730
W3 of W5 - Economic Rise of New World (America and Far East) (1730-1776)
W4 of W5 - (Sideways) BoE causes American Revolution and plunder of Far East (late 17th century)
W5 of W5 - American Capitalism (1785-ish to 2000)

Let's only talk the internal structure of W5 of W5, above, the fifth wave of the Era of Modern Central Bank Looting.

W1 of W5 of W5 - Hamilton resurrects BoE ties in the form of FBUS/SBUS
W2 of W5 of W5 - (Deep Zig Zag) Andrew Jackson sends BoE packing, all currency is extinguished
W3 of W5 of W5 - Jacksoinan era sparks Industrial Revolution
W4 of W5 of W5 - (Sideways) WWI thru Great Depression (nothing compared to 1836-42)
W5 of W5 of W5 - 1932 to Present

W1 of W5 of W5 of W5 - New Deal socialism sputters (1932-1939)
W2 of W5 of W5 of W5 - WWII (1939-1942)
W3 of W5 of W5 of W5 - Rise of modern American might (1942-late-60s)
W4 of W5 of W5 of W5 - Late 1960s dopers (now in charge of America) thru Vietnam
W5 of W5 of W5 of W5 - 1974-2000 Rise of mega-government-enabled Central Bank Looting

W1 of W5 of W5 of W5 of W5 - Gerald Ford
W2 of W5 of W5 of W5 of W5 - Jimmy Carter
W3 of W5 of W5 of W5 of W5 - Ronald Reagan
W4 of W5 of W5 of W5 of W5 - George Bush I (closet aristocratic socialist)
W5 of W5 of W5 of W5 of W5 - Bill Clinton

After 5 completed movements of fractal degree, all waves reverse and begin their ABC. Note, Wave A may also subdivide into 3 waves, which is my prefereed count.

WA of WA of W5 of W5 of W5 - George Bush II (closet aristocratic socialist)
WB of WA of W5 of W5 of W5 - "
WC of WA of W5 of W5 of W5 - Barack Obama (still unfolding)
...completion of WA bottom, around 2012

There are various ways to interpret the opening stages of the long, grinding collapse of Planet Earth, but it's mostly academic. Centuries-long Dark Ages to follow....

Health Care Bill to Collapse the World Economy

It never stops amazing me how EWs forecast human events so reliably.

Over the past several years, I've been saying that although I don't know what the news event will be, some news event or group of them will collapse the global economy as a tidal Wave 3 down takes hold.

As we sit at the completion of the lower degree W2 of that mammoth Wave 3 down, confirmed in virtually all markets, and yesterday we completed (or nearly completed) an even smaller degree W2 of momma W3 herself, it seems clarification has arrived.


Saturday, March 20, 2010

First Day of Spring Buries West Texas Under a Foot of Snow

Record snowfall is continuing into Spring as the normally sweltering deserts of western Texas get blasted by another record blizzard.

The Fort Worth Star-Telegram held it's first-ever snowman contest, receiving more than 400 entries. Six received praise:

'Marshmallow Man' look-alike

Erick Thomas and family, Arlington

This snowman had staying power: seven days, to be exact. It's no wonder, at 13 feet tall and 10 feet wide (including the arms made out of 2-by-4's). Thomas, his daughters -- ages 8 and 5 -- and a neighbor worked on this mammoth man in Thomas' front yard for two days.

"We were just making a snowman and decided ... we might as well do it as big as we can," he said. The eyes are made of beer bottles and the mouth is made of charcoal.

It became a neighborhood tourist attraction. "A lot of people stopped by, got out and took photos," he said.

Think tank

Rosalie Kobetich, Lipan

"While passing the commode in our pasture -- which usually is filled with flowers -- the idea occurred to me to build The Thinker," says Kobetich, who is a painter and a member of the Weatherford Art Association. The 5-foot-3 snow sculpture took about 90 minutes to complete by herself and is adorned with a branch of pine needles.

"Unfortunately, he lost his head the next morning because it got pretty mushy out there," Kobetich said. "Too bad he didn't stay longer."

Snow warrior

Jim Walter, Burleson

"This is a statue of a Viking warrior standing on the deck of his long boat, but we didn't have enough snow for the boat," Walter says.

During the snowfall, Walter's family had six different snowman projects going on their pasture, and they were scrambling to complete them before the snow melted. The Viking was his idea. This menacing warrior, holding a spear in his left hand, eventually sunk back into history.

