Oct 23 2009 9:27AM
This discussion is not about politics but the economic fallout FROM politics. Throwing verbal stones at politicians is great fun. However, today we need to carefully examine what happens with our trading, investing, and life style situations as a result.
What happens in markets with out-of-control political dissention? The Obama administration is on a “hunker in the bunker” mentality dodging verbal brickbats and accusations flying with great speed and increasing numbers. Some days in that business all your stuff goes bad at the same time. With little or no leadership this was bound to happen. With no logical plan and a loosey-goosey socialist-commie agenda taking policy far away from the voting majority; you’re going to get in some really big trouble. The fallout is of the upheaval kind; as in uncontrollable social problems.
US political activity and its attendant louder screaming is growing ever more ugly. Pressure is building as unemployment continues to rise as the party in power pushes even harder for messed-up healthcare. Worst of all, they seem to be ignoring a major firestorm building in Afghanistan and Iran. Domestic events, front-and-center over-shadow international ones. The president’s first job is to keep our nation safe. Personally, at this juncture, I worry more for my country than for me. Foreign relations practiced with whining and acquiescence never works. History books bear this out.
Every where we look we see failure by both parties. Hard decisions remain shelved while health care, cap ‘n’ trade, and more useless, profligate spending are the norm. People are dying in the Middle East because the president is too busy campaigning for colleagues. The kid was elected to serve his country not run a perpetual merry-go-round of speeches raising campaign cash. A comparison of time frames in this administration so far, shows 22 Obama fund raising road trips for our president thus far, while Bush did six. Something is very wrong here. The first nine months of this presidency has been so negative they need every dollar they can scratch-up to be used for buying 2010 election ads.
Personally, we think most politicians in both parties are stupid fools. There appears to be few people left in our government with level heads willing to do the right thing. Too many of them have a personal agenda that fits within the context of their respective parties’ demands. Proper management of government and satisfaction of the people is ignored.
The sad thing is voters’ wants and needs are barely considered if at all. Congress puts themselves first followed by the needs of global corporations and banks. Sheeple are just in the way except at election time when their votes are needed. Give me your tax money so I can buy votes and power while you need to sit down, shut-up and get back in line doing as you are told. This is not going to last. It never works.
Our Job Is To Forecast And Suggest Ideas For The Preservation Of Self, Family And Capital. Let’s review major messes and see if we can make sense of what might happen.
The Iran and Israel potential conflict could come to head before 2009 ends. We think Israel is out in the wind by themselves. Obama gave the Russians a major gift removing the missile shield in Eastern Europe. He did this to persuade Russia to help put a lid on Iran. It failed and Russia will not help and now they’ve got a huge win-win. Further, the administration’s actions are skewed with sympathy toward the Muslims, Iran, and Russia to the detriment of Israel. Israel may have to attack Iran to save themselves. Hello $200 oil.
Since Obama installed this new idea of pandering toward dictators thinking he will achieve major gains with his towering charisma, our allies, friends and neighbors such as Japan, Europe, Australia and others are edging backwards forming new alliances with each other. They are partially or in total, moving toward exclusion of US partnering and backing. Most of all they are abandoning our lousy, weakening currency. Old important friendships and allies are being damaged. Washington’s arrogant ignorance is producing costly financial and diplomatic messes world-wide.
US Healthcare obviously needs some work. However, we see about 12mm uninsured that need new support not a major revision of the entire USA health care system. The latest ploy is to give all Americans a public nationalized plan using Medicare as the vehicle, while adding a Medicare expansion plan. This is worrisome as it could happen, further damaging the national economy with unbearable costs and lousy medical services. Educated, experienced doctors and nurses do not grow on trees within one voting cycle. Passage of this bill instantly creates a professional people shortage of 50,000. Further, it robs seniors of mandatory care. In some cases it could be causing premature death.
The Card Check program for union voting will probably pass and give unions a tighter grip on employees, public and private. Meanwhile, it can be raising costs, throwing more folks into unemployment lines and effectively handing carte blanche iron-fisted control to the unions, not private or government managers.
The TARP plan was designed to stimulate the economy. It only stimulated banks and bankers pockets to the extent they were recapitalized after they destroyed their businesses with derivatives. They are in the derivative business again; doing a repeat performance despite previous massive failures. This will further enhance severity of the forthcoming crash. Only a small portion of TARP has been spent. Small business and consumers barely got anything and they are the larger problem needing to be fixed before we can recover. It won’t happen. They get nothing. Meanwhile, TARP money is stolen and handed to bankers and corporate outlaws. We’ll see billions of TARP totally wasted with no positive bank-corporation effects as most of the rest is just stolen.
