Harry Reid humiliated as Alma Mater strips his name from building

OK this one is priceless.  We all know these elitist jerks are all egomaniacs of the highest degree.  Their highest honor is to get buildings erected with their names on them, especially at the colleges which they attended.  So Harry Reid gave permission for Southern Nowhere University to use his name on an existing building.  He apparently made no donations in the deal. The goal was to trick others into believing that he did so that they in turn would want their names on a plaque next to Harry's.  But they would have to pay up for this privilege you see.

Well, the school waited and waited for all these wannabe donors to show up, but according to the president of the school, Scott Wyatt, "They thought there would be substantial donations from Harry Reid's friends... But there has never been any money donated for that purpose."  Wow Harry, I guess your popularity collapsed in lock step with your defeat at the battle of Bundy Ranch in which you and your BLM agents got your asses handed to you by patriot militia volunteers.   HA HA HA!!  You slimy POS!!  You also said "this isn't over" in regard to the Bundy matter and in response within these pages at the time I said "oh yes it is".  The clear loss of elitist backing at the Utah school shows that I was right.  Reid is now a lame political duck who has no stroke anymore.  This is an important statement as Reid is, along with a few others, the core of the liberal political movement in the USA.

But the real chuckle here is that the school received $40k in donations with the proviso that Harry Reid's name be stripped from the building it was on.  When does THAT ever happen??  It's the first time I have ever heard of such a thing.  It's one thing for nobody to line up behind a political figure but its a whole different thing to see $40k pissed away in order to directly assault said politico's ego.  Harry Reid is OVER and someone wanted to shout it from the rooftops at the expense of $40k.  Money well spent IMO!

But don't worry Harry, the school president doesn't want to offend you and so he made you a Wimpy promise: your name can go on a non-existent building for which there is budget.  But don't worry, as soon as the money comes rolling in you will be re-immortalized in stone!  My gawd, what a left handed compliment.  The school would have done better to just quietly remove the name and move on but to promise Harry's name will go onto an unfunded ghost building is like begging more conservative donors to pledge more money in order to renege on that deal too.  What would it take to do that for a nonexistent building?  10k?  HA HA!!

The evidence is beginning to pile up by the truckload folks: the pendulum is swinging away from liberalism in locked step with peak credit.  Credit and debt are the engines of liberal lies and scams.  I do believe that before this is over, the federal reserve will be closed down in a mighty and powerful act of new, real conservatism.

Common economic lies that Mark and Patsy believe

After hearing some people who read some headlines and thus began to actually believe that they know anything about economic truth I realized just how badly misdirected good common people have become. It's sometimes difficult to believe the level of gullibility but the indoctrination and training is constant because of the main stream media so I guess what goes in the ear so many times eventually sticks in the brain and then later comes out the mouth.

In any case, here are a few of my favorite mainstream economic lies.  I would call them "myths" but that allows the propagators of these untruths to get off without proper attribution for being the criminal traitors that they in fact are:

