Think about this for longer than a minute...

Don’t be fooled by the MainStreamMedia, the talking heads in Washington, or any other sources pointing to a turn around.

Chew on this for a while. Don’t just read the article, look at the fleet of EMPTY and IDLE cargo vessels, but think several factors beyond that.

A Massive Fleet of Empty, Idle, Non Productive Assets

Think about what it would take to get those ships moving again. Americans are the largest importers, you know this. Take a step further, what does this say about consumer demand WITHIN OUR ECONOMY!

If demand falls, prices MUST fall unless held up by an artificial floor price mandated by Gov’t decree.

As demand/prices fall, what do revenue streams do? Getting the picture?

No Revenue + Booked Liabilities = Future Losses; this statement is not being reflected in the market TODAY. So the markets are not accurately reflecting the value of the underlying future revenue and profit stream. More than likely, it may not EVER materialize in the scale traders need.

Some people see this picture and think, ‘Wow…’ then blank out.

This Feral Capitalist saw this picture and extrapolated an economic truth that you can’t find ANYWHERE but in independent news sites and blogs.

Like this one.

 

The Constant Battle: Posting vs Real Life

As you can see, the FeralCapitalist has not been posting with such ferocity. Real life is butting in, again.

 

I am back in school, recently took on more responsibility at work (that’s what it takes to keep your job during this “Great Recession”), and moved 40 some miles from my previous dwelling with cut my wife’s commute to a whopping 6 MINUTES! You are welcome honey :P.

 

All that put some stress on this capitalist, but I shall return.

 

Keep thinking, keep questioning, because above all else, that what capitalists do, THINK. Even if most actions of the mind are cut off from the real world, the value of mental capital can still materialize. Just ask Sir Stephen Hawking!

 

 

Usefulness of a Bureaucracy, Seriously

Our Federal, state, county and local gov’ts are inherently inefficient. The word bureaucracy means, “a ruling of bureaus (or desks)” and by extension a rulers that sit behind those desks.

This archaic structure coexists with a private sector that communicates and functions at the speed of light. This is makes as much sense as driving an Egyptian war chariot in the Daytona 500!

But our gov’t is not as useless as that…not yet.

Our politicians need to be reminded that legislation DOES NOT need to be passed ASAP. As a matter of fact, legislation that is touted as needing to be passed as fast as possible should be slowed down to a snails pace. Laws of our country should not be the result of short lived public outcry or the whims of third / fourth party with an their own agenda.

Let it to the Feral Capitalist to solve this one.

In some states, a couple cannot divorce without a mandatory “cooling off” period of 60 days. We need the same thing for Congress and Senate.

When a piece of legislation is finalized, all amendments are loaded and the pork is stuffed in the barrels, a mandatory “cooling off” of 30 days goes into affect. This period is two fold.

First, after 30 days, no Rep or Senator would be able to claim that they never read or studied the bill and its affects on their constituents. This also gives watchdog groups and the commoners a chance to grab a hold of the reins.

Second, any Rep or Senator that votes on the bill is required to sign an affidavit that declares that they read, understand, and comprehend the bill in all its glory. This is where it gets REALLY good! If it comes back that a Rep did not read it after they voted and signed the affidavit, they DO NOT pass GO, they DO NOT collect K Street donations, THEY GO RIGHT TO FEDERAL PRISION FOR PERJURY

This is where the power of a bureaucracy shines. By the time the bill is ready to pass, the local gov’ts and their courts will have passes laws for that specific state  and solves the issue at hand. This also preserves the Rights of the States and keeps the FEDS out of our everyday lives.

BAM! Under this structure TARP, the Auto Bailout, AIG Bailout, and CARS program would not have passed.

Oh,  the answer to your question is yes! My huge rational brain is a burden, but it is my responsibility to use it for good and not evil.

The FED Pays Banks Not to Loan TARP Funds!

You have to watch this video. Hat Tip to the Market-Ticker.org forum for pointing this one out:

http://www.youtube.com/watch?v=qvZRVNZ5zeY

It spells out in CLEAR language that banking institutions are being PAID for parking the TARP funds at the Federal Reserve via interest earned.

This is OUTRAGEOUS! In one corner, we have Obama telling the sheeple that the recession is nearing "the beginning of the end." In the other corner, there are Federal Reserve personnel that are purposefully holding up TARP funds from entering the market.