Cold sweat

Michael and Tammie Baker, Fort Worth

"My wife and I exercise together," says Michael Baker. "I run, and she follows me on her bike. We thought that our snow people should reflect our hobby, so we built a runner and a rider in front of our home."

This cardio-tastic snow couple are wearing the Bakers' own clothes and shoes (the race number is from last year's Cowtown Marathon) and using their own bike and ear buds. The hardest part was balancing the one on the bike.

So did they work out after they built their snow avatars? Baker laughed. "That was our exercise for the day."

Snow dragon

Sarah Blaido, Hurst

Sarah, 16, spent three days sculpting this dragon. The home-schooled high-school sophomore "really wanted to do a dragon because it's my favorite thing of all time," she said. She filled up big bins with dense, clean snow and built the rear first, then the middle and front sections. It measured 8 to 9 feet long.

Unfortunately, not many people got to see her creation before it melted. "On the last day, I was just putting on finishing touches when the sun came out, and it immediately started melting," she said.

Global warming protest

Curtis and Melissa Reeves, Weatherford "Thirty snowmen held a global warming protest in Weatherford," the Reeveses said in their clever entry. "The protest ran for two days before the crowd dissipated. No injuries were reported. However, the protesters did leave their signs on our sidewalk."

It took the husband-wife team a few hours to create this snowy scene; each snowman was about a foot tall. It looked especially neat when the candles were lit at night, they said. However, all the snowmen eventually fell victim to the warming trend.

Friday, March 12, 2010

TRADING ALERT: Too Much Liquidity is Your Friend

I've often talked about the evils of Federal Reserve corporation counterfeiting, but sometimes it is your friend. Today's stock market is a good example...

Over the past 97 years, the Federal Reserve has slowly flooded our markets with funny money, creating the greatest global market hyperinflation since the BoE engineered the South Sea Bubble.

Think of modern-day hyperinflation as the water level above an ocean floor. There are features on the floor that the make underlying terrain unique, like a variety of financial different markets should behave, each with its own, independent and characteristic, price behavior. But after you flood the earth with liquid, baseless paper in the metaphor, the water level eventually drowns the interesting features below, and coincident waves of liquid cash create the dominant force driving prices of all markets.

The DJIA is a perfect example of hyperinflation. Since its low of 40 in 1932, the original Dow 30 index has kicked every company out except GE. And yet, this shadow of a ghost, that one-thirtieth of what $40 used to buy, now sells for a little over $10,600. Literally, it takes a wheelbarrow full of worthless paper cash to buy what little remains of the 1932 Dow.

The "evil" part is that the Federal Reserve has sold The People of the United States mountains of this worthless paper in exchange for real assets; those assets are gone (to the Fed's private owners). So what's the "good" part? Why is Fed counterfeiting our friend at the moment?

For the answer, see the chart snippets below. As of today, we sit at the top of a minor W2 of a major W3 in virtually every market. Why do all the counts interlock? $10,600 of pure paper liquidity flooded on top of every $1 or $2 dollars of 1932 value. These counts are dominated by nearly 100 years of mounting hyperinflation.

Proof? Look no farther than P/E ratios, floating almost fifty-fold above the 1932 ratio of 5. That is exactly what you'd expect as the result of hyperinflation.

Am I predicting hyperinflation? No. I am pointing out that it has already occurred. It is the dominant force driving all market prices today.

Stocks, oil, gold, silver, corn, cattle, you name it, and of course, inversely, the dollar--all waves are aligned on this March 2010 morning--and in all cases, a major downward W3 is forming (the USD being reversed: about to explode upward).

Every table is set, or already in breakdown. The charts below are all 3 months long. Minor details are more clear in some than others, but it doesn't matter, if you can count one, you have counted them all.

Idealized Impulsive W1-W2 (downward):

Oil (already in breakdown):

Silver (already in breakdown):

Gold (already in breakdown):

Stocks (about to breakdown):

Fed Accelerates Two Year Cash Drain

Anon wrote: "People are panicking out of the dollar"

0.14% for a 3-Month auction? The line to hold US cash can't get much longer. The money supply continues to drain faster than ever before:

For the past two years the Fed has been sucking dollars out of the system like there is no tomorrow, and there might not be.

Sunday, March 7, 2010

Stock Market Update

A lot of people have asked for an update, so I've taken my stock updates from Jan 2009

...and Nov 27, 2009 (click to enlarge):

And I've appended my new thinking (click to enlarge):

As I've been saying but would like to reiterate, the major W5 on that chart (Wave A bottom) will likely happen in or around 2012. My target for Wave A is Dow 3,800. Time is difficult to estimate, and basically unimportant compared to the price target being achieved.