• Debt cannot be used as a sustainable mechanism for generating wealth.  In a large group, the first ones to use debt for this actually do appear to generate new wealth.  Factories are built, production capacity increases and people get to have more stuff (which is what we call wealth). What they don't tell you is that debt based production is not sustainable.  In fact, it is a system of steadily diminishing returns until the returns actually become negative.  In fact, it works something like a drug.  When you first take it, the effects are wonderful.  Over time you have to take more and more in order to get the same effects.  At some point you can't take enough to get the original effects.  In the end game, you are so addicted to the drug that you don't take it to get high, you take it in order to not feel bad.  Even then you feel worse and worse and the drug eventually kills you or so dampens your spirit that you kill yourself.
• There is a real economic mechanism at work when applied to economics.  The use of debt essentially pulls demand forward, thus stealing it from the future generations.  The current generation racks up a bunch of debt and then leaves the system for the next generation.  At some point the debt is so high that nobody will loan more money to you and whoever happens to be living through it gets the withdrawal pains whether or not they got any of the early euphoria.
• I recently wrote a post to this link of an interview of Jim Rickards.  I strongly suggest to watch the video even though it is an hour long.  Rickards keeps it fast paced.  But if you can read faster than you can listen, go to that link and then close the window.  A pop up will ask if you want to stay on the page.  Choose that option and you will see the transcript.  In that, Rickards states, "During the boom years of the 1950s and 1960s, every dollar of debt that was created, we got $2.41 worth of economic growth. So that was pretty good bang for the buck. But by the "stagflation" of the late 1970s that relationship had actually collapsed. So now for a dollar of debt in the late 1970s, we were only getting $.41 in growth, so, obviously, that's a huge drop-off. So we're piling on the debt, but we're getting less and less growth. As the trend goes from $2.41 to $.41 to $.03… It's soon going to go negative." So you can see the actual data tells us that debt based production is a game of diminishing returns.  At some point, you can't borrow more but all the debt either remains or you default on it (and then you get to experience your own version of an Argentinian shit hole collapse).
• The reason that it works like this is simple.  The economic books call it the power of compound interest.  Normally this is applied to savers who receive interest on their savings at a certain rate.  Well, compound interest is an exponential function.  If you start with $100 and get 3% per year for it and then add that 3% to the nest egg and get 3% on $103 next year, this is compounding your interest.  The result is an exponential function.  It starts off slow but before long you have that hockey stick curve.  It works the same way no matter if you are the lender or the borrower.  The only difference is whether you are gaining or losing exponentially.  Debt means you are the borrower and so you are losing exponentially.  Look at the numbers that Rickards quoted above in blue.  $2.41 of growth in the 50s became $0.41 in the late 70s and it is now 0.03 today.  That is an exponential decline in the amount of growth that is bought with debt over time.  The reason is that the interest payments begin to cut into the production numbers until at some point you are working all day and night but still cannot create enough spendable value in order to survive.  At that point you get what those running the system choose to give you.  It is no different than how slavery works where the slave owner gets all the productive output of the slaves and tosses them some old meat each night - just enough to cover the needs of life so that the slaves don't die off.

• You cannot use exports as a sustainable mechanism for generating wealth.  Since not everyone can be a net exporter the concept of "first to do it and last to do it" applies. The first to do it appear to be getting rich in the deal.   They export a bunch of stuff and get real stuff in return. We call that trade and it is a good thing.  But at some point everyone wants to get into the act and the net exporter exports more than the importers can afford.  And so the exports are paid for with markers for future production by the importers.  We call these markers "debt".  If the net importer has to resort to paying with debt then he can't afford it and never will be able to.  So the exporters will eventually get stiffed for what they owe.  German corporations, owned by the people in their retirement accounts, will get defaulted on in their vendor finance scams.  They will either BK as a result or take massive write downs which will collapse the share price.  So the industrialist con men get all the high pay and big bonuses of being net exporters for decades but at some point all the bad debt has to be paid by someone and that is mainly the shareholders.  In some cases, governments bail out the corporations with tax dollars (or more public debt) so that the systemically important company won't BK and lose jobs.  So if you do the math, the people ended up paying for all those exports even though they did not get the benefit of consuming them.  This is the economic truth of the matter that Keynesians and other con men will not tell you even though they have endless praise for the value of exports to economic growth.
• Consumer spending is not an engine of economic growth.  Economic growth is the act of creating more production.  Consumer spending is consumption, the polar opposite.  When you spend to consume, capital is consumed.  Does going to Disney land on an expensive vacation with the kids lead to greater wealth the following year?  I think not.  This is not to say that consumption is bad!  Humans need consumption in order to live with good quality of life.  But if you consume all of your seed corn in the winter then don't expect to have any way to plant a crop in the spring. Savings, investment, and production are the real engines of economic growth.  Now, for a while, consumer spending appears to be economic growth but at the end of the day the spending collapses because there is nothing on the shelves to buy.  The productive capacity was all consumed.
• Growth of the money supply is not real growth.  Inflation based gains are real for awhile but mainly for those with first access to credit.  At some point, the cost of goods rises faster than salaries and inflation produces negative growth.
• There is such a thing as the right amount of inflation and, properly managed, inflation is not only good but necessary.  This central banker lie is almost universally believed.  The story is that central bankers are good and honest people who only want a chicken in every pot and a good paying job for every person.  Of course, like everything else they tell you, this is backwards and upside down.  Bad is good, Ron Paul is a flake and Obama is a saint, etc. etc. etc.  The truth is that knowledge builds upon knowledge at an exponential rate.  Knowledge is the basis of all production and so our lives should be improving at an exponential rate.  But they are not and there is a reason: inflation is stealing our productivity as fast or faster than we can create it.  All of it funnels to the very few which is why the wealth gap is so ridiculously large.  Inflation always benefits those with the first and the most access to the new money (or credit in the case of credit based inflation AKA TEMPORARY INFLATION).  The new money is spent from the top, trickling down into the hands of the workers.  However, by that time it has already chased up the prices of the stuff that workers want and need to buy.  So the elite get the new money for free and they get it first and they use it first and then everyone can have access to it.  Is it really so difficult to see in a fraudulent, corrupt, scam ridden system like this how the top 1% own so much of the available wealth?
• Everyone should participate in ownership of stocks because on average they go up.  That makes them a wonderful investment.  In this way, your money works for you to provide a plush retirement.  There are three big lies in there:
• Stock market participants make money in three different ways.  Inflation, dividends, and via greater fools.  Inflation runs up the dollar value but does not change the actual buying power of your account.  All it really does is generate a taxable event as if you made new value when in fact, the numbers just got bigger on both the earning side and the cost of goods side of the equation with no net benefit to the participant even though they think they won something (something for nothing scam).
• Stocks go up on average as long as the credit environment is on the rise.  When it turns into a deflationary crash then most people lose everything.  Did we learn nothing from the stock crash '29-32?  All the gains are temporary because most of the gains were driven by rising amounts of debt used to buy the shares.  When cheap credit is no longer available, the use of debt to buy shares is curtailed and the deflationary spiral crashes the whole thing back down from whence it came.
• Your money does not "work for you".  Never has, never will in a monetary system consisting of fiat currency and fractional reserve banking.  You might win some gambling bets but that is not the money working, that is a zero sum game where someone else lost that money that you won.  Only people can work and the associated output is controlled by the effort put in multiplied by tools (which is another word for knowledge) and energy.

