At some point in time we will once again have intelligent leadership in the USA and will use our natural gas that is much cleaner and 70% cheaper, our gasoline that is 50% cheaper and our oil that is 30% cheaper to produce.... more energy than what the rest of the world supplies today. Even USA coal is cheaper to produce and ship than for China to mine. With energy independence we can withdraw our forces from the mid-east and Africa and no longer have to deal with and defend the criminally insane religious/socialist tyrants that sprout in those regions like weeds. We can stay out of squabbles and cease to be a lightening rod for terrorism. And then the USA will be more prosperous while most of the rest of the world will continue to live with socialist feudalism as they love to do anyway. And some of the world will continue to pray six times each day for the last bit of human freedom and human dignity in the western world to collapse. Currently China, N. Korea, Iran, Pakistan, and India are growing thermonuclear threats to the very existence of the human race. Yet no one in any leadership position is even thinking…

Bernanke QE3 is funding an equities bubble that allows mergers that increase layoffs and unemployment that normally only occur during full employment to now occur in a world-wide depression.  Companies use his low interest funds to close businesses, automate, and layoff the surplus workers.   This is only happening because QE3 is causing an artificial stock market bubble in the midst of Obama's depression.  Then when Bernanke shuts off QE3 and interest rates rise… the bubble will pop and many over-leveraged businesses will go broke and highly leveraged hedge funds will blow-up.  It will break the "Buck" and even money market funds could collapse. However a few like Warren Buffet and other wealthy Americans are using Bernanke’s low interest money for highly leveraged buyouts of healthy companies to take ownership control and extract all the value and ultimately leave the company bankrupt when Bernanke allows interest rates to rise.  The Bernanke exit problem is two edged.  One edge is the inevitable bankruptcies that will occur when interest rates on corporate debt rise.  The other edge is the unemployment the mergers and acquisitions and high debt cause as QE3 continues at the depths of a depression when mergers should only occur when there is full employment and lots of jobs.

Basically QE3 is just what Obama says it is.  It is an economic stimulant.  Like Cocaine and other stimulants it is addictive and causes brain damage to the users.  It is a wonderful euphoric sophomoric experiment, but once the foolish student is hooked it is almost impossible to stop.  Trying to stop the Dodd/Frank/Obama “Liar Loan Mortgage” recession with Obama’s stimulants and regulations has given the world a depression which ultimately could lead to the economic death (bankruptcy) of the free world.  So there you have it, stopping a stimulation addiction cold is painful.  The USA should have bit the bullet four years ago and we would be in an energy boom economy by now.  Now the world is in pain and having the shakes and craves more of the addictive poison called QE.

San Francisco Federal Reserve Bank President John Williams said Thursday that the U.S. central bank will not end its bond-buying program in 2013 until a 6.5% unemployment level is achieved and that itself would not be imperative until inflation were projected to reach 2.5%.  But that could be any time now because look at this weeks reported Consumer Price Index and see it already hit a 3.6% annual inflation rate this week.

Under feudalism, the State (is embodied in a protector, a War Lord) who owns everything, redistributes according to what the people require to subsist, and takes what they produce via force.

 Under socialism the State (is embodied in a political party) owns everything and redistributes according to what the people require to subsist, and takes what they produce via force.

Under America’s original pure Free Enterprise, the State maintains the peace as a lawful arbiter for counter acting the use of force by arresting and trying those citizens who use force. People have private property and other personal property. People earn according to the value they create or rely on charitable organizations when unable to earn a living. Value, wages, and salary are determined by consensual agreements rather than force or government decree. The Federal Government is only permitted to have a military force to defend America from foreign attack. The Constitution did not permit the Federal Government to have a Federal Domestic Army that would make America into a police state. The Constitution gives the states the right to have police.

Entrepreneurs are business persons who risk their fortune and health to start a new enterprise.  Capitalism is a particular economic system for banking and financing corporations.  Communist China even uses a variant of capitalism to finance much of its industrialization and even experimentally encourages entrepreneurs by allowing them to accumulate private property and wealth. 

Creative destruction is a particular form of product development methodology what advances technology so fast as to render earlier products and competition obsolete until the creative designers and engineers begin to run out of new ideas.    It can last one or two decades until it loses its critical entrepreneur who designed and ran the process.  IBM, Microsoft, and Apple dominated computer hardware, software, and then integrated products respectively for up to about 20 years. 

