Shadowstats.com-the real information

Here is the free information from John Williams at Shadowstats.com Pay for the good stuff, worth every penny. Read bolded commentary first.

In the past three weeks, three “Commentaries” have been
published.  Although these are available in full only
to paid SGS-Subscribers, we summarize their key “bullet
point” here for your interest.

No. 250: General Outlook and Trade Data Update
—————————————————— October 9th, 2009

– Bernanke Pushes Monetary-Base Panic Button
– M3 Headed for Still Weaker Growth
– Substance Behind U.S. Dollar Concerns and Gold Rally
– FY2009 Government Obligations Likely Hit $75 Trillion
– Trade Deterioration Should Be Minor Drag on 3q09 GDP
– Economic and Solvency Crises Continue, Inflation Risk Ahead

No. 251: General Outlook, CPI and Retail Sales
——————————————————-
October 15th, 2009
– September Annual Inflation -1.3% (CPI-U), 6.1% (SGS)
– CPI-U Inflation Spike Due by Year-End
– No Recovery: September Real Retail Sales Continued
Bottom-Bouncing at Low-Level Plateau
– 10 Years of Retail Sales Growth Gone

PLEASE ALSO NOTE:  Small summary chart of Retail Sales
levels is available on our home page, http://www.shadowstats.com (Lower right-hand side)

No. 252: General Outlook, Housing, Production and PPI
————————————————————
October 20th, 2009

– Key Indicators Continue Bottom-Bouncing at Low-Level
Plateaus of Business Activity
– 10 Years of Production Growth Has Evaporated,
All Post-World War II Housing Growth Is Gone
– Positive Quarterly 3rd-Qtr GDP Growth Would Not Mean
Recession’s End
– PPI Annual Inflation Should Turn Positive by Year-End

PLEASE ALSO NOTE:  Small summary chart of the Industrial Production index is available on our home page, http://www.shadowstats.com (Lower right-hand side)

Alternate Data
—————-

The following three data series were also updated.

CPI, Money Supply,  US Dollar Index

Charts of these can be viewed at:

http://www.shadowstats.com/alternate_data

and

http://www.shadowstats.com/alternate_data/money-supply
(for more Money Supply charts)

Thank you for your interest in ShadowStats.com

Kind regards,

The ShadowStats Team

And this on Thursday Oct. 29, 2009:

Recession Is Not Over
– Quarterly GDP Growth Is Not Sustainable, with 92% of Growth in Nonrecurring Factors
– Annual GDP Down 2.3% (5.7% SGS) (Different than up 3.5%, isn’t it?)
– 4th-Quarter GDP Should Resume Quarter-to-Quarter Decline
– Durables Goods Orders at 1997 Level
– Help-Wanted Adverting at New 58-Year Low

Side musing: 9 banks down yesterday. Is your cash protected? Spread your cash for personal and business spread over at least 2-3 banks.

Latest letter from Martin Armstrong dated October 29, 2009

Click here  for the latest Martin Armstrong’s letter dated October 29, 2009. Entitled “Is America On The Verge Of Another Bank War? Should We End The Fed Or Goldman Sachs?” (38 pages). Check out the last 5 pages for sure.

Here are Jim Sinclair’s comments on this latest letter:

Dear CIGAs,

Martin Armstrong has written a new article titled “Is America On The Verge Of Another Bank War? Should We End The Fed Or Goldman Sachs?”

The subject is something we have spoken about here. The Fed is under political pressure not to SAY or DO anything that would be perceived by the Administration or Wall Street as a derailment of the procedures seen as necessary to economic recovery.

The needs of politics and Wall Street are always in present time and not forward looking.

Armstrong points out the history of such events, but in my opinion there has never been a challenge to a central bank as serious as what is now in place.

 

Marc Faber on Fiat Money

Excellent video from Marc Faber via zerohedge (.) com. Click here.

Let’s take a gander at that quote again, shall we…..

“The fiscal position of the US is a complete disaster. Eventually in ten years time about 50% of tax revenues will be used to just cover the interest payments on the government debt and that is unsustainable. Then you are forced to print money… As soon as the S&P drops towards 900 or 800 Bernanke will print money again, he is a money printer, he is nothing else. But he does that well – he prints well; you have to give him a medal for that” – Marc Faber

Marc is talking about everything going up, but in price, not necessarily value.

 

So, you really think you are going to get a social security check or unemployment benefits in 10 years?

 

What happens when it’s 100%?

Exponential function, baby. This will hit with the speed of light. Get prepared now.

The Bomb has been delayed not defused

The bomb is the derivatives market.

Click here  for the latest update from RGE Monitor.