IMPORTANT NOTE: There is a common theme running through the examples above.  Did you catch it?  The theme is simple but incredibly important because it speaks to the entire nature of the thing: In almost every case, the first to participate in the stupid act actually appear to be smart. They get ahead just like they were told would happen.  Debt can buy growth for awhile.  Being the first net exporter can make you personally rich.  The first people into and out of a pyramid scheme or Ponzi scheme can get rich. All of the lies seem true for awhile until they finally collapse under their own corrupt weight but by that time that happens, everyone has gotten dirty with the con.

This is the very nature of a confidence game.  As you play you get sucked in deeper and deeper but the game is fixed in the favor of the con operators as they, like carnies running a fixed game, continue to urge you to participate with ever larger sums of money.  The more money that is put into it, the richer the con men get and the more the fame of the con spreads.  Once everyone is fully invested (cough cough boomers cough cough), the trap is sprung, Bernie Madoff admits that the money is not really there, the massive serial daisy chain domino defaults begin etc. etc.

Bottom line: the con men play on human greed.  Some of us can do math and we know the real score, others of us can do math but want to believe in fairy tales. But most people simply cannot do math and do not possess the critical thinking skills in order to understand the magick trick that is being played on them.  These people will shout down anyone who tries to explain it to them and they really will not listen to anyone except their brainwashed id which haunts their subconscious.  They vote into office those who reinforce their corrupted belief system so that we are all actually in the same boat to some degree even if we know what's going on.  The best we can do is stand near the life boat and to be ready to defend ourselves when the other passengers lose their minds in a panic.

GE trying to quietly raise cash by divesting of assets.

My opinion on GE is clear and unwavering: it will BK before the coming crash has bottomed.  GE is the poster child for globalized, debt-fueled corporations.  It is way too big to bail and it is a massive shadow bank.  Its Altman Z score shows that it has high odds of BK within the next 2 years.  Here is the first reading I took at 1.3.  It's now at 1.34, barely any change since late 2013.  When interest rates begin to push higher, GE will begin to dive deeper and deeper into distress with its debt being downgraded and downgraded until its borrowing costs for roll overs is so high that it has no choice but to BK.

