Tuesday, June 29, 2010

Obama's "Interesting Sectors"

Obama: More Economic Work to Be Done

As for the United States, Mr. Obama said, “We share the view that the economy is strengthening, that we are into recovery, that it’s actually led by some interesting sectors like manufacturing.”

“But,” he added, “what we also agreed is that we’ve still got a lot of work to do. There is a great concern about the 8 million jobs that were lost during the course of these last two years, and that we’ve got to continually push the pace of economic growth in order to put people back to work.”

I think I found 10% of those jobs.


The company opened its first manufacturing plant in Shenzhen, China in 1988, which is now the company's largest plant, with 420,000 employees working in shifts and living inside the compound. Currently Foxconn employs 800,000 people in mainland China including those working at the massive Shenzhen complex.

It is the kind of work Americans are told we don't want to do though. Heck, even the Chinese aren't all that crazy about it apparently.

Between January and May 2010, twelve Foxconn employees attempted suicide, with ten deaths. Some reporters criticized the company's long working hours, low pay and harsh management methods, such as physical abuse towards mainland employees from Taiwanese managers. Workers have complained about monotonous work schedules and inhumane working relationships (such as one employee, who had worked for half a year and yet did not know the names of his dormitory mates). Compared to China's overall suicide rate, the suicide rate at Foxconn is not statistically aberrant, but the rapid succession of suicides is unusual.

Fortunately, robots will never complain.

At the moment, Elektro-Praga -- which specializes in low-voltage circuit breakers, switches, control products, wiring accessories and cable systems -- only employs the ABB robot system to turn out its "Tango" line of dual plug sockets. But in the near future, it plans to use it for several other variants. In fact, as it takes no more than 10 minutes to set up the line for another variant this will make it possible to change the variant up to 30 times per week - which results in real flexible 'production to order'.

Citigroup's Swamped (Musical Tribute)

Citigroup Shares Survive Brief Halt

NEW YORK (TheStreet) -- A sharp swing to the downside caused shares of Citigroup(C) to trip circuit breakers put in place in the wake of the "flash crash" in early May on Tuesday.


Apparently a single trade was placed for 8,820 Citigroup shares at $3.3174, 12.7% lower than the previous trade of $3.80, Dow Jones says. The trade has since been canceled, authorities told Dow Jones.

A single $30,000 trade is all it takes to swamp Citigroup these days? Doesn't that just inspire confidence. It's the kind of unemployed "fat finger" that can work out of a mother's basement on the hopes of getting rich as a day trader.

I'm picturing all those computer program trading algorithms factoring in this new normal. $30,000 is certainly a cheap way to influence a stock's price, especially one that trades roughly 800 million shares per day such as

When you've bought on credit
When you've bought on credit
When you've bought on credit
When you've bought on credit
Ooohhh noooo

Citigroup's flying high above
With those gains that we can't quite realize {realize}

Citigroup? who cares? {Citigroup? who cares?}
As it turns around {as it turns around}
And we know that it descends down carefree

It's just another day
The shame's still here
Hard to believe
That it's just been sold, just been sold, just been sold

Citigroup can't refuel our debts
Scary shadows of our past are alive {alive}

Citigroup? who cares? {Citigroup? who cares?}
As it turns around {as it turns around}
And we know that it descends for a while

Just another day
The shame's still here
It's hard to believe
That it's just been sold again

It's just a tragedy
It bleeds cash flow
Hard to believe
That it's just been sold

When you've bought on credit
When you've bought on credit
When you've bought on credit
When you've bought on credit
Ooohhh noooo

Just another day
The shame's still here
It's hard to believe
That it's just been sold again

It's just a tragedy
It bleeds cash flow
It's hard to believe
That it's just been sold, just been sold, just been sold

Monday, June 28, 2010

Summer Is Finally Here! Hurray!

It's sunny here in the Seattle area so you can probably expect fewer posts from me in the coming months.

Seasonal affective disorder

Seasonal Affective Disorder (SAD), also known as winter depression or winter blues, is a mood disorder in which people who have normal mental health throughout most of the year experience depressive symptoms in the winter...

Our economy has been SAD for a full decade so far. I think it has something to do with several "mock crashes" after excessively binging on cheap credit.

Hold on. That's not SAD. It's SADD.

Students Against Destructive Decisions

SADD hosts many events meant to underscore the consequence of destructive decisions, including a mock crash that portrays the effects of drunk driving, and a "Grim Reaper" day which involves particular students dressing in grim reaper costumes and symbolically "killing" their peers. The "dead" peers don't speak for the rest of the day, and also act very sullen, to help simulate the effect of how it would be if the students were truly dead.

I just want to make sure I understand this correctly.

It’s a Fork, It’s a Spoon, It’s a ... Weapon?

Zachary’s offense? Taking a camping utensil that can serve as a knife, fork and spoon to school. He was so excited about recently joining the Cub Scouts that he wanted to use it at lunch. School officials concluded that he had violated their zero-tolerance policy on weapons, and Zachary was suspended and now faces 45 days in the district’s reform school.

Meanwhile, dressing up in black and symbolically "killing" your peers is not only acceptable, but is actually considered a responsible thing to do. Go figure.