In other words, if EW's indicate that nature has programmed poker players to stand up and walk away from a poker table after losing $X, it doesn't really matter how many hands it takes to lose $X. That said, we might instinctively read into the same metaphor that time, or the number hands going nowhere, plays some role in the human decision making process.

Friday, March 5, 2010

The 11th Plank Has Arrived

Both congressional Democrats and Republicans (while feigning outrage) want to pass Government Health Care. That's why massive capital gains tax hikes (15% to 22.5%) and income tax bracket hikes (to 42.5%) are buried in the new version of the bill.

For those not following U.S. (over-)achievement of the 10 planks of Marxism:

1. Abolition of private property and the application of all rent to public purpose.


As we've seen all too well lately, banking corporations are our government. But to the extent some are private, by the time a 30 mortgage is paid, property taxes exceed original mortgage payments.

2. A heavy progressive or graduated income tax.


3. Abolition of all rights of inheritance.


The death tax forces all family businesses, of any value, to turn over the keys to the corporate-government for pennies on the dollar when the owner dies. If you own nothing, you are exempt.

4. Confiscation of the property of all emigrants and rebels.

Mostly applied to US citizens through Eminent Domain.

Marx was just an angry racist; the original White Supremacist.

5. Centralization of credit in the hands of the state, by means of a national bank with state capital and an exclusive monopoly.


6. Centralization of the means of communication and transportation in the hands of the State.


7. Extension of factories and instruments of production owned by the State, the bringing into cultivation of waste lands, and the improvement of the soil generally in accordance with a common plan.

TVA, Government Motors, more broadly... corporations and our government are indistinguishable. "The United States government will bear any burden and pay any price to ensure that Citigroup does not fail" --Chairwoman of congressional oversight panel

Certainly, more to come.

8. Equal liability of all to labor. Establishment of Industrial armies, especially for agriculture.


9. Combination of agriculture with manufacturing industries; gradual abolition of the distinction between town and country by a more equable distribution of the population over the country.


Government zoning has displaced individual land ownership. But I think Marx was probably high when he phrased this one.

10. Free education for all children in government schools. Abolition of children's factory labor in its present form. Combination of education with industrial production.


And now, beyond Marx's wildest dreams:

Centralized control over citizens' physical being. Common enforcement of the ideal size and make-up of the population. Care granted in proportion to production.

What do Dividends, M&A, and Health Control Have in Common?

Anon wrote: "Dividends picking up, M&A for cash picking up, and companies buying their stock proves this market is heading higher FDR"

Dividends heading higher is always a sign the market is going lower. At market peaks, dividends are virtually non-existent at around 2.5%, because people are happy with cap gains--companies don't need to pay cash flow to attract stock trader-speculators.

At major market bottoms (talking Great Depression lows), dividends hover as high as 30% to attract investors (I'm interchanging the term "trader-speculator" and "investor" intentionally). Today we're in the 3-4% range.

Remember the M&A flurry at the last major W2? It was at Dow 11.8K and only a few bears were left waiting, and waiting, and waiting on the market to turn lower. The Bear bandwagon emptied out, just like today. Then the stimulus bill passed and the very minute of the vote was the W2 peak. The market was at 6.5K within a few months.

Interesting that the health care bill is set to pass as early as next week, with little hidden gems like an increase in the capital gains tax from 15% to 22.5%, and a similar income tax bracket increase. Just saying... look out man, it's coming.

Any of these major news events could trigger it. It doesn't matter what the news is, EWs tells us that a major change is imminent and it will be interpreted as a major selling event. The same event would be a major buying event if the wave were on the other foot.

Thursday, March 4, 2010

Gov: We'll Break America to Save Bankers

Reported by Market Watch:
"The sheer magnitude of Citigroup's operations, and the company's history of receiving extraordinary government support, has led this panel to an inescapable conclusion: The United States government will bear any burden and pay any price to ensure that Citigroup does not fail" --Elizabeth Warren, chairwoman of the congressional oversight panel

I guess it is old news that the FDIC has failed and is powerless to insure rapidly imploding $3T Citigroup and their 40x leveraged losses.

The "price" is the wholesale disposal of the U.S Constitution. All to protect congressmen's private IRAs/401Ks, probably amounting to thousands of dollars. And that won't even work.


Wednesday, March 3, 2010

Prechter's Armageddon

Blogger's comment engine was apparently snagged for a few days. Comments reappeared this morning and are all posted (hopefully). If any are missing, I haven't seen them, sorry.