Cash For Clunkers was born to stimulate auto sales. It placed many new car owners in auto payments they could not afford taking them out of paid for cars. This freebie is over and sales from that program concluded. For now it appears Ford can still hang on for awhile after they hocked their physical plants, factories and offices for $33 billion in new loans in 2006. Most of that cash is gone and if they cannot shrink much further, they go into burn-out mode just like Chrysler and GM, who in our opinion will finally fail. Global sales and auto manufacturing capacity must be cut back 33%-50% fitting depression demand. A larger chunk of global auto companies will go extinct.
Tax demands from all government will rise further. Governments will not curtail spending and some continue to increase it despite falling revenue. This is very important as these tactics take state, county, township and villages to the brink. They will continue to spend until they’re totally dry, then lay-off and fire most employees. This is when the chaos begins and outlaws run wild. Social conditions can get out of control quickly.
Unemployment is much worse than reported. We got news yesterday from a larger suburban contractor that metro Chicago tradesmen are unemployed to the extent of 60-70% and, it’s getting worse. There are no new projects or jobs. Higher paid, skilled blue collar workers accustomed to good incomes doing plumbing and electrical work for example, are mowing lawns; if they can get even that. USA national unemployment averages 21% and the worst is in Michigan with 30% soon rising to 40%.
The real estate industry is destroyed and sinking even deeper. Single family housing both new and used is literally destroyed in some states, with Florida the worst. Others in big trouble are California, Arizona, Michigan, Nevada and other parts of the Midwest. Next, commercial goes in the tank as credit was reduced to a simple trickle. Banks are holding millions of foreclosed homes off the market to avoid huge price markdowns. They are merely delaying the inevitable. Now big malls are closing and suburban office parks going vacant, too. When General Growth, owner of over 100 shopping malls, filed bankruptcy; that signaled the end. Big Box retail chains are crumbling as Santa’s pre-sales sink. Watch for major chain store bankruptcies in the first quarter of 2010 after another failed Chistmas selling season.
Deflation dominates for now but inflation has begun. The stock market is rising on inflation and a horde of parked hedge fund cash looking for a home. Banks are over-loaded with ill-gotten TARP money playing identical games all over again. Food and energy costs are rising and the commodity bull should go on for years. There is strong potential for hyperinflation within the next 1-2 years, riding waves of printed, un-backed US Dollars and bonds. Foreign holders of this paper are retreating as fast as possible without wrecking values on their holdings. This is why the dollar is sinking steadily, but not with gross volatility.
Crash forecast reports are flying in from analysts. We see this stuff all the time but the recent number of them with more strident and panicky tones does not bode well for these markets. Our readers know where we stand and our professional analyst friends agree with us. It’s only a matter of time. Control risk first and make money second. The big stock markets, banks, currencies, and all governments are not to ever be trusted-period.
Financials crashed in fall, 2008 with Lehman. Recovery began with TARP in May, 2009: During October, 2009, we’re ending a dead cat bounce with selling this month. Precious metals and their shares are toppy on this October 22, 2009; for the shorter term. Beginning November 9-13, most all trends can reverse and moves to rallies. Between now and then some selling and corrections should appear. We are at a turning point in most markets.
Keep in mind, if you own paid for stuff it will most likely remain in your hands; not in somebody else’s. That includes gold and silver. Do not get tangled-up in daily noise. Keep studying the larger view and buy precious metals after each profit-taking correction. Headwinds are building into an economic hurricane. Take care of business right now. My dire fall prediction might surprise us and arrive later. Selling is now. But next summer could be the larger crash. In the coming middle, look for more buying. Time is short.
Personally, I can see unbelievable opportunities to trade that we would never see again for many years. Turn these problems into opportunities. Those on the right side of the trade might get rich. Those on the other side are just victims. Stay Alert. – Traderrog
Editor Trader Tracks Newsletter
The Jay & Rog Blog at webeatthestreet.com
Roger Wiegand is Editor of Trader Tracks Newsletter for gold, silver and energy traders. Roger provides recommendations for short and longer term traditional stock shares, futures and commodities trading with specifics for individual trades. See webeatthestreet.com for more information.
Contact Claudio Bassi, at Trader Tracks New York City publishing offices for an introductory 30-day trial subscription for only US$49.00. This is half the monthly rate our subscribers pay. Call us at 718-457-1426 Monday through Friday, 9:00am to 4:30pm (EST). You can also e-mail Claudio at email@example.com for more information.