I believe that the federal reserve has begun to intervene and to force it to sell assets in order to raise some cash while pretty good prices are still possible for said assets.  It's trying to maintain calm but GE got big by buying businesses on debt and now the debt associated with acquisitions and the vendor finance scam it has been running (IMVHO!) is making operating profits impossible.  This is what a top always looks like.  They will sell a few things at pretty good prices but then the signalling of further divestitures will make buyers wary about paying high prices and they will demand massive price cuts for the assets.  GE will whine about them being unreasonable and then the interest rates will begin to climb and GE will have to sell stuff at lower prices.  The buyers of these assets will soon develop cases of buyer's remorse as interest rates continue to climb and GE has to sell even more stuff at a time when others have decided to get lean as well.  An asset price war will begin but instead of it being one where the asset is bid up, the war will be between sellers to price their assets lower.  In the case of GE it will ultimately turn into a battle of sell stuff or default on debt payments and die so it will sell like mad but I think it is too late.  It will default and then it will declare BK and what remains of it will be broken up in BK court.

The chart is bad enough when shown in linear scale but it is downright scary looking when observed in log scale.  Still, the log scale clearly shows the EW elements in play including 3 wave internal structures given that the overarching structure falls into the triangle category (even if it is an expanding one instead of the normal contracting type).  It also shows alternation of the big B waves between 2 and 4.  Finally, that declining double top, while it could still turn into a 4th wave triangle, does not look promising for the shares at this point.

SVXY analysis suggests that bull market may have ended Aug 25th.

In the past couple months I provided a wave model for TVIX which I stated could have been either the final wave down or just the 3rd of 5 (the big ending diagonal into early July) . Well, the ending diagonal that I worried would be a 3rd was in fact a 3rd.  I was clear about the fact that I thought it would bounce and that if it did so in a certain way then it would likely be a 4th wave which would reverse downward after hitting the low $4 range.  That 4th wave in fact peaked Aug 8th.  From there I modeled that the next 5 wave sequence down would mark the 5th and final wave.  After that, the bull market in stocks since 2009 should be over.

So now 5 waves down in TVIX have transpired.  But these 5 waves still have three valid options under the EW rules:

1. They could in fact and in aggregate be the sum total of the expected 5th wave in which case markets will begin to sell off upon return from Labor day.  In that case TVIX will begin its massive rise which I think should, at the end of the big expected sell off perhaps 2-3 years hence, be a 20 bagger, minimum.
2. They could be 1,2,3,4 and 1 of 5.  In other words, the 5th of 5 could extend and then hit a brick wall and then collapse.  If this is the case, it will finish on Tue or Wed of next week and then reverse downward with conviction, likely blamed on some kind of news.
3. The could, as a whole, be just wave 1 of a larger 5th wave.

 They are shown below in abstract model form.

 

While any of these are possible, I think that SVXY is telling us that it could be scenario number 1.  to understand why I think this, check out the count below.  Obviously it is going to be the near inverse of TVIX.  Since wedges have been 3s or Cs of late, the rising wedge on the left side is likely a 3rd wave.   This corresponds to the falling wedge that I have been labeling on the TVIX chart as a 3rd.  Then we got a move to the bottom of the channel but instead of that being the full 4th wave, SVXY put in a big fat triangle B wave there and then went down 5 more waves to end in a falling wedge that must have been a C wave (C of 4).  From there I count 5 waves up.  Currently, all of the waves are the same size which suggests that the 5th wave might still extend.  But SVXY went out of its way to destroy its upsloping channel and then to back test it with 5 waves up and that is the typical behavior of a failed 5th, not 1 of 5 or a 5th wave that is about to extend.

We should know the answer very early on Tuesday and the triggers for bailing on TVIX are clear: If SVXY catches a bid and goes above the red line then sell TVIX and let the char either extend the 5th or trace out 3,4 and 5 of 5.  Once either of these are done, the odds become so high that a major change in market direction is going to happen that it really becomes a no brainer.  We really are in the last few days of the end game of the 2009 bull market here.  

If this gaps down on Tues then there are two likely paths it will take.  It will either go down to the level of the prior 4th (red 4 of 5) and then bounce to a higher high in 3rd of 5 OR it will just keep going down (which is what I suspect will happen).  Once it goes below black 4 then GAME OVER for the bull market IMO.  This will be a significant declining double top that will just set off every sell program on the planet.