Saturday, June 26, 2010

A Century of Dow Hats

The DJIA first crossed 100 at some point before 1929.

It bottomed in 1932. It took 10 more years to cross 100 permanently.

The DJIA first crossed 1,000 in 1972.

It bottomed in 1974. It took 8 more years to cross 1,000 permanently.

The DJIA first crossed 10,000 in 1999.

At first we thought it bottomed in 2002 and that it took just 1-2 more years to cross 10,000 permanently. No such luck.

We then thought it bottomed in 2009 and that it took less than one year to cross 10,000 permanently. No such luck.

Nobody knows how many years it will be before we cross 10,000 permanently. It is possible that we already have. I wouldn't bet on it though. As of today, we only have a 143.81 point safety margin.

May 25, 2010
Dow 10,000! (An Illustrated History)

Stocks were way down this morning, and the Dow fell below 10,000. That threshold has no intrinsic meaning, but it has this very loaded, emotional history.

The first time the Dow closed above 10,000, it was a really big deal. They made hats, as if the stock market had just won the Super Bowl, or something.

Source Data:
Yahoo: DJIA Historical Prices

Yet Another Real Estate "Victim"

Former Jaguar Mark Brunell filing for Chapter 11 bankruptcy

Brunell fell victim to real estate downturn.

“The timing of the group’s real estate acquisitions at the height of the real estate market, in hindsight, clearly was not good,” Brunell said in a statement e-mailed to the Times-Union.

If you made $52 million over the course of 10 years, spent $17 million on taxes, spent a whopping $200,000 per year just to scrape by, invested the rest entirely on speculative real estate, that real estate then lost 75% of its value then...

You'd think you'd still have $4 million leftover to enjoy a very comfortable post-NFL retirement and would have no need to file bankruptcy.

You'd think.

You might not have factored in what Fitch Ratings analyst Bob Curran had to say about debt and leverage in
April 2005 though.

It may simply reflect our overleveraged society and the fact that people are carrying more debt on everything and it doesn't take a lot to affect a small percentage of them in terms of moving them from homeownership to not.

That's probably my favorite quote from the housing bubble. You'd think he'd be the biggest bear of them all. It's something I could have easily said back then. No such luck though. Check out what he said next.

"It's hard to make a case, based on what I see here, that all of a sudden it's become an enormous trend." He said the economy is improving and employment is growing, which bodes well for a homeowner's ability to make mortgage payments.

Guess what? It eventually became an enormous trend, the economy fell apart, unemployment skyrocketed, and it did not bode well for a homeowner's ability to make mortgage payments. Go figure.

Friday, June 25, 2010

JP Samara Morgan Chase (Musical Tribute)

US banks' Q1 trading revenue rises to $8.3 bln-OCC

Exposures in the derivatives contracts remained highly concentrated, with the largest five banks continuing to account for 97 percent of overall exposure and 86 percent of net credit exposure, the OCC said.

JPMorgan, Bank of America, Goldman Sachs, Citigroup and Morgan Stanley (MS.N) had the largest derivative exposures of all holding companies, at $76.89 trillion, $71.16 trillion, $49.14 trillion, $42.31 trillion and $40.73 trillion, respectively.

Samara Morgan

Dr. Scott: You don't want to hurt anyone.
Samara Morgan: But I do, and I'm sorry. It won't stop.

My Stagnationary Prediction

In my last post I concluded that the stimulus physics model I was using is beginning to break down. I clearly need to start thinking of another model to replace it. The most obvious path is that the stock market just continues to roll over. It is hard to believe in the obvious though. I typed "double dip" in Google and it actually tried to help me by adding "recession 2010" to the end of it. Go figure.

The DJIA is trading at roughly the same level that it was trading at when I turned bearish in 2004. That was my primary fear in 2004. It would simply stagnate. That's my primary fear now.

My long-term prediction is therefore just about as simplistic as simplistic could be. Hello stagnation. It's just a gut call. I don't have much supporting evidence to back it up. Just add one part deflation to one part stagflation and that's what you get though.

See Also:
Stimulus Physics
Stimulus Physics Update #1
Stimulus Physics Update #2
Stimulus Physics Update #3
Stimulus Physics Update #4
Trend Line Disclaimer

Source Data:
Yahoo: Historical Prices for Dow Jones Industrial Average

Thursday, June 24, 2010

Stimulus Physics Update #4

The model is beginning to buckle (as we knew it eventually would). The correlation between the data and the extrapolated trajectory is eroding as more data comes in. It does not help that the data itself is more volatile.

This started off as mostly a joke. It then turned into a running gag. Now look at it. The original peak prediction of 11,000 doesn't seem all that silly in hindsight.

Please don't read too much into this. This model was guaranteed to fail at some point. It may have already failed. Even if I am right to be bearish, the stock market could simply stagnate from here.

See Also:
Stimulus Physics
Stimulus Physics Update #1
Stimulus Physics Update #2
Stimulus Physics Update #3
Trend Line Disclaimer

Source Data:
Yahoo: Historical Prices for Dow Jones Industrial Average

Today's Stock Market Tribute

See Also:
Crossing the S&P 500's Rubicon v.23
Sarcasm Disclaimer

Source Data:
Yahoo: S&P 500 Historical Prices

Wednesday, June 23, 2010

Personal Safety

When I turned bearish in the summer of 2004 I thought it would be a good idea to buy gold and silver. I didn't just stop there though. I figured a handgun could serve two purposes. First, a decent one is collectible and should hold its value. Second, well, you know.