Derivatives were the invisible 800-pound gorilla in the room. After accounting for them  – even abstracting from counterparty risks – leverage ratios were a multiple of those reported in the books .It was the failure of Lehman Bros that drew the attention to the ultimate implications of this huge snowball rolling down the hill .In the eve of the bankruptcy of Lehman, the International Swap and Derivatives Association (ISDA)[1][2], had to improvise an unprecedented trading session on Sunday, September 14th 2008 to enable market participants to carry out trades and offsets of derivatives; further, the effectiveness of the transactions was contingent on Lehman filing for bankruptcy by midnight.

Seven Banks closed

The FDIC closed 7 banks last Friday.

Click here  for a rundown on some major banking issues from Jim Sinclair.

Some interesting things are brewing in the credit markets, and of course, the F-TV talking heads are not covering it as they should. The credit market is still frozen and now the cracks are showing……

CIT, the retail industry creditor, is unofficially bankrupt. Implosion will happen.

Capmark, the commercial industry creditor, is on its way to bankruptcy court, offically now.

GE Capital will be gone too at some point.

GMAC too (or Ben prints more money for that one)

Even if the government will not let these companies “officially” declare insolvency for the good of the country, it doesn’t matter. Whether official or not, these industries have no means of credit. Therefore, they are frozen and will implode at some point. There is no growth possiblity at all.

The only thing the government is trying to do (the only thing they can do) is control when certain institutions implode and make sure the public is as blind as possible. At some point, they will even lose that control.

Uncle Harry came out with his monthly letter yesterday. He is now suggesting your “ark” have 50% precious metals, with half of that in the physical metal. I completely agree. No cash, only short-term bonds.

The global financial crisis is not getting better, it is building up pressure. Nothing has been fixed.

Make sure you are prepared.

The Great Depression

This link will take you to a video documentary about the Great Depression. Click here.

It is an hour long video, however, the similarities to what is going on right now are scary.

The only difference is that this will be a hyperinflationary depression because the dollar is not tied to anything of real value.

Deflation in debt, inflation in prices brought about by a currency crisis.

Just watched Frontline’s The Warning

A few comments from groovygirl (only my opinion):

The program clearly disagrees with the idea that unregulated free markets will drive out bad investments. Although, I disagree with many things Alan Greenspan stands for, the idea that free markets can work, is not one of them.

Our government (including Alan Greenspan) made two huge mistakes. They did not allow the free markets to be free:

• They did not demand transparency of the investment. Without transparency and education, an investor can not make a wise investment and the market will not be truly free. Transparency of how investments really work is the reason I write this blog and pass all this information to you, the reader, for free.
• They did not allow the free markets to work by correction. They did not allow Long Term Capital Group or AIG or any other institution to fail. The failure of LTCM back in 1999 (because of lack of transparency) is the free market correcting itself. It was not allowed to do so.

So, I disagree on the big picture market philosophy, but it was a good program on what happened and why.

One thing they did not go into. The government has not regulated any derivative contract at this time. There is about $520 trillion dollars in global derivatives. We have seen the tiniest fraction of that market implode.

The legislation to regulate derivatives floating around DC is for all future derivative contracts, not the $520 trillion already created.

As Brooksley Born says at  the end, this derivative implosion will continue and continue until the whole market is undone or reorganized. Whether the government does it or not.

The free market will work it out. And because the government did not create transparency of these investments and then did not allow them to fail, the free market will work it out…in the bad way.

Expect more of the same.

This is why your 401K, pension plan, and the stock market is not a safe place to be. This is why housing prices will not rise. This is why the credit market will continue to be frozen. This is why the government will continue to print money and bailout whatever is imploding.

Protect your capital and savings now.

DOW at 10,000

As I mentioned yesterday, the DOW at 10,000 is an illusion.

This current economic environment requires an investor to take into consideration the impact of fiat currencies on the real value of his/her investment.

I chose two dates and compared the gain or loss on gold, the DOW, and the US dollar. I chose July 2006 and October 2009. I chose an 2006 date because this was before the big bubble frenzy in the DOW (DOW was around 11,000). The loss in the DOW was much more if purchased near the high (14,000).

You can use any dates you like, but here is the concept:

If you purchased one ounce of gold in July of 2006 and sold in October 2009, you would have made a 38% gain on your investment. For the DOW, you would have lost 11%. And for the US dollar, it would be a loss of 17%.

However, regarding the gold and DOW investments, you will have to take into account the loss of the dollar, because the investments are dominated in US dollars.

So, the real gain of gold would be 21% and the real loss in the DOW would be -27%.

I am not presenting this example to convence you to buy gold. These are the tools you will need to figure out if an investment is as good as the broker, Wall Street, US Government says it is. Right now, the government says that this stock rally is a recovery and the recession is over. This could not be farther from the truth. The real numbers do not support that conclusion at all. In fact, it looks very bleak. The Fed had to debase the dollar 17% just to keep the stock market from falling further in real terms.