There are TONS of small businesses that need funds to MEET PAYROLL. But they can’t get the funds because the banks would rather earn interest from the FED than use the money for the purpose intended!

Lies on top of theft on top of fraud on top of misdirection...it will not end until you get mad enough to stop paying for this insanity!!

If they lie about the money and where it goes, what makes you think that you can trust them with YOUR AND YOUR FAMILY'S HEALTH!!

My take on the July Rally...

First off, this is not financial advice. These are my OPINIONS and,
being they originate from a human, are prone to errors of understanding.

This recent run up is simply a case of short covering and a massive bear
market rally.

There is nothing FUNDEMENTAL holding this thing up. Which means if you
are buying into it, your position is very likely to turn into something
that resembles Wiley Coyote right after he runs off a cliff and hangs in
mid air for a split second.

Stop watching Jim Cramer and turn off CNBC. Do your own research!

2Q09 = 4th Qtr of Declining GDP

MarketWatch reported this little gem on Sunday: GDP Declines for 4th
Consecutive Qtr
<http://www.marketwatch.com/story/gdp-set-for-4th-straight-decline-econo
mists-say-2009-07-26>

The story goes on report that the last time this happened was during the
great depression.

The math says that we have to experience an explosion of economic
growth, not Gov't related, for GDP to catch up to the burgeoning
deficit. But reality says that is not going to happen.

Why? That is a VERY good question.

1. The consumer (70% of GDP) is still cutting back.
2. Financial losses have not been recognized and priced into the
market
3. Consumers + Businesses are waiting to see what legislation
passes before they spend any cash
4. Continuing Federal Deficit as tax revenues decline

Tighten up your belt Chuck; this winter is going to be long and cold.

Its economics STUPID!

Here is the proof that the Congressional leaders of our country do not fundamentally understand the laws of macroeconomics.

House.Gov HealthCare Flow Chart

I circled where our Reps in Washington D.C. start to go astray:

Notice how they plan for tax revenue to come from two sources: Businesses and Consumers.

MORONS! Businesses simply pass their tax burden onto consumers through price increases! End the end, the consumer pays TWICE!

Here’s the real kicker. There is no value added! All those new taxes do not add efficiency or value, but instead go to pay for that bureaucracy labyrinth shown in the PDF file. So WTF are we paying for?

One word…Socialism.

The Black Swan event in front of US

There are so many happenings over the past few days:

-- Sotomayor praised for her “empathy”

-- Cap and Trade and all that insanity

-- Universal Healthcare…so many issues with this one

-- GoldmanSach’s publically documented shenanigans

-- $2 Trillion Gov’t deficit by the end of ‘09

-- Just today the www.Market-ticker.org points to the possibility of a $23 Trillion exposure to the US via the bailout bill

I might come back and say a few things about each of the above topics, but my past today is to acknowledge a Black Swan event is coming. I personally think it is the total and complete reset of American society, as we know it today.

The reason I say this is due to all efforts taken by The Powers that Be (TPB) to decrease this nation’s standard of living by destroying its capacity for creating REAL and VALUABLE assets in the future.

The increase in the standard of living is the measurement by which economists measure the true economic growth of a nation. You could have a 150% increase in GDP YOY for 10 years, but if 99.99% of all the citizens in that nation are missing the basic elements to SURVIVE, the true economic value of that economy is almost nothing.

You cannot deny that the incentives to become a self-sufficient, value-adding member of society are QUICKLY disappearing. As soon as enough people stop adding value to the system, it can no longer support itself or its people. We are moving ever more rapidly toward this event.

Why Consumer Spending Reports are Misleading

This was presented by Karl Denninger on his BlogTalk Radio show and I present it to you.

But first, 3 main points to remember when tackling this little piece of truth:

First, know that the Consumer Spending Report is a report that “reports” to how well you and I are spending our disposable income.

Second, know that the moratorium on banks foreclosing on properties is coming to an end.

Lastly, know that a “non-performing” mortgage and the way it is report on bank financials can be redefined because and there fore changes the $ impact of the reporting QTR. A pre-crisis non-performing mortgage was delinquent in 30 -60 days. Not any more, it is delinquent whenever the bank feels like reporting it as non-performing.

