Friday, June 21, 2013

Seven degrees of separation

The NSA's contractors are sucking up everything digital, way more than the obvious stuff, and storing it. They don't look at it, so that by the broadest (both eyes shut and sphincter clenched) interpretation of the 4th amendment that's not a 'search'.

The thing is, it's all 'indexed' by digital identifiers. That means once they get a secret warrant, or maybe just a 'National Security Letter' which isn't even reviewed by a rubber stamp judge, they can look at anything linked to the original subject. This could, according to the 'Kevin Bacon theorem' of higher probability mathematics, [okay that is some what an exaggeration] you could look at all material they've stored on everybody based on one order. So really, they don't need very many court orders. 

Thursday, June 20, 2013

Birds of different feathers chase different bugs

The markets all tanked again today on ginned up fears that the Federal Reserve is raising interest rates. But it was gold that fell right through the floor losing well over 5% in one day to $1280 per oz.
Gold has lost a third of its value from the peak when the Gold Bugs were sending me nasty mail about me advising people to ignore Glenn Beck.

This week's new unemployment claims jumped back up again, but they're still not so high as to be a real problem.

The big 'scary' news all the 'experts' are cackling about (between chasing June Bugs they predict the sky is falling), the big news is that China's banks are having problems borrowing overnight from each other with rates for single day borrowing going to as high as 25% (annual rate).  China's Central bank is refusing to pump in money, or rather it is just silent, and the 'Chicken Littles are saying this signals the 'end times'. There is of course a more reasonable explanation.

There have been rumors for sometime that there is a lot of shadow banking in China. You know under the table unregulated lending with kick backs and such. This has been overheating the housing market as people are hot to make a quick yuan on rising prices. The Commies are all capitalists now, don't you know? Like you could ever tell the repressive regimes apart, except theirs works better than ours.

The refusal of the Chinese government to step in and bail out the banks is probably a sort of soft crack down. They're sweating the banks to see who has really been doing this illegal stuff, and if any banks fails you can probably expect who ever is responsible to have his organs sold. Only after everybody has gotten their 'thinking corrected' will Beijing step in and stabilize the banks under tighter controls. Don't you wish we would do that with the bankers here? What does a fat banker's liver go for, would that be like Foie Gras?

It's not likely that this brouhaha will spread to US banks, the Chinese have been shrewd enough to keep Wall Street banks at arms length. So I wouldn't step up your purchases of canned goods right now. But, if you're holding gold though, you might want to see if you can barter for food while you still can.     twitter @BruceEnberg  Be aware that Keynesian Twitter birds eat Gold Bugs, yum!


Wednesday, June 19, 2013

The little dog could recognize his Master's voice

The Federal Reserve has said it will maintain its QE3 program of printing $85b/month and using it in the markets to buy various instruments. The Fed has said in the past that this might not be limited to after-market Treasury bonds and mortgage bonds, but they haven't said what these 'other things' might be. The Fed's goal is to keep prices from falling and thus triggering an end of civilization death spiral of deflation.

A flurry of rumors over the past couple of weeks has suggested that this program could end 'any day!'. These prognostications are clearly intended to sway the market since they weren't based on any facts. This week they are trotting out old Republican Fed watchers to proclaim that Chairman Bernanke is a 'lame duck' who shouldn't be listened to. This is on the assumption that he won't be reappointed in January, only based on a poorly worded answer by the President in response to a live interview question.

The truth is that the economy continues to recover slowly, and the Fed's latest report gives a fairly optimistic outlook for the end of 2014, with unemployment falling and inflation rising toward the target of 2%. You don't suppose this has anything to do with all the unfounded and basically wrong speculation by pundits that happen to be Republican? I think I heard that there's an election at the end of 2014.

New unemployment claims fell to 334,000 for last week, it's not a fabulous number, but is well within the range where you might expect over 200,000 new jobs a month or better. Housing starts were up nearly 7% in May, and inventory of new houses is actually fairly tight. Some lenders are offering mortgages with only 10% down again. This could actually get the market going again if loan qualifications are relaxed across the board, that is if this is not just a promo for people who don't need a loan. Presumably this increase in lending is a result of the ongoing QE3 by the Federal Reserve.

China has launched an ambitious plan to move 250 million people from rural areas into newly built cities over the next 12 years. Think about this, it's nearly like moving the entire United States into newly built cities. Who's the super power again? We can't keep our bridges from falling down because the Republicans say we're broke! The usual suspects are predicting that this will surely collapse China's economy. No matter that China has moved 600 million people over the past 30 years while the US has drifted inexorably into third world status.

They are building fully modern cities that rival anything in the US, but with more modern infrastructure. China is building 300 mph trains with thousands of miles of track, we don't repave our roads. China is building high tech projects all over the world, making friends and building trade. We used contractors at five times the going rate to build some crap in Iraq that's falling down. China was building steam locomotives 30 years ago, now they're building a space station. We have a space station that we share with other countries, and we need to hitch a ride with the Russians to get there.

China is already buying Texas oil fields, if we don't get rid of the idiot Republicans next year, we'll be selling the rest of the country to China for food. Twitter @BruceEnberg I'm not tweeting in Mandarin yet, but we will all have to learn our master's voice.

Sunday, June 16, 2013

My best thought today.

The fact that a man will stand up and fight shoulder to shoulder with women does not indicate that he thinks they are weak, but that he thinks they are right. The right wing trolls will try to call you sexist if you stand up to defend women, you are not.

 "We all hang together, or we all hang separately." - attributed to Benjamin Franklin when they declared war on the British East India Company, the billionaires of their day.