The real value of the DOW is not 10,000, but 7,537. (Jon Stewart showed us the “graphic” details on his October 15th show.) The DOW is actually moving sideways. This is why insiders have been selling stocks all summer. They understand this concept.

Now, you know the tricks of this fiat currency system, do not be fooled. Since all global currencies are fiat, you may use these calculations for any foreign-denominated investment as well.

Side musing: Some will argue with me that this is not a valid point because inflation in prices has not risen with the fall of the dollar index. This is true…..for now. All the money printed in the last 15 months is sitting in the Big Banks, Fannie and Freddie, and just raised the DOW to $10,000 on the lowest trading volume in years.

BUT…when that money starts flowing again…watch out. Prices will rise. Prior to the collapse (as far back as 2000), the dollar index and the inflation index circled around each other, but US dollar trended down and inflation trended up. Check out the public section on shadowstats.com for more info (on my blogroll). The real inflation numbers are something to check as we move forward. It will impact your investment value as well.

As hyperinflation begins in earnest, this knowledge will be very important to understand. The investment you chose must gain at least the same percentage as the loss on the dollar just to break even. This is why I am constantly repeating: in this financial crisis, purchasing power preservation is the goal.

When the US Government prints money, you lose investment money. The trick is to invest to stay ahead of the printing press. Gold, silver, and commodities are traditionally places to do just that.

You may also use the Gold/DOW ratio to take the “dollar devalue” out of an investment. Click here for more info.

Dollar headed down-breaks through support level

and with it….your purchasing power.

Updated 11-9-09, the US Dollar was testing .76 when I penned this post, today (less than 30 days later) it’s at .7505, testing another support level on its way down. Global trading partners (i.e. China and Saudi Arabia) are paying close attention to this fall. This is what Jim Sinclair was talking about..referenced below. Dollar could bounce back in the short-term, but the trend is well established for the long-term.

Click here  for an article by Dan Norcini.

Protect yourself from the theft of your wealth by these conscienceless politicians and monetary officials for they have sold their citizenry down the river and plundered them in the process far more thoroughly than Attila and his army of Huns ever did to Rome of old. At least the Roman inhabitants were aware of the rape and pillaging of their substance – when the general public finally awakens to the despicable looting of their treasures by these reeking buzzards, they will rush into gold with a fury that will shock even many of the readers of this site.

I know everyone is talking about the 10,000 DOW. Please hold your applause. The stock market is going sideways if you factor in the fall of the dollar. This is all an illusion, folks. Click here  for the REAL data. And here. (And Jon Stewart covered this on his October 15th show.) This is what hyperinflation looks like, only 100 times worse. It looks like your investment has gained value, but it hasn’t. This is only the beginning.

Jim Sinclair talks about more downside of the dollar very soon. Click here.

The best investment strategy in this current business cycle is capital preservation by anticipating a falling dollar and then complete currency crisis.

Frozen Falls-The Coming Second Great Depression

A FROZEN Niagara Falls-Winter 1911

The unimaginable.

Yes, those are people walking across Niagara Falls. This is why I am constantly saying, study at least the last 200 years of economic history to understand all the possible outcomes of this current financial crisis. We are in the winter phase of the 100-year K-Wave economic cycle.

Prepare, this current economic winter cycle is not a normal winter, just like Niagara Falls in 1911 was not a normal winter.

Click here for an excellent post from neithercorp.us, The Latest Signs of Complete Economic Meltdown: Phase 2 Begins, about the next leg down in the financial crisis and the coming Second Great Depression.

A snippet:

This massive level of printing press inflation has created a kind of new “Sucker’s Rally”, the likes of which has not been seen since the bullet-train rally of 1930 that eventually heralded the train wreck of the Great Depression. Banks, instead of using the bailout money to increase loans and unfreeze credit mechanisms as it was intended, have decided it would be better to bet the bag on the stock market roulette wheel. Trillions of taxpayer dollars have thus been thrust into the markets, creating the illusion of an investor resurgence. This is why the Dow has gained to nearly 10,000 points while the rest of the economy continues to sink into the quicksand.

In response to these inflationary practices (and as we predicted in 2008), the dollar has begun to tumble versus other national currencies, and gold has surged to a record high of over $1040 an ounce!

It is now October, 2009, and the “new sucker’s rally” is beginning to falter. Very soon, I believe, massive swings in the Dow like those we witnessed in 2008 will resurface once again, and stocks will resume their downward spiral, while at the same time, the dollar will lose the “safe haven” investment status it had in 2008, causing possible hyperinflationary conditions for the Greenback. Here are some reasons why:

Click here and scroll down to view the vintage cartoon and the “Plan of Action for the US” sign . Government reactions to currency events do not change. They are repeating the same mistakes. Just as a depression resulted in the 1930’s, so will it in the 2010’s. Take a look at that bond graph, too. When that trend breaks, it is a major turning point in the financial crisis and value of the USDollar.