Why the Consumer spending reports are a farce:

If the bank, by Presidential mandate, halts the foreclosure process, that puts the (would be) mortgage payment back in the pocket of the consumer. Since one out of 10 people (rounded up) don’t have a job, they are doing two things with that cash. They are either buying necessities or they are paying off debt.

Here is where the report starts fibbing. If you have a credit card with a $10K limit and your monthly unemployment check is ½ of your recent salary (or worse, your check has stopped coming), the credit card is now the breathing tube keeping said household alive.

The mortgage payment is used to pay off the life line credit card to sustain a standard of living. What would normally look like discretionary credit card spending is actually necessity spending and does nothing to GROW the economy.

Now the other side. If you were the bank (assuming the bank is the originator of both the mortgage and the credit card), would you rather foreclose on and write down a loss for said property or keep the occupant there and have them pay their 25% APR credit card every month? One is a performing line of unsecured credit and the other one is secured debt but is an instant loss if foreclosed and collected..

Decisions. Decisions.

Right now, the accounting rules say that the secured debt does not have to be recorded, so bank hold off. Hey, they are just following the rules. And you really don’t want to piss off the stock holders with that nasty little right down on the foreclosed property.

OK FINE, BUT WHAT IS THE POINT, you ask?

The whole point of this little thought experiment is to show that either way, a loss is a loss is a loss. More and more people are living off DEBT than creating value in the economy. Anytime debt rises in an economic environment, the assumption is that new more valuable goods and services will be created.

What the US is facing now is a formula for economic reversal: exponential growing amount of debt combined with crashing asset values. Take that and apply a future that does not promise an increased standard of living for several generations.

Ok, so what is the solution?

I will get back to you…in the mean time, try Atlas Shrugged by Ayn Rand as a little lite reading.

TARP will NEVER end per Geithner

This video is an EYE OPENER. It is originally posted on www.Market-ticker.org

Watch the whole thing but especially pay attention to the last little bit with Timmy Geithner

He admits that the 700+ Bailout legislation that was past is a NEVER ENDING line of credit that can be used for any economic purpose the Treasury deems is crucial to support.

What is truly horrible is the questioning representative says, “This is the way you understand the bill that was passed.” Does this rep (and by extension the ENTIRE House and Senate) not understand the inner workings of the bill?

If so, WHY WAS IT PASSED?!

This is a must see.

Its No Joke: Stimulus 2 is Being Kicked Around

You people are insane. Yes, I am talking to all the SHEEPLE who think Universal Healthcare is cool, the economy is growing “green shoots”, and “climate change” is caused my humans.

You are being spoon fed rubbish because either 1)you are too stupid/ignorant to say “hey, this isn’t right” or 2) you actually think Obama (and his cronies) has the answer to everything!

Well, I have news for you. The next spoonful is coming so stretch out those cheeks because this is one heaping load.

According to CNBC, Stimulus Two is being considered. http://www.cnbc.com//id/31772150

Here is a question that the Obama Presscorp would never allow: WHERE IS STIMULUS ONE!!! Hello! McFly!!

Where are all the “shovel ready projects” that Obama promised? Where are the 500K+ jobs that were supposed to be created (not saved)? Why is the unemployment rate screaming past 8.9% and is now 9.5%? Why is ACORN scheduled to receive BILLIONS of dollars in aid while Americans are losing their jobs?!?!

Folks, this stuff is not rocket science (as you are lead to believe). Last summer I told my peers that a New New Deal was coming and the unemployment rate was going to 8% - 10%. If a free thinking, actively investigative, capitalist minded American can see this stuff 12 MONTHS IN ADVANCE, why can’ our overlords in CONgress and the SINate do the same!?!?

It is simple, because they think you are sheep that love to be lead around. Only this time, they are leading you to the rear of the barn to be pillaged and slaughtered!

Gov't Control = Gov't Accountability for Success & Failure

So Obama has presented the New Financial Regulatory points. The goal is to stop another AIG and halt systemic risk or economic bubble.

It is not going to work.

This is why:

The underlying problem with regulations and laws is that they are REACTIVE. They are written to stop past events from happening again. Laws are not created to stop new types of action/events in the future. How can lawmakers know the future enough to write laws to protect against them? Simple; they cannot.