As readers of this blog probably know, Bob Prechter is the guy who smuggled EW analysis away from the smart money and delivered it to The People in the 1970s.

In the late-30s/early-40s, R.N.Elliott discovered the EW insight, the fractal, and single-handedly unlocked a major part of how Nature works in his astonishing work titled, Nature's Law, The Secret of the Universe. Perhaps more astonishingly, one cannot find RNE's work on the shelves of any Library, or in any book store. If nothing else, the early discovery of the fractal and how nature uses them to generate complexity from simplicity makes this book invaluable to the scientific community. But magically, RNE's highly profitable masterwork had apparently vanished from the face of the Earth.

Bob learned of EW theory as a professional trader in the back rooms of large trading houses, and immediately realized the value of sharing with the world (he located the original on microfilm in the basement of the Met NY Library, if memory serves). To this day, the only way to read RNE's original book is in a back chapter of one of Bob's first offerings (I have no affiliation).

Bob is a brilliant guy with an amazing track record. His first big public call was in 1982, when he predicted that an enormous Wave 4 was now complete (from the mid-1960s to early 80s), and that a massive inflation was coming. He said you could do no wrong investing in paper stocks, almost anything would do. His 1982 chart (with the Dow bobbling beneath 1,000) projected a surge to Dow 4 to 5,000. Needless to say, professionals laughed at him until they wet themselves, after all, we were in a major recession at the Dow had scarcely topped 1K in all of stock market history. When the market surpassed Bob's call in a few short years, he began warning of a major top, the Wave 5 top formation.

"Pro's" drunk on inflation that they were way too stupid to predict, laughed again. Bob was a few years early, the market went crazy, we experienced a final bout of hyperinflation as the ending phase of the 1932-2000 Wave 5 of an even bigger 5 slowly fell into place. But Bob was exactly right. When viewed in the proper multi-century context, that he always framed but few were smart enough to wrap their minds around, Bob's calls will plot within a few pixels of precision.

As the 1990's big bang boomed, Prechter counted out the final form of the mega-top in 2000, accurate within a week or two. Again, an amazing call that few saw coming, and most people laughed so hard they lost everything.

This is when I learned EW theory as a direct result of Bob's work, and not a second too early. Luckily, I had done well as a lemming during the boom, but now I understand it was pure luck. Since then, I've often disagreed with Bob's calls on the margins, but for the most part, the few good EW'ers that are alive tend to agree in the macro.

Recently, Bob issued a warning in July 2007 when the Dow hit 14,000 that Wave B was complete and the mother of all C waves was forming. Again he pointed out that you could do no wrong, by going short this time. He issued a cover call at 6,500 (after I did :) and another short call at the recent peak. Bob is really good, assuming ones understands the inherent risks involved with attempting to call a multi-century top (maybe longer) to the penny.

Bob recently published some free video interviews/updates/warnings on his website. Essential viewing for anyone who doesn't fully understand what is coming:

Tuesday, March 2, 2010

Get Ready for a Flurry of Real Estate Activity

The Fed has sold almost the entire Mortgage Backed Security market short. Now it is time to drop it.

Remember, the term "buy" to the Federal Reserve means "sell" to everyone else. They "bought up" the MBS market at prices no one else was willing to entertain (= WAAAAAAAAY too high) along with a scarcely noticed taxpayer guaranty of no losses.

That means when they "sell" the junk, we have to pay their loss. That's right, we have to "buy" it. That means they "sold" to us at WAAAAAAAAY too high a price. Out of the kindness of their hearts, they lent us the cash to buy it too, at interest.

Now, it's time to dump the junk. The lower they price it, the faster they get paid in full. And the faster they start accruing interest on our debt to them, as our cumulative national real estate losses get tacked on to the national debt.

Real estate is about to start flying out of inventory. The inept main stream media will think the Fed has dropped a gift from heaven. "RE Sales UP 200% YOY!!" they'll rejoice, ignoring prices that are deteriorating more than hard-line bears dared to dream.

I've dreamed it. It isn't pretty.

Monday, March 1, 2010

Borrowing to Stay Afloat...

..."normally" beats selling off assets at fire sale prices, especially when you're carrying assets on your books absurdly above market price. Problem is, borrowing your way out of trouble is only feasible during inflation, during deflation, debt crushes you.

In other words, "fire sale price" is a inflationary term. The equivalent deflationary term is "overpriced."

The USA's political-economc system is best described as:

On Nov 2, 2010, I plan to vote (FOR or AGAINST) my incumbent congressman

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