I no longer own the gold and silver. I still have the 1911. It just sits in a safe in the garage. I have no great desire to move it to my night stand unless the economy really heads downhill (which I obviously hope never happens). I continue to believe that locks, a dog, a big jammer or two, and my girlfriend's cell phone are far better forms of defense. I'm one of the few (perhaps only) people in my neighborhood to actually lock the gates to the backyard. This even after at least a few houses near me were robbed? Go figure.

I owned a .22 rifle as a teenager and many days were spent shooting targets. It was fun then and it is fun now. The target above is from one of the last times I fired the handgun at the range. If not for the expense (bullets aren't cheap), I'd still be doing it. It's hard to believe it has been 5 years since I have fired it. Where does the time go?

2004 was the first year I'd ever fired a handgun. The chart above shows what roughly 4 months and 300 rounds of practice can do. In order for me to want to move the gun to the night stand, I'd probably want to fire another 1,000 rounds at the minimum and continue to practice. As you can see, although all 15 shots hit the target, the first few (the most important shots) were not acceptable.

In my opinion, those who own handguns without practicing are the real gun nuts. They say that a bad worker blames his tools. No court of law is going to let people blame their handguns though.

Those who buy a handgun for personal safety with no intention to practice first should try buying a unicycle for personal transportation with no intention to practice first. It's about the same to me. The latter would be far more amusing to watch though, lol.

Here's what even less practice looks like. It's a target from about one month prior. You will note that two shots did not even hit the paper and the rest did not exactly cluster around the bullseye. I keep it to both humble me and remind me just how dangerous handguns can be.

Just thoughts!

Real Prosperity vs. Dumb Luck

I stumbled upon the following two videos today.

That's real prosperity. How can he play the guitar like that without any hands? I find it very inspiring. It gives me a sense of hope.

That's dumb luck. How can she make predictions like that without a brain? I find it very discouraging. It gives me a sense of hopelessness.

Tuesday, June 22, 2010

Sarcasm Disclaimer

Many of the posts on this blog contain sarcasm in one form or another.

This is especially true any time I use the "sarcasm" label to help identify a particular post. It's up to the reader to determine what parts of the post are sarcastic though. Sorry!


Though in the English language there is no standard accepted method to denote irony or sarcasm in written conversation...

What can I say? It's a curse. We live in sarcastic times and yet there is no way to adequately express sarcasm in written form.

For example, I was very sarcastic in the following post.

Crossing the S&P 500's Rubicon v.23

The Rubicon is meant to express something that is crossed just once and there is no turning back. The S&P 500 turned back many, many times though.

This post inspired by AllanF who has pointed out that newer readers might not realize that much of what I say is sarcastic and might therefore assume that I mean exactly what I write. I've been thinking about it and it would seem that I need an additional disclaimer.

The Free-Money Tsunami

Free-Money Tsunami Provokes Rush to Control Cash: William Pesek

Gone are the days when central banks were truly independent. Can you imagine if the Fed raised short rates this month? U.S. lawmakers would probably send a SWAT team to bring in Bernanke. Imagine if Trichet tightened policy at a time when Greece is being downgraded to junk and Spain is on the brink. The United Nations might have to get involved to save the euro zone from itself.

Get Used to Zero

Nor does anyone expect the Bank of Japan to surprise markets. Central bankers are stuck near zero for some time. That’s the problem with using all your ammunition. It’s hard to reload when credit markets are still malfunctioning and demand for credit is scarce.

The 20-Year isn't buckling yet, but it sure is trying.

This is America though. We're not just some third world country. We should keep that in mind. It would take an epic financial disaster to make this economy bad for 20 more years (in addition to the last 10 years of course).

The bond market doesn't think we're about to hyperinflate. That's pretty good news for those of us who are savers (not so good for those in debt). Of course, that might end up being too much of a good thing if we slide back down into the deflationary abyss.

I continue to believe that we cannot borrow our way back to prosperity. It did not work for Japan. It did not work for us in 2004. It won't work for us now. We cannot fix long-term structural problems with short-term cyclical solutions.

See Also:
Trend Line Disclaimer

Source Data:
FRB: Selected Interest Rates
U.S. Treasury: Daily Treasury Yield Curve

Monday, June 21, 2010

China's Newest Jobs!

Now Hiring: Fake Executives in China. No Experience Required.

Moxley said he, along with five other guys, was hired to be a “quality-control expert” for $1,000 a week, though it was made clear to him at the time of hiring that they wouldn’t be doing any quality control.

The job would entail attending some dinners, going to a ceremony and touring the factory once a day. The rest of the time, he and the other “executives” sat in fly-ridden office, where they slept, read magazines and joked around.

CNBC: Fake Execs Wanted in China (video link)

It's very funny actually...

I'm trying to remember why I don't wish to invest in China. Is it because I think it is a bubble? Is it the rampant fraud and corruption? Are those things somehow stopping me? It certainly isn't the humor. I know that much.