The other problem is that Gov’t wants to take credit for the good and not the bad that result in Gov’t actions. They want to be responsible for a growing economy or for bringing to justice a social evil (Enron). That is what keeps them in office.

If the Gov’t wants to create regulations and laws that are geared toward another financial meltdown, they need to be prepared to take responsibility for failures and the unintended consequences of those failures. That means the Gov’t is SOLEY responsible for any future events such as the S&L Crisis, LTCM, FreddieMac / FrannieMae scandals, Dot Com Bubble, Housing Bubble and the current debt debacle.

The Gov’t won’t take responsibility for its actions, through the Fed and congress, TODAY!

Why in the world would new regulations matter if 1)the current ones are not being followed and 2)accountable parties are not brought to trial?

Senators and House reps can barely be honest with themselves let alone the public that voted them in office.

The trade off being offered by new financial regulations is “less” risk of failure for decreased freedom to SUCCEED and FAIL in the private sector.

They can keep their regs and just start handing out prison terms. Fraud = Fraud, not matter the size of campaign contributions or how long you have been on the House Finance Committee.

Edge.org; A new fav for The Feral Capitalist

Some sites require a thinking cap.

This site requires a DOT Certified 200+Mph rated racing helmet.

www.Edge.org

If you want to increase your metal capital by orders of magnitude while at the same time exposing your precious neurons to University Professor style discussions, visit Edge.org

I am unable to say anything more as a continued sophomoric description would not begin to sufficiently describe the intellectual gems that can be found.

Only con is the site layout. A person really has to use the search option to find specific speeches, lectures, and videos.

10 Interesting Principles from the Author of "The Black Swan"

I thought these points were very interesting:

10 Principles that Minimize Future Black Swans

I especially appreciate how Nassim Taleb points toward the simplification of financial assets and economies.

Take a look at it and get back to the Feral Capitalist!

Bulldozing of Assets!!

Click the link to see the article from the Telegraph.



This is INSANE! The asset that is the other side of the loan is GONE!



Book value = ZERO!! (per rules of the Universe)


How in the HELL are banks NOT going to post this as a loss. This is worse than a foreclosure; this is complete DESTRUCTION of the underlying asset of the loan the bank issued!


wow...that's all I got...wow


-- Lache, The Feral Capitalist

What's with the "Czar" titles?

I remember the first time an Old Russian title of commander was given to an American public official was when I understood “The War on Drugs” and the resulting “Drug Czar.”

Even at the age of 12 – 13 years old, I knew the contradiction that the name “Czar” on an AMERICAN official implied. It would be like an elected KING!

Why “Czar”? Why not “Highly Exalted and Lawfully Untouchable Public Servant?” Isn’t that the same thing? Does it not rightfully convey the same message?

And now, with all the new recessionary programs enacted we have the following: Health Czar, Bank Czar, and the latest from the WSJ is a Pay Czar!

At want point do we stop being CITIZENS and start being COMRADES?!

The Feral Capitalist is feral for a reason. The overwhelming message to the public is one of negating personal responsibility in exchange for a welfare state that will make all the decisions for you. Unbelievably, more and more of my fellow citizens are willing to stop thinking and hand their right to fail/succeed to Uncle Sam.

But but what is wrong with that?

Follow the logic is all you have to do. If a person wants to ignore the risk of failure in life, then they must also ignore the benefits of success. You can’t have it BOTH ways!

You can’t have your cake and eat it too!

-- Lache, The Feral Capitalist

Taste of the Technicals...

Just a little taste of the weekly technicals to show that the S&P 500 is rapidly approaching a very overbought indicator.

Tighten up those short positions, that is where the money is gonna be made in the next 30 days.

-- Lache, The Feral Capitalist

May & June's Fake Out Rally

The Feral Capitalist is going on record to say this is a Fake Out Rally. Fundamental and technical indicators are divergent.

Sure, the technicals point to the 200 day moving avg being broken (on the daily view), but there are no fundamental changes to support such an increase in equity valuations. Unemployment is still rising, mortgage delinquencies are rising (although they are being held off the balance sheet so as not to report the loss), and the commercial real estate meltdown is yet to roll through the system.

