Thursday, July 7, 2011

Twisted Logic Thursday- Initial Claims Nails 418k, Again as Employment Deteriorates; Worst Flooding in U.S. History Not Bullish for Economy; JP Morgan Buys $158 Million Worth of SPR Oil, Will Hold Hostage Until Prices Spike and You Will Pay; Tensions Between Russia and U.S. Increase Over Arctic; ECB Takes Toilet Paper as Collateral, Fails as Euro is Put on Death Watch; Japan Pays Shills to Support Nuclear Power, Fails; German Professor Cuts The Fat on Fukushima; Much More

Today's news is short and sweet, with only a few observations in between. Since 2008, the "stock markets" have been broken. That's not to say that they were really working properly before 2008, but September of that same year proved to be the tipping point where "buy and hold" died, and "trade me if you can" lived on. Now, 90% of the abysmal volume on the stock markets is HFT computers run by none other than the very banks that got bailed out with your money.

The algorithms that run these computers, are highly complex but at the same time, very dangerous (see: May 2010 flash crash) and pointless (except to those banks who make huge profits on your loss). Which begs the question, "why are they allowed?" The answer is obvious - money. Of course, you already knew that.

These algorithms all have about the same basic programming, based on twisted logic such as, higher unemployment is good for the "markets." The line of code follows: If economic news is bad, then Dr. Deficit will provide more free money. Simple enough. Although it is true that inflationary pressures caused by free money are bullish for stocks, it only shows that "investing" has become nothing more than betting if Dr. Deficit will print more and how much. Investing in a company that was expecting to organic growth, based on good products and good service is long dead.

Thursday is Initial Claims day, and with that we present to you another week of 400k+ claims, at 418k to be exact. On this news, which normally would be taken as a very bad signal that the economy is deteriorating, the "markets rally." Twisted logic is a symptom of a bad system about to get worse. Think Zimbabwe circa 2007 and the "starving billionaires" twisted markets produced.

"Twisted" also describes the thinking behind the whole "catastrophes are bullish" . Which is why we will pay particular attention to the "bullish" results of the worst flooding in U.S. history and the impact on the global economy, as thousands of people are displaced and out of their normal routine of consumerism. Apple can't bring the iPhone 5 and iPad 3 soon enough.

Nice to see another one of our predictions come to fruition. Two weeks ago when the world was in "shock" over the SPR oil release, we said 'it would accomplish absolutely nothing' and on the contrary back fire - with the U.S. tax payer footing the bill. Oil prices are up again, almost at $100 pb and rising sharply. The real kick in the pants for the U.S. tax payer however, may not be in the fact that they are stuck footing the bill for a failed political stunt, but the fact that JP Morgan (you know, that Too Big To Fail, Too Corrupt To Save, Tax Payer Bailed Out Depositor Bank) bid $158 Million worth of the black stuff - no doubt, they plan to hold this oil as hostage until the price of oil goes much, much higher and then promptly sell it back to the U.S. tax payers for a big profit. We lose, they win. We have to ask (besides why this is allowed), why doesn't JP Morgan just send every citizen a bill in the mail for breathing their air? We'll let ZeroHedge take it from here. Must read.

As commodity prices go, so go the tensions between Russia and the U.S. over territory in the arctic - all about oil and metals of course. Should be interesting to see if a new Cold War erupts over this.

As EU bond prices go, so go the ECB standards for collateral, as they announced today they will accept all trash anything written in ink. Of course, this has everything to do with the death of the Euro currency as contagion spreads from Greece to Portugal to Ireland and on to Spain. Like Greek "diaspora bonds" which are a signal of a nation's last days of existence, so to are the lowering of standard for collateral. Than again, they are simply trading one piece of public toilet paper for another used piece of toilet paper. After all, that is the definition of fiat - debt needs more debt in order for the system to continue. That is fiat.

In other radioactive ignored news, Fukushima continues to spew smoke and radioactive particles into the atmosphere. In the meantime, the Japanese propaganda machine is out in full force, countering any whiff of resistance to nuclear power. A Japanese power company named Kyushu, has been found not only sending out pro-nuke emails to thousands of workers, they were caught red handed sending out paid "shills" who impersonated citizens at a news conference to ask loaded questions - all of which were pro-nuclear of course. They made sure the event was televised and broadcast nationally. Too bad for them that their plan was uncovered and now the people of the world know they can't trust anyone - especially corrupt organizations.

However, not all is lost and corrupt, as some people in positions of prestige recognize the filth and expose it - like German Professor Ulrich Beck, who in an interview said, "but the catastrophe–the consequences of a nuclear catastrophe–is unlimited in space, time and the social dimension. It’s the new kind of risk. This catastrophe... doesn’t have a limit... even people who are hurt by the Chernobyl accident have not been born yet." Then he gets to the root cause - a "system of organized irresponsibility [is] behind the Fukushima crisis." The earthquake in itself was a terrible tragedy, but immoral men made it into a global catastrophe. Stay tuned. The next few weeks will be fun to watch.

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