We Can't Even Produce Our Own Fake Lunch Meat!

A Bubble Gum for Bologna Lovers That Invites You to 'Blow Your Lunch!'

The pair are manufactured in China for Ford Gum and Machine Company of Akron, New York, and are available at the myriad Heavenly Delights stores, which cater to tourists in Midtown.

How sad is that?

Sunday, June 20, 2010

The Sarcasm Report v.52

I present this small offering to the Sarcasm Gods.

Offering to the Gods

In many Pagan and Wiccan traditions, it's not uncommon to make some sort of offering or sacrifice to the gods. Bear in mind that despite the reciprocal nature of our relationship with the divine, it's not a matter of "I'm offering you this stuff so you'll grant my wish." It's more along the lines of "I honor you and respect you, so I'm giving you this stuff to show you how much I appreciate your intervention on my behalf."

I do honor and respect the sarcasm gods. I expect nothing in return. Why should I? The gifts they have already given us just keep on giving.

I think that people don't think of Lenny as sophisticated, but I am telling you Bernie, that not only is he sophisticated but he's one of the great ones in this business. He's one of the great ones. - Jim Cramer

If I didn't know any better, I would tell you that everything you hear from Lenny is an act, because there is just no way that you would ever feel like he's as smart as he really is. - Jim Cramer

April 23, 2009
The Myth Of Lenny Dykstra Completely Unravels

ESPN's Mike Fish punctures the final holes into Lenny Dykstra's supposed financial genius with swift, purposeful blows.

June 11, 2010
The 10 Most Broke Former Superstars: Where Does Eddy Curry Rank

Dykstra is now supposedly living out of his car, in his old offices and hotel lobbies.

Where does Lenny Dykstra rank? #1! Woohoo!

Hindsight will show that Jim Cramer was one of the great ones someday. Most simply did not understand that he was a true master of sarcasm. I am humbled by his presence. Is it a coincidence that Jim Cramer thought Lenny Dykstra was one of the top 5 in the world? I say no! That's a billion to 1!

February 29, 2000
Winners of the New World

You want winners? You want me to put my Cramer Berkowitz hedge fund hat on and just discuss what my fund is buying today to try to make money tomorrow and the next day and the next? You want my top 10 stocks for who is going to make it in the New World? You know what? I am going to give them to you. Right here. Right now.

Note that the winners of the new world were actually epic losers. That can't be a coincidence. Would someone who made picks that poorly really have their own TV show right now? It only makes sense if what he wrote was pure sarcastic genius!

May 4, 2010

Sarcasm FAIL

Given the new consumer optimism, good luck to anyone who wants to short this sector.

We believed the the sarcasm actually failed, but did it? What if the sarcasm was so deeply layered that mere mortals could not possibly comprehend all its subtleties? In other words, what if the sarcasm was itself sarcastic? Genius!

Friday, June 18, 2010

The Sarcasm Report v.51

Proof that Interest Rates Are Getting Ready to Rise Sharply

Barron's says rates will stay low as far as the eye can see.

Fantastic proof!!

A special thanks to the columnist for Forbes.com for showing us all his work too. There's just no disputing it once all the evidence is laid out like that.

There's more though. Unlike Barron's, we know we can trust Forbes.com to tell us how it is. They are always spot on.

August 26, 1999
Forbes.com: "Outlook: A perfect economy"

While the trade deficit may counter GDP growth, it's not a bearish sign for the economy. On the contrary, U.S. consumers' seemingly unquenchable demand for cheap imports is an undeniable indication of the strength of the U.S. economy relative to the rest of the world.

The S&P 500 closed that day at 1,300.29. It's only 14% lower today. That's nearly 11 years of solid "undeniable" perfection.

Thursday, June 17, 2010

Bond Bubble? Maybe. Maybe not.

Pop goes the bond fund balloon?

Yet unlike the technology- and credit-fueled bubbles, which resulted from eager buyers chasing returns, this latest bubble is forming in part because frightened investors want to minimize risk and avoid further losses.

Unlike the credit-fueled bubble? Seriously? This *IS* the credit-fueled bubble. We are still in it. It did not just magically disappear.

Let's look at the mother of all credit fueled bubbles and its aftermath for a small glimpse of what could happen.

I refer you to the Historical Bank Prime Loan Rate.

1929 range of 5.5 to 6 <------ The Roaring 20s!
1930 range of 3.5 to 6
1931 range of 2.75 to 5
1932 range of 3.25 to 4
1933 range of 1.5 to 4
<------ The Great Depression!
1934 (date uncertain) value of 1.5
1935 (date uncertain) value of 1.5
1947-12 (specific date uncertain) value of 1.75
1948-08 (specific date uncertain) value of 2
1950-09-22: 2.25
1951-01-08: 2.5
1951-10-17: 2.75
1951-12-19: 3
1953-04-27: 3.25
1954-03-17: 3
<------ 20-25 years later!

I'm not saying it will happen, but I'm not about to suggest it won't. Those placing leveraged bets on higher interest rates and higher inflation might continue to be very disappointed.

seasonally adjusted CPI was 217.224 in December 2009. It was 217.224 in May 2010. That's a big fat nothing, right down to the last digit of precision.