Investors are tired of sitting on their reserves and it is burning a whole in their money market accounts, so they buy equities. With GM and Citi’s removal from the DOW and Cisco & Traveler’s addition to the index, that is a reason to hope.

Hope is the slope the dumb money rides all the way to the bottom.

If you want the real picture, look at the technicals from a weekly and monthly point of view. There are many resistance levels to bust through before the fundamentals begin to approach technicals again.

Look for P/E ratios around 10 or even single digits before it’s all over.

Look for the Feral Capitalist to buy your sold shares at the end of the 3Q or the beginning of the 4Q.

-- Lache, The Feral Capitalist

More than the typical economic slowdown...

May 27, 2009 saw the S&P 500 index dive 2%. When this happens, even the novice investor would expect to see the 10 yr Treasury drop as investors sought safety.

The exact opposite happened. The treasury went 1.5% in the direction it normally does on a trading like the 27^th.

The public is being told “the banks are fine, the economy is showing strength.” This does not reflect REALITY.

Treasury yields MUST go higher to support the trillions being pumped into the banks and the welfare state. This is a simple function of inflationary action. If yields must go up in the future, why would banks loan large amounts to businesses or individuals now? Wouldn’t it make more sense to wait till the %’s go up and then loan out money? Shareholders demand a return on their equity holdings, don’t they? That is what I would do…but then I am the Feral Capitalist.

We are 12+ months into the residential mortgage meltdown. The trillion dollar elephant in the room is the looming commercial real estate paper market.

This summer and this fall is going to give the historians something to write about for YEARS.

Expect the market to dive (Elliot Wave pattern 3^rd wave downward) by the end of the summer, credit cards to dry up, and more Gov’t intervention by Christmas.

Nature abhors a vacuum, the equation must balance, the market will find an equilibrium, pick which ever you like…but you can’t stop the “invisible hand” that is going to bitch slap those who lie, cheat, steal in order to move markets or economies.

-- Lache, The Feral Capitalist

The Ascent of Money - PBS Documentary

PBS documentaries, for the most part, are a roll of the dice. However, I ran across the program “The Ascent of Money” while browsing PBS’ list of programs.

I clicked on the link and it turned out to be a fairly recent program (Jan-2009) that offers the option to watch the entire show online.

Fore the most part, “The Ascent of Money” is a fairly accurate summation of money, banking, markets and the current meltdown. One thing that I particularly enjoyed was how it showed the evolution of the housing market in the US, the role of Freddie Mac / Fannie, and ongoing housing problems.

It gave a quick node to Soros betting against the Pound, to Long Term Capital Management, Enron and its after effects.

It also broaches the subject of bonds, options, and derivatives. I was surprised at the concise and succinct way that it explained derivatives without loosing the audience.

It is no “Commanding Heights” but it is a well rounded program and is worth watching. “The Ascent of Money” is a definite addition to the Feral Capitalist home library.

-- Lache, The Feral Capitalist

SOX, the Mortgage Meltdown, and Ignoring Reality

I have been wondering when that little piece of legislation called Sarbanes-Oxley was going to be enforced.

SOX legislation is really geared toward accounting practices. However, one if its regulatory controls is that of highlighting and clearly explaining the way a firm makes and approves decisions.

Somewhere in these firms are risk analyses that point to the probability of Alt-A and subprime housing loans imploding. That means a Risk Manager and his/her Controller either willfully ignored the risk or ignorantly trusted the analysts.

Either way, someone should pay for their stupid decisions and mistakes. Ignorance is not a defense against REALITY.

SOX was created for that specific purpose of hold responsible the upper management and officers of a firm that breaks the law. But, SOX does not allow the prosecution of REALLY REALLY bad decisions which is different from malicious intent.

That only provides more weight to letting banks and corporations fail. At the very least, these loan officers, managers, executives, and irresponsible home owners should reap the full result of their choices. Ignoring reality is not the best course of action for anyone.

-- Lache, the Feral Capitalist

Healthcare Costs Too Much so Gov't to Tax Soda

This is so BACKWARDS I don’t even know where to begin.

Even the below average student in a community college economics class learns that tax is a complete pass through cost to the consumer. It is passed through by the business selling the good/service that is being taxed.

