Friday, May 29, 2009
Thursday, May 28, 2009
You are right, Jeffers. If we had elected our own psychopath to the White House, then all the other international psychopaths would have been much more impressedwhen I suggested that McCain would have made the better commander in chief in these circumstances. This is the kind of immature thinking - name calling - that suffices for abstract thought in some circles.
A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects. - Robert A. Heinlein (my personal hero, and author of my favorite book "Stranger in a Strange Land".)
Wednesday, May 27, 2009
Tuesday, May 26, 2009
Sunday, May 24, 2009
Thursday, May 21, 2009
Standard & Poor's affirmed the U.K.'s credit rating at AAA but lowered its outlook to negative from stable, citing the potential that government debt may equal the country's output. The worse a country's credit rating, the more expensive it is to borrow.It is a foregone conclusion that the U.S. debt is greater than 100%, and growing with no end in sight.
Wednesday, May 20, 2009
The Federal Government's Pension Benefit Guarantee Corp. is going to need a bailout. That is not news to readers of the AEC.
Tuesday, May 19, 2009
I want to pound home the “Oil export market” issue. The importing OECD nations - the U.S., Japan, Germany, and France, along with China – may only import Oil which exporting nations have exported in the first place. I know this sounds elementary, but this is a critical item that the markets are failing to reflect. The exporting nations are increasing their domestic consumption of Oil because their populations are increasing rapidly and those populations wish to live at the same standard of living that they see on American Television Programming – Air conditioning, appliances, cars, etc… If these exporting nations cannot increase total production of Oil more than the amount of the increase in domestic consumption it follows then that their exports decline. It is important to mention that the price of petroleum products to the citizens of the major exporters – Saudi Arabia, Iran, Abu Dhabi, and Venezuela – is a fraction of the world market price, leaving them little incentive to curtail consumption.
Now, superimpose this on a background of asset price and monetary deflation (CPI deflation has not appeared as yet. Our own Dr. Saif Lalani believes that if CPI deflation does not appear at the end of Q2 2009 it will never appear – as in, “if not now, when?”), economic contraction, and in the case of the U.S., the world’s largest Oil importer, increasing Oil inventories at the same time that imports have plummeted, and the illusion of a “Stress Test” by government officials that, in my opinion, used wildly overly optimistic assumptions, and a budget deficit that we feel will absolutely lead to a funding crisis for U.S. Treasuries, requiring debt monetization by the Federal Reserve, with, in our opinion, the result a currency crisis of biblical proportion.
The U.S. National Debt was $11.2 TRILLION (80% of GDP, the number that really matters) as of last week (and that number does not include the $5 Trillion of Fannie Mae and Freddie Mac debt that the U.S. is on the hook for nor the Social Security “Trust Fund”) with interest on the debt in 2008 totaling $412 Billion. The U.S. is increasing its debt by $1.84 Trillion in 2009 and the U.S. projects that the national debt will increase to 100% of GDP - $20 Trillion by 2015 (we wouldn’t be surprised by $24 - $28 Trillion, as we view the Obama administration’s assumptions as more “wishcasting” than forecasting), with INTEREST on the debt topping $1 Trillion.
Please consider this: Economic growth has averaged just under 3% for the past century. Once the National Debt reaches 100% (and we are well past 100% if you add it all up), the interest alone will compound at better (perhaps FAR better) than 5% per year. It follows then that it is impossible to grow our way out this, and if we increase taxes to pay the debt off, we will bring GDP to a negative - thereby only increasing the debt. It appears to us that there is only one way out. (I have searched and researched to see if anybody else has pointed this metric out - and have found none. Could it be that I am missing something? Miscalculating? Feel free to comment.)
Since there is simply not enough money in the world, at the moment, for this to occur it is our opinion that a massive devaluation of the U.S. $ is in the offing through the creation of money “out of thin air” by the Federal Reserve in order to pay for the debt.
That said, in the short term deflation could fool one into thinking that this is just hysteria and histrionics on the part of some. We think that the turn of events, when they come, will be so swift that no words here would be able to capture the “shock and awe” we feel we are in for.
The question of exactly "WHEN" this will happen is beyond my abilities, yet "when" is very important. If the funding crisis happens before the oil import crisis then certain outcomes in the commodity market will be different than if the funding crisis happens post oil import crisis.
To my mind, ONE THING IS A NEAR CERTAINTY - one day in the next 1,500 days your life savings is going to (mostly) evaporate.
Mentatt (at) yahoo (d0t) com
Monday, May 18, 2009
Nonfarm payroll employment continued to decline in April (-539,000), andThere is a big difference between having the rate of decline in employment slow, and a "recovery". There is no "buy and hold" anything in this world. Not even "cash". There will likely be upside "surprises" in the employment numbers in the next 2 quarters. I look forward to seeing how the U.S. equity market reacts to this with great anticipation.
the unemployment rate rose from 8.5 to 8.9 percent, the Bureau of Labor Sta-
tistics of the U.S. Department of Labor reported today. Since the recession
began in December 2007, 5.7 million jobs have been lost. In April, job los-
ses were large and widespread across nearly all major private-sector indus-
tries. Overall, private-sector employment fell by 611,000.
Unemployment (Household Survey Data)
The number of unemployed persons increased by 563,000 to 13.7 million in
April, and the unemployment rate rose to 8.9 percent. Over the past 12 months,
the number of unemployed persons has risen by 6.0 million, and the unemployment
rate has grown by 3.9 percentage points. (See table A-1.)
Unemployment rates rose in April for adult men (9.4 percent) and blacks
(15.0 percent). The jobless rates for adult women (7.1 percent), teenagers
(21.5 percent), whites (8.0 percent), and Hispanics (11.3 percent) were little
changed over the month. The unemployment rate for Asians was 6.6 percent in
April, not seasonally adjusted, up from 3.2 percent a year earlier. (See
tables A-1, A-2, and A-3.)
Among the unemployed, the number of job losers and persons who completed
temporary jobs rose by 571,000 in April to 8.8 million. This group has more
than doubled in size over the past 12 months. (See table A-8.)
The number of long-term unemployed (those jobless for 27 weeks or more)
increased by 498,000 to 3.7 million over the month and has risen by 2.4 mil-
lion since the start of the recession in December 2007. (See table A-9.)
Total Employment and the Labor Force (Household Survey Data)
The civilian labor force participation rate rose in April to 65.8 percent,
and the employment-population ratio was unchanged at 59.9 percent. The employ-
ment-population ratios for adult men and women showed little or no change over
the month. However, since December 2007, the men's ratio was down by 4.4 per-
centage points, while the women's ratio was down by 1.3 percentage points.
(See table A-1.)
In April, the number of persons working part time for economic reasons
(sometimes referred to as involuntary part-time workers) was essentially un-
changed at 8.9 million; however, the number of such workers has risen by 3.7
million over the past 12 months. (See table A-5.)
Monday, May 11, 2009
Friday, May 8, 2009
A decline in the value of the US$ (Inflation) would explain part of the equity rally, as well as the bond market's debacle.
Tough stuff to put your mind around.
Thursday, May 7, 2009
Tuesday, May 5, 2009
Saturday, May 2, 2009
On April 29, we had 2 goats, 4 kittens, and dozens of chicks birthed on the farm.
Our fencing crew, with the forman in the foreground...
Peaches are setting
The Jeffers Farm
Mom and the terrors.
with the ever present T-Bone