This is not investment advice. In order to know if there is a bond bubble, one must first figure out where interest rates are headed. Good luck on that one long-term. Interest rates will be somewhere between Japan's and Zimbabwe's no doubt.

Kan’s Megaproblem

Japan’s gross debt-to-GDP ratio is second only to Zimbabwe, at almost 200 percent.

Japan can't seem to escape deflation and even Zimbabwe's inflation is down to 6.1% , as hard as that is to believe. It's certainly better than the 89.7 sextillion percent rate they had earlier.

Real Yield Infection (Musical Tributes)



Not dead yet!

I've been predicting the death of real yields since 2004. I felt that the era of making money off of money would be coming to an end, much as it did in the 1970s.

That said, real yields are very low and I am currently deflationary. They could spike up like they did in late 2008. They could also spike up for other reasons. For example, the US could simply offer too much debt and find a lack of demand. If so, I offer an alternative musical tribute for that possible outcome. That's right! Two musical tributes for the price of none! Woohoo!

Source Data:
I-Bond Rates
FRB: Selected Interest Rates

Tuesday, June 15, 2010

Poll Results: Who Is Smarter? (Musical Tribute)

Poll: Who Is Smarter?

The Crow wins 28 to 2 based on a non-scientific sampling of potentially biased anonymous Internet users! Woohoo!

Ravens and Crows

Technically, since ravens belong to the crow (corvus) family of birds, they can be called crows - but not all crows are ravens.

Monday, June 14, 2010

Q: What Do These Five Commodities Have in Common?

1. Gold (the ancient metal?)
2. Silver (imaging?)
3. Copper (wiring?)
4. Lead (bullets?)
5. Iron (swords?)

There are many valid correct answers, but I have one particular answer in mind.


Here's the answer!

For at least 1,250 years, those wishing to hoard elements from the periodic table had only five choices.

There are now many additional options open to us.

1. Titanium (the space age metal?)
2. Plutonium (nuclear weapon?)
3. Uranium (power plant?)
4. Aluminum (airplane?)
5. Platinum (automobile catalyst?)

And many more!

I would argue that world wars will no longer be fought over gold, but they may very well be fought with plutonium. In a way, plutonium has been the world's ultimate safe store of value for the last 60+ years. It's been very difficult to have a world war with it in existence. Let's hope it stays that way. Otherwise, plutonium will become a very unsafe store of value.

I know not with what weapons World War III will be fought, but World War IV will be fought with sticks and stones. - Albert Einstein

I think you all did great in the comments by the way. As you can see, my hints were not all that helpful. The description I offered for gold was the key, but you will notice that I suggested it was "the ancient metal", not one of five. I'm pretty sure you all would have solved it had I said that!

For what it is worth, I would not have solved this puzzle. The red herrings would have definitely worked their magic on me.

Source Data:
Timeline of chemical elements discoveries

Saturday, June 12, 2010

5 Minute Easy Set Up Instructions!

I supported our trade deficit while simultaneously supporting the American economy today. I feel so patriotic!

I replaced a portable air conditioner. The previous one died after about 4 seasons of use. Big surprise! Not!

I thought I'd share how miserably I failed the installation task though. It took me roughly 3x longer than I was told it would take.

1. Bring the unit near a window and install the included window bracket.

The bracket(s) actually came in 9 parts (5 being plastic rivets). There were a variety of permutations. The correct one depended on the size of the window opening. The instructions left that as a puzzle for the reader. Some permutations had too many holes. Some would have the holes in the wrong places. The bug screen could have been installed one of two ways. I had to look ahead to future steps to figure all of this out.

I solved the puzzle AND installed the window bracket in just under 5 minutes. Hurray! Unfortunately, that only left me roughly 30 seconds to do the rest of the installation, lol.

2. Attach the included exhaust hose to the back of the unit. Then connect the other end of the hose to the window outlet.

There were actually two hoses. I opted to install both. I was tempted not to of course, since I knew it would double my time, lol.

3. Insert the end of the hose that is now connected to the window outlet into the oval opening of the window bracket.

That required me to go back and redo step #1 (minus the puzzle solving time). There was no easy way to simply insert it into the window bracket. I had no leverage. It wanted to snap in place but it was MUCH easier to do this when the window bracket wasn't already installed into the window.

4. Be sure to have a 3-hole grounded outlet no more than 5 1/2 feet from the window, and plug in the unit.

The outlet was 6 feet away. I had to start from the very beginning again.

JOKE! I'm kidding of course. I actually thought to check the length of the cord before I started. Yes, miracles do happen, lol.

5. Turn the unit on and adjust the temperature for your desired comfort. See the user manual for further instruction on using the features and settings of the unit and remote control.

Okay! Unit on! Let's go read that instruction manual.

After transportation, wait at least 6 hours before switching the unit on.

Holy crap! I just broke the air conditioner!

JOKE! I'm kidding again. I actually chose to read the instruction manual before installing it. I did not turn the unit on in step 5.

And now for the last step in the easy set up instructions. It isn't numbered. I assume it is therefore an afterthought.