Feudalism and socialism are the two systems primarily associated with genocide and wars.  Feudalism sometimes merges with socialism with local warrior leaders and more global religious leaders.  Feudal socialism was originally characterized by walled towns and cities for protection from the vicious and idle marauders.  Everyone contributed food and resources and the leaders redistributed the wealth.  Tithing by the church and taxes by the warrior lords covered the costs of government, defense, and education. 

Practically every outlawed religious commune or pacifist group in Europe sought refuge in America.  The Pilgrims’ socialism was abandoned after two years during which 50% of their Massachusetts Plymouth colony died of starvation in America’s land of plenty.   The pilgrims then switched to individual free enterprise where if they grew more, they could trade their surplus for something else of value. 

On Tuesday Feb 19 at the very peak of the stock market rally MSNBC/Pravda’s Jim Crammer ranted about how misguided investors were who just sold out of the market.  How pathetic his stay-invested advice was.  He is Mr. Pollyanna, or better yet the goat they use to lead the herd of investors to their slaughter.  The opposite is true of gold and gold stocks.  The gold death cross occurs near every bottom in the gold market but all the goat pundits were telling people to sell gold right at the bottom when it was time to buy.

http://futures.tradingcharts.com/chart/DG/W?anticache=1361395109

Bernanke, the naked economic emperor, has a room full of tailors who want to start cutting QE3.  The U.S. Federal Reserve now recognizes that QE3 can neither bring down nor slow unemployment because it is only increasing unemployment via mergers and acquisitions that drive up stock evaluations but cause further consolidation layoffs when the companies merge.  Businesses also see Obama spending making layoffs necessary to lower the rapidly rising labor costs especially cost of medical care.  That increases the burden of the Obama give-away programs in a vicious cycle as socialism spreads unemployment and poverty to everyone.   The FED minutes indicate they will stop buying assets without any hope of ever seeing any pickup in hiring.

 Monday industrial metals began a decline in anticipation of a deepening global economic slowdown while ignoring the rising inflation pressure from loose credit.  “The whole thing is doomed,” Co-chief executive officer, Lars Christensen, of Danish bank Saxo said this week in an interview at the bank’s Dubai office. “Right now we’re in one of those fake solutions where people think that the problem is contained or being addressed, which it isn’t at all.” the euro’s recent rally is illusory and the shared currency is set to fail because the continent hasn’t supported it with a fiscal union.”   “Another possible fallout is getting rid of some of the countries that are being ruined by being in the euro, notably the southern European economies,” Christensen said. “Once the French get into a full- scale crisis, it’s over. Even the Germans cannot pay for that one and probably will not.”  France is already grappling with shrinking investment, higher taxation, job cuts, and pressure from European partners to speed budget cuts.   Germany growth has recently stagnated, France posted no growth last year, and Italy probably contracted more than 2 percent last year.  They are the strongest in the euro area with the likes of with Greece, Spain, and Portugal.  Britain is entering its third recession in a row.  The new bailouts are when world inflation goes into high gear.

The defense industry will likely see some accelerated merger and acquisition activity if Washington’s plan for sequestration kicks in as scheduled.  Obama’s arrogance on Tuesday after returning from a golf vacation in Florida turned off even the liberal news media.  They may yet see him for what he is, Mr. Economic Depression in person.

China needs to spend more time improving themselves and stop trying to sabotage foreign companies.  They do not understand that by national law, companies they damage can claim China pay the cost of the damages or face being cut off from world markets. 

Gold prices that rallied the past 12 years will probably peak again in 2013 according to Goldman Sachs Group Inc. and Credit Suisse Group AG.  Last week the Asian New Year and a flurry of negative speculation pushed gold and silver close to their lows of 2012.  The buying opportunity occurred due to selling to cover losses in other investments and to raise capital.  Soros Fund Management reduced its holdings by 55 percent as of last Dec. 31 from three months earlier.  Bacon’s Moore Capital Management LP sold its entire stake in the SPDR fund and lowered holdings in the Sprott Physical Gold Trust. Paulson & Co., the most successful timing investor in the SPDR fund, kept its stake at 21.8 million shares, a filing showed compared to loser Soros 600,000 share sale.  Based on all the negative chatter last week investors were getting back in.  Soros only talks up investments when he thinks it is time to sell.  Then they get quiet when they actually buy or sell.  The best time to sell was in September before the elections when we said price was becoming reasonable.  Note that silver swings at least 20% more than gold so some diversity is good.