The reason I bring this up is because one “ideas” being toyed with in Congress the taxing of SODA! Ok, so Coca Cola raises the price of a 2 liter by 3 cents, so what?

When I already pay 10% of my paycheck to a program I will NEVER benefit from (social security) and then I have to pay more taxes to just drink a coke? That is insane.

Plus, I DO NOT want Uncle Sam telling me what kind of health care I can have, what quality I can have, how much I pay, or even if I am able to receive health care. Veterans, those people who have put their lives on the line so that I can enjoy freedoms such as expressing my frustrations of our Gov’t, cannot get proper health care. What can Gov’t possibly promise to convince me that I will get proper and just health care?

The answer is NOTHING.

Hey Congress!! Get out of my Doctor’s office, get out of my Dentist’s office, get out of my Emergency Room!

Capitalism works! Try it.

-- Lache, the Feral Capitalist

Not All of Us are Suckers

What is wrong with the generation known as “Millennials?” Which is my generation by the way.

If you read my post regarding the most endangered species, the Capitalist Pig, I hint as to the reason this country and its glory is fading into that hellish void of mediocrity.

Wake up! Put down your iPhones! Log off and read a book! Grow your MIND! Trying to escape the apathetic nature of the Universe does not make it go away.

I will not allow the Gov’t to be my surrogate guardian. I am my own responsibility. I knew Social Security would fail because there is no such thing as a free lunch. And a social program created by Gov’t are doomed to fail because of MORAL HAZARD! These programs are teaching MILLIONS of American citizens that it is ok to accrue debt, go on welfare, and expect other Gov’t handouts if they make the wrong decisions.

Why is EVERYONE so afraid to tell the truth. Failure is earned! If I can’t plan well enough to have enough money for retirement, that is not my neighbors fault and he should not pay for me to live.

I heard this morning that economists are confused as to why retails sales slowed in April. They figured that the new tax credits and tax refunds would spur spending. Let me shed a little lit on the issue.

It slowed because of people like me. If the Gov’t wants to give me a tax credit, fine, I will take it. But I also understand that I need to pay it back, so therefore I can’t REALLY spend it. I have to save it. It is not disposable income, it turns out to be an increase in savings.

They forgot to factor in that there are still some in this nation understand economics, finance and accounting. They forgot to factor that a good number of other FERAL CAPITALISTS still exist.

-- Lache, the Feral Capitalist

Learn More about the Feral Capitalist

Ok kids, if you want to know more about The Feral Capitalist, click on the title of this blog or click on the side link that says "Interests, Resources, etc..."

I will be putting up some of my favorite links to my web resources, blogs, and other readings and documents.

I will also upload my photos of my trip to the Fed to my Google Sites page.

-- Lache, The Feral Capitalist

Reading Atlas Shrugged for the 2nd Time

It has now been 13 months since the Feral Capitalist finished reading Atlas Shrugged, and about 16 months since finishing The Fountainhead. Both of these books inspired me to make significant philosophical changes in my life.

Objectivism comes the closest to my own philosophy of living on earth, but be assured that I am an American Capitalist. There are some ideas I do not agree with when it comes to the more outspoken Objectivist blogs and authors. But that is ok, we are free to disagree, and I don’t need nor require the label of Objectivist. My philosophy is my own, and according to Ayn Rand 'all that matters is a self sufficient ego.'

I have started to read Atlas again. I plan to glean even more from it this time. When I first read it, I most identified with Hank Rearden. I wonder if as I progress through the book if I will begin to identify with Dagny, or d'Anconia, or even Galt more than Rearden this time.

Last night, as I was taking a business final, I watched as scores of upper classmen going into their classrooms with business suits on and preparing their presentations in the hallway and it got me to thinking. How are the overall the tenets of Capitalism taught and supported by faculty? How many presentations are geared toward the James Taggart viewpoint that making money isn’t as important as the social responsibility of business and giving the little guy a chance? Then how many of those are given “A’s” simply because they sound fair as opposed to the hard nose presentations of driven capitalistic students?

My best friend is in Graduate school to earn his MBA and he tells me that the James Taggart viewpoint is quickly snuffed out. Blank out arguments such as “it isn’t fair” is quickly silenced unless that statement is promptly supported by rational thought.

I hope that is the case.

-- Lache, the Feral Capitalist