FOR OPTIMAL PERFORMANCE: The hose should be as close to the window as possible, without any kinks that could obstruct the flow of exhausted air thereby reducing cooling performance.

A bit late for that don't you think? I already installed all the hoses in steps 2 and 3.

And now for the main event. The instructions INSIDE the box say...

The unit should be transported in a vertical position. If this is not possible secure the unit at an angle, do not lie it horizontally.

Picture the OUTSIDE of the box. It is about 4' tall. Picture the cargo space of my friend's SUV. Picture the box's only warning.


That's not exactly a suitable warning based on what I'm reading INSIDE the box. Anyone could see which end was up. It's the side that makes the text on the box easy to read. There's no mention of needing to transport it at an angle if upright is not possible though.

Contrary to the 5 minute easy set up instructions, I've got about 4 more hours to wait before I can turn it on and see if it actually works.

Forehead. Desk. Whack. Whack. Whack.

Thursday, June 10, 2010

Home Mortgage Debt (Musical Tribute)

On September 17, 2007 I posted the following chart and commentary.

Based on the data below, a potential peak appears to have been pushed out a few quarters. It could even be argued that a peak is not coming.

Using hindsight, the peak came all right. Home mortgage debt peaked right about where the chart showed it would. It simply peaked at higher level. It was like one last gasp before the descent.

Home mortgage debt peaked at $10.6129 trillion in the 1st quarter of 2008. It has fallen to $10.2358 in in the 1st quarter of 2010 and continues to fall. It also appears to be accelerating. This most recent quarter's data is the fastest rate of decline yet.

Seasonally Adjusted Annual Rates

2008 Q2: -0.5%
2008 Q3: -2.4% <--- Sheer panic
2008 Q4: -1.8%
2009 Q1: -0.1% <--- The stock market finds a floor
2009 Q2: -1.6% <--- Dennis Kneale "crows"
2009 Q3: -3.4% <--- Dennis Kneale Show canceled
2009 Q4: -1.1%
2010 Q1: -3.8% <--- Fastest declining annual pace yet
2010 Q2: ____? <--- Dennis Kneale's off Power Lunch

Well, that's just great. What if they replace the Dennis Kneale with a permabear? How would I be able to compete if CNBC starts pandering to the masses? Say it isn't so!!

In all seriousness, for an economy supposedly dependent on credit as its life-blood, this data looks pretty bad to me. I suppose it could be worse. The Federal Government's debt could have been rising at an 18.5% annual pace in the 1st quarter. You know, just like it did. Oops. I guess that wasn't all seriousness. I also snuck in some sarcasm in there too. Sorry about that!

Roubini Urges ECB to Cut Rates to Offset Austerity (Update1)

“Going to zero alone is not going to be enough, it’s 100 basis points,” Roubini said. “They need to go to zero, they need to do more quantitative easing, they need to support dysfunctional markets, they need to signal that they are actually not uncomfortable with a weaker euro as long as that is a gradual and orderly process.”

Bernanke Disagrees With European Austerity Moves

I like long TIPS and I can not lie
Our auto workers can't deny
That when our Ben walks in with more itty bitty rates
And our homes just slow their pace
Stocks get sprung
What a sell off so tough
'Cause you notice it all was bluffed
Deep in the debt we're swearing
We're hooked and we can't start caring
Bernanke, I wanna get with you...

You know the words. Sing along!

Source Data:
FRB: Flow of Funds

Bring More Tuna (Musical Tribute)

As impressive as today's stock market rally was, one still has to wonder if...

Soros Says ‘We Have Just Entered Act II’ of Crisis (Update2)

“The collapse of the financial system as we know it is real, and the crisis is far from over,” Soros said today at a conference in Vienna. “Indeed, we have just entered Act II of the drama.”

Soros, 79, said the current situation in the world economy is “eerily” reminiscent of the 1930s with governments under pressure to narrow their budget deficits at a time when the economic recovery is weak.

If memory serves, the 1930s were deflationary.

The Sarcasm Report v.50

Top 10 Trading Rules

Wednesday, June 9, 2010

Illusions in a World of Housing Gems

Illusions vs. Reality in a World of Gems

LONDON — In Guy de Maupassant’s 1884 story, “The Necklace,” a poor woman married to a lowly clerk borrows an elaborate diamond necklace for a fancy ball. She is devastated at the end of the night to realize that it has vanished. For a decade, she and her husband toil to pay off the enormous debt that they incur in buying a suitable replacement, only to discover that the necklace was paste — an artful but worthless glass used in imitation jewelry.

The themes that concerned Maupassant — reality, illusion and the murky borderland between them — have preoccupied jewelers ever since they and their clients first discovered that glass could be a convincing substitute for genuine gemstones. In ancient Rome, Pliny called it mendacio vitri, or “lying glass.” Little wonder that, throughout history, any discussion of gems has necessitated a mention of the potential for duplicity and deception.

There's been a bull market in "lying glass" for over a decade. Who knows when it will end.

Take today's stock market. It was up almost all day and then right there at the close... poof.

Perhaps the housing market is the better example of what decades of debt can do though.

August 6, 2006
Look at the benefits of buying a home in a cooling market

That's not to say that a well-priced property won't move quickly in this environment, he said, but buyers need to educate themselves so that they can recognize a housing gem when they see it.