http://finance.yahoo.com/q/ta?s=UGL&t=6m&l=on&z=l&q=l&p=&a=&c=

The boom in health care stock prices just went bust.  The Obama administration has to scale back payments of the government’s Medicare program due to the addition of 40 million people who live on welfare and now are entitled to the medical care of the Presidente of Venezuela.  And indeed a selloff began Tuesday, with stocks of Humana (NYSE: HUM) and UnitedHealth Group (NYSE: UNH) falling. 

Reinsurance is the tax dodge Warren Buffet uses to shield 99% of his investments from US taxes.

Bernanke faced criticism from the Group of 20 officials who said that its QE3 accommodation has weakened the dollar, threatening to fuel a “currency war” of competitive devaluations. The Fed under Bernanke has expanded assets to a record exceeding $3 trillion and pushed down the benchmark interest rate below zero on an inflation adjusted basis.

Hit by the payroll-tax hike, shoppers stayed home and February sales at Wal-Mart were reportedly a total disaster, marking the worst start to any month in seven years. 

World Economies

http://www.bloomberg.com/news/

http://www.foxbusiness.com/index.html

The EU economy is expected to contract 0.3% in 2013 after a contraction of 0.6% last year. European Commission officials cited unemployment rate expect to hit 12.2% this year as the slowdowns of unions and criticism increases of communist unions in French factories.  France's Socialist government is struggling to boost the productivity of its industries in the face of increasing global competition and socialist unions.  French firms have announced thousands of job cuts in recent months as the economy stagnation accelerates. 
In America the primary purpose of government is to prevent or stop the use of force against Americans by other people, private corporations, governments and associations.   A major problem with socialism is the rise of the vicious and idle into positions of power where they become corrupt and evil.  The recent candidate for head of the Chinese Communist Party and even his mother, both who never had legal outside jobs were discovered to have mysteriously become billionaires. That Chinese official fell from power last year only when it was proven that his wife had a British citizen poisoned to death and then quickly cremated to continue to conceal a secret illegal deal they had going.   

Japan avoided G-20 currency manipulation criticism thus far.  By buying foreign currency Japan is flooding the world with Yen making Japan’s products cheaper.  This could lead to competition that will cause gold to soar to new record highs as all nations try to become competitive by devaluing their currencies.

Monday industrial metals began a decline in anticipation of a global economic slowdown, with aluminum retreating 2.4 percent from a six-week high. Copper fell 1.1 percent, while nickel slid 2.9 percent.

Banks in AAA rated Sweden are struggling to contain record household debt.  It is a unique set of risks than elsewhere. Rules guiding the industry need to reflect that FSA Director General Martin Andersson said.   It’s a viewpoint that has won support from the financial regulator in the U.K., home to Europe’s biggest banking hub.

Mandiant Corp. said in their report that China’s army apparently is the hacking group that has attacked at least 141 companies worldwide since 2006.  The attacks were carried out by a group that is “likely Chinese government sponsored.” Mandiant said it traced the group, labeled “Advanced Persistent Threat 1”, to four large computer networks in Shanghai. Two of the networks serve the Pudong New Area district, where a secret Chinese army unit called 61398 is based, the report said.  Prior to WWII the USA allowed Japan to steal Phony “Top Secret” naval ship designs which when used made the Japanese fleet easier to sink.  China should have learned that lesson but didn’t.

China ordered cities to limit home purchases and data showed foreign direct investment retreated in January.  China’s markets failed to break through the resistance level and still gave no buy signal after four years that have seen MSNBC/Pravda falsely claiming China had recovered about four times per year.   See their leading indicator very close but it has to break through this resistance level first!  China needs to spend more time improving China and stop trying to sabotage foreign companies.  They do not understand that by national law, companies they damage can claim China pay the cost of the damages or face being cut off from world markets.

http://in.finance.yahoo.com/echarts?s=000001.SS#symbol=000001.ss;range=1y;compare=;indicator=;charttype=line;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

Draghi, of the European Central Bank sought Monday to ease fears that countries including Japan were deliberately weakening their currencies and that European exporters were threatened with a possible round of competitive devaluations.