This post inspired by GawainsGhost.

Gold vs. Cement, Steel, Copper, & Nickel

If history is any guide, it could easily be argued that gold was expensive compared to all four of these hard assets back in 2008. Gold was $871 an ounce then and has continued to climb in price.

The key, at least to me, is what happens to the price of those other hard assets. Should they fall, then gold would seem to be even more overpriced.

Here's a mix of inflationary and deflationary stew for you to digest.

As China’s Wages Rise, Export Prices Could Follow

“For a long time, China has been the anchor of global disinflation,” said Dong Tao, an economist at Credit Suisse, referring to how the two-decade-long shift to manufacturing in China helped many global companies lower costs and prices. “But this may be the beginning of the end of an era.”

China worried over high steel prices

The switch to quarterly pricing for iron ore and a similar switch potentially lying ahead for coking coal is the biggest structural change to impact the global steel industry for decades. Various steel producers and bodies have warned that it will increase price volatility in both costs paid for raw steel-making materials and prices passed down to consumers.

Copper to Drop as China Chokes Off Property Boom: Chart of Day

“There could be further downward pressure on the copper price,” MF Global analyst Jeremy Cave wrote in a report. “Over 40 percent of copper is used in construction, so the relationship with Chinese property markets is clear.”

Copper Enters Bear Market on Jobs Data; Zinc, Nickel Plunge

Copper has fallen 23 percent since reaching a 20-month high in April on signs that growth is slowing in the U.S., China and Europe. The Reuters/Jefferies CRB Index of 19 commodities fell as much as 2.4 percent today, led by declines in metals. Zinc plunged 15 percent this week, the most since February 2007, and nickel lost 16 percent, the biggest drop since October 2008.

“The jobs number was very bad,” said Gijsbert Groenewegen, a partner at Gold Arrow Capital Management in New York. “It means that the economy doesn’t have any traction. Markets will struggle from here and people are going to sell base metals.”

China bubble

It is very difficult saying when a bubble will pop. As John Maynard Keynes once famously said, “The markets can remain irrational longer than you can remain solvent.” But the available evidence seems to suggest that the Chinese property bubble cannot go on for long. And as when it pops, Chinese manufacturers will start dumping all the steel and the cement that they produce, on other parts of the world. As and when then happens, steel and cement prices will crash.

At that point of time, you wouldn’t want to be holding these stocks, anywhere in the world, India included.

Beijing chills hot property market

James Chanos, a hedge fund manager, went so far as to warn earlier this year that China was “on a treadmill to hell”.


Despite the effects the measures have had, analysts are predicting further action. In particular, it seems likely that a property tax will be introduced. It is expected to be a tax on those holding properties, rather than a transaction tax. This will give local authorities a more stable income and make them less reliant on the revenue from land sales, something that has helped fuel the price increases.

In sharp contrast to Forbes, I find the opinions of James Chanos to be rational. I continue to lean deflationary. It is not a sure thing though.

See Also:
A Century of Gold Bubbles
Gold vs. The World's Oldest Money
Gold to Aluminum Price Ratio
Gold to Salt Price Ratio

Source Data:
USGS: Historical Mineral Prices

Tuesday, June 8, 2010

Gold to Salt Price Ratio

It would seem the world does not have enough salt speculators.

The following chart shows the price of gold compared to the price of salt from 1913 to 2008.

I should also point out that the chart ends in 2008. The price of gold was $871 then. It is now over $1200. Gold is far into bubble territory compared to salt, just as it was compared to cattle, aluminum, and the precious metals found in the platinum group (see links below).

Which is really the safer store of value? I would claim that salt wins by a HUGE margin. It has tracked the CPI much better than gold over the last 100 years. Gold is all over the place. Fortunes were made and lost as speculators rushed in and rushed out. That's not my idea of safe. Further, gold was extremely expensive compared to salt in 2008. It's only gotten worse.

I know what you might be thinking. Yeah, but what if salt explodes higher in price due to all of this monetary printing press activity? Wouldn't the ratio look much better then?

1. Then buy salt! It is currently very cheap relative to gold.
2. Don't hold your breath.

May 25, 2010
Ministry plans massive salt purchase to prop up prices

VietNamNet Bridge – The Government has been asked to buy 200,000 tonnes of salt to help salt producers cope with the falling price.

May 17, 2010
Price, surplus hits salt firms

In the first four months of this year, the country produced 350,000 tonnes of salt, twice that during the same period last year, according to the Ministry of Agriculture and Rural Development.

Meanwhile, the salt import volume increased due to falling global prices. As a result, farmers sold salt at record lows of between VND200,000-VND500,000 (US$10.5-$26.3) per tonne in mid-March.

I have no interest in owning gold at these prices. I remain deflationary. There's no telling how much higher gold might go relative to the things I actually need though. More power to it. Just don't count on me supporting its price. I sold in 2006. I'm done.

Gold breaks $1,250

Gold prices hit a new record high of $1,254 an ounce as nervous investors piled into the precious metal.

If there is one thing the markets love to do, it is to eventually ruin the hopes and dreams of nervous investors.