The French market indicates stagnation since year 2000.

http://in.finance.yahoo.com/q/bc?s=%5EFCHI&t=my

Germany now shows stagnation since 2007.  It failed to break out from the 2007 high even with the world being flooded with stimulation credit.

http://in.finance.yahoo.com/q/ta?s=%5EGDAXI&t=my&l=on&z=l&q=l&p=&a=&c=

=0;logscale=off;source=undefined;

The British market indicates peaking in 2000 and stagnation since 2007. 

 http://in.finance.yahoo.com/q/bc?s=%5EFTSE&t=my

 The Swiss market indicates stagnation since 2007.  But once again look at the spike up in stock prices with Bernanke’s $85,000,000,000/month gift from America to the stock and bond markets of the world as more people enter poverty, go hungry and lose their jobs under Socialism’s equality of poverty.

 http://in.finance.yahoo.com/q/bc?s=%5ESSMI&t=my

  The NYSE is similar to the British and Swiss and indicates stagnation since 2007 but no spike up. http://finance.yahoo.com/echarts?s=%5ENYA+Interactive#symbol=^nya;range=my;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

 

 American Economy

A 10% or more equities decline is now possible.  The stock market is beginning to re-engaged with the economy and is unstable because the FED created a balance sheet bloated approaching a trillion dollars putting US and world stocks in the stratosphere.   

The DJA in 2013 is also now at a record high. Look at the spike up this year as $85,000,000,000 flows into markets each month.  http://finance.yahoo.com/q/ta?s=%5EDJA&t=my&l=on&z=l&q=l&p=&a=&c=

This week

http://biz.yahoo.com/c/e.html

Feb 19

NAHB Housing Market Index Feb 46 versus predicted 48 a 4% miss

Feb 20

Housing Starts Jan 890K down 9% from 973K …But Bloomberg lied again and said U.S. single-family home starts rose.  See the Bloomberg lie…

http://www.bloomberg.com/news/2013-02-20/work-begins-on-most-u-s-single-family-homes-in-four-years.html

Building Permits Jan 925K up from 909K

PPI inflation Jan 0.2% up from -0.2%  

Core PPI Jan 0.2% up from 0.1%

Feb 21

Initial Claims 02/16 362K up 6% from 341K

Continuing Claims 02/09 3148K up 1% from 3114K

CPI Jan 0.0% flat at 0.0%

Core CPI Jan 0.3% sharply higher than the 0.1% last month and at a 3.6% annual rate well exceeding the FED 2.5% inflation rate that is the criteria to cut off QE3.  Will it stay this high?

Existing Home Sales Jan 4.92M down from 4.94M bad

Philadelphia Fed Feb -12.5 fell dramatically from -5.8  bad

Leading Indicators Jan 0.2% fell sharply (60%) from 0.5%  bad

Feb 21 10:30 AM Natural Gas Inventories 02/16 -127 bcf fell from -157 bcf, bad

Crude Inventories 02/16 4.143M up from 0.560M, good

Markets February 21-22, 2013

Look at the Bulls- Bears indicator.  The risk of being long is very high when bulls outnumber bears as we told you for the last month. 

http://www.martincapital.com/index.php?page=graph&view=investors_intel

Bernanke is pushing on a string.  The FED has run out of leverage at close to 0% short term interest rates.  When rates rise, the bond bubble will burst and that wealth will evaporate over night.  Bernanke is funding mergers that increase layoffs as companies use funds to consolidate and automate.

http://www.martincapital.com/index.php?page=graph&view=interest_rates_long

The VIX was worse last week than the low where it was in 2007 before the last bubble burst.  A low VIX normally precedes a panic sell-off. Once that starts the VIX needs to go up above 30 before a bear markets normally ends and it is time to buy.  Low Vix means excessive exuberance.  A 10% equities decline is now possible.

http://finance.yahoo.com/q/bc?s=%5EVIX&t=5y&l=on&z=l&q=l&c=

 

World stock market updates:

http://in.finance.yahoo.com/intlindices?e=asia

http://in.finance.yahoo.com/intlindices?e=europe