See Also:
A Century of Gold Bubbles
Gold vs. The World's Oldest Money
Gold to Aluminum Price Ratio

Source Data:
USGS: Historical Mineral Prices

Monster Rally Zero (Musical Tribute)

I'm sticking with the Godzilla theme over at MaxedOutMama.

The DJIA rallied nicely today to 9,939.98. That's so close to 10,000 that it makes me want to celebrate.

It feels like 1999 all over again (April 6, 1999: 9,963.49). It's been 11 years of zero. It just makes me feel so Ghidorah inside!

This fascination, on the part of contemporary Japanese filmmakers, with the destruction of their land by fantastic, prehistoric forces only 20 years after Hiroshima, might be of interest to social historians. The film, otherwise, is strictly for the comic book set. - Vincent Canby, New York Times film critic

It was actually Monster Zero's interest rate policies that caused much of the destruction. Few people realize it though.

Monday, June 7, 2010

Tuesday's Stock Market Prediction!

Do you think I am insane? This is not Mad Money! Making daily predictions just makes me look stupid.

I have standards to maintain. I can't predict the unpredictable on a regular basis and still expect anyone to think I'm credible. It's hard enough to come up with long-term winners of the new world. Incredibly hard, using hindsight of course.

I don't want you to leave empty handed though. Here's something for those who enjoyed the comedy of Better Off Dead, but have always wondered what the horror version would be like.


Over the long-term, I suspect there will be plenty of horror and comedy in the global stock markets, for both bulls and bears alike. That's been true for centuries. What hasn't been true for centuries is the miracle of modern discovery and its fueling of our ever growing trade deficit.

A Century of Gold Bubbles

The platinum group includes palladium, platinum, and small amounts of iridium, osmium, rhodium, and ruthenium.

As with many of my charts concerning gold, you will note that I am once again not comparing gold to dollars. I am simply comparing gold to other useful assets one might own regardless of what the dollar does or doesn't do.

That said, there are at least 4 notable bubbles in gold compared to the platinum group in the chart above. I would argue that there is more than a decent chance we are now in bubble #5. Those who hoarded gold during the previous 4 bubbles lost a lot of purchasing power in the following years.

1900 was a horrible time to hoard gold. Its price went nowhere for 30 years even as inflation rose. The platinum group was the bargain of the century though. It tripled in price from 1900 to 1901.

1933 was a horrible time to hoard gold. Not only was it already overpriced relative to the platinum group, but it was actually confiscated and fixed in price for 4 decades. It doesn't get much worse than that.

1980 was a horrible time to hoard gold. We all know how that turned out.

1995 was a horrible time to hoard gold. It dropped more than 35% in price over the next 5 years even as inflation continued to rise.

In my opinion...

The smart money hoarded gold during the roaring 1920s when nobody else wanted it. It then sold when everyone wanted it.

The smart money bought gold at the first instant gold was allowed to be owned by the public in 1971. It then sold when everyone else wanted it.

The smart money also hoarded gold in 2001. That we know for sure. We don't yet know how that will turn out though.

I can say this. I don't consider my purchase in 2004 to be the smart money. I was 3 years too late. I was not looking to make money off of gold though. I was simply trying to preserve my wealth. I bought right on that "average" line and I pretty much sold it right on that line too (in 2006 for a 50%+ gain).

See Also:
Gold vs. The World's Oldest Money
Gold to Aluminum Price Ratio

Source Data:
USGS: Historical Mineral Statistics

Sunday, June 6, 2010

Monday's Stock Market Tribute

The pre-markets look a bit weak. I'm therefore going to do something incredibly stupid. I'm going to pre-heckle.

This is very dangerous of course. The markets were down big on Friday and I'd normally expect some sort of relief rally.

This could end up being an epic
sarcasm fail. I just can't seem to help myself though. I'm rationalizing any excuse to post the following video, lol.

Becky is going to make one heck of an institutional trader. May she have a long and rewarding career at Goldman Sachs. I think she'll fit right in.

Goldman Sachs: Who We Look For

“Ideal candidates for the Securities Division are dynamic, quick-thinking self starters who have a real passion for the markets. The ability to communicate effectively and build strong relationships with clients and colleagues from a diversity of backgrounds and experiences is crucial. Those who succeed in Securities thrive from the fast-paced, constantly changing environment where no two days are the same.” - Steve Windsor, Managing Director, European Sales

Competing Directly With China

Gingrich pitches no-tax zone to revive Detroit

"If you're not going to compete with China, you're not going to be successful."

This post inspired by G.H., who offered the Detroit link in the comments.

Saturday, June 5, 2010

Gold vs. The World's Oldest Money

Cattle are the world's first and oldest form of money.

The ratio in the chart shows one troy ounce of gold to one troy ounce of Tennessee All Beef cattle.

Gold traded at $697 in 2007. Gold has risen 75% since then. Meanwhile, cattle prices have apparently gone pretty much nowhere. That would imply that we are now off the chart when trying to come up with a current ratio.

It is just my opinion of course, but I continue to believe there are much better things to be hoarding than gold right now if all you are trying to do is preserve your wealth.

Source Data:
USDA Cattle Statistics (pdf)
USGS: Historical Mineral Prices