Good luck to all of you who have been following the saga of TVIX unfold since I learned about in in early Feb 2014.  It was about $10 at the time and I have been watching it fall, counting the waves, testing entry points and getting stopped out multiple times at a small loss each time until that ending diagonal 3rd wave outed itself and predicted the big recent 4th wave bounce and 5th wave sell off.  This is getting ready to pay off folks.  I'll stay on high alert until a real reversal has been confirmed but after that I plan to only trade the major turns.  In other words, maybe a trade every 3-4 weeks not 3-4 days or even 3-4 hours.  Once we see that 500+ point single down day in the markets then I'll be able to relax a bit more.

Boeing shares ready to crash.

In my last BA update I indicated that blue 2 was very near.  So far it looks like that model was pretty close as you can see by today's snapshot.  The shares peaked very near to where I had placed the blue 2 on the model and have now begun a decline.  While a move back up above the lower rail below would negate this model, I don't think that will happen what with all of the other topping signs I am seeing unfold right now.  So the next likely move for BA is to accelerate to the downside as blue 3 plays out.  Somewhere within it should be a 3rd of a 3rd of a 3rd which almost always includes gaps of some sort.

This is not the time to be complacent about the ownership of these shares IMO.  It is more than likely a great place to take out a short position or for the more leverage minded, some put options.

TSLA update - major top likely

My track record for calling TSLA turns has actually been pretty good as evidenced by my blog posts.  In this post I correctly called the first peak.   I also recognized that the first peak was only wave one and that higher highs were coming as I modeled two potential paths for finishing wave 2 and going into wave 3. In this post I correctly called for a 5th wave bounce (albeit a few bucks too early).  Yes there was some confusion between what was the 3rd and 5th wave but this is almost a given when trying to call the waves in real time.

Today I am modeling another major top on TSLA shares.  I think 5 waves up have very nearly played out and that TSLA longs should not only sell but should consider flipping short very soon!  All the signs are there at this point.  Another count is possible but it does not detract from the short term negativity of the current chart.  I suspect that, whatever the deal turns out to be, wherever the  location turns out to be, the coming announcement of the Gigafactory location will be viewed as bad somehow.  The wave count is telling us that the herd is ready to take ANY news and spin it bad.

Anyone not sure of this count can simply wait until the shares fall below red 4 in the model and that will be a confirmation that the herd is turning south on TSLA shares.  Best case price target is $180.  That would be the level of the prior 4th as well as the 38.2 fib.  61.8 fib is $114 which also corresponds with wave 2 below.  If this is treated as an expanding wedge which dies mid channel, it would not be considered uncommon to retrace the entire wedge and that would be the $114 price level of wave black 2.

Common core commie Jindal now turns on his buddy Obama.

Lousyana (sic) governor Bobby Jindal used to support big government and one of its main tenets, Common Core.  Also known by conservatives as "no child gets a useful education".  Common core is all about control, all about creating drone workers with just enough knowledge to obey and operate machinery and to do as they are told.  They are also being trained to be clueless unless an overseer is telling them what to do; Common Core beats the mavericks and the leaders down.  It uplifts compliance and conformity.  The whole thing is corrupt to the core and so is anyone associated with it, including teachers who live under it and abide by it so that they can continue collecting their government salary and benefits.  Anyone who supports Common Core in the schools, especially the K-6 grades, has sold the USA down the river cheap.

But, as expected, all of that is beginning to weaken rapidly now that the debt Ponzi is in the collapse stages.  Jindal has now turned a new conservative leaf, having read enough poll data at this point to figure out that there is a new swing of the her's pendulum back toward conservatism.  So all of a sudden this sell out son of a bitch wants to bark like a conservative and so he launched a frivolous lawsuit against Obama for Common Core.  Of course it will go nowhere just like the suit against Rick Perry won't go anywhere.  But these lawsuits are certainly not appreciated by the opposition nonetheless.

Why all of a sudden are we seeing criminal and civil charges being brought across the board?  Who'd a thunk it?   Could it possibly be that this is the historical reaction when any kind of organized criminal group is in decline?  Why, yes it could!  And in fact it is just what I suspected would happen (and wrote about many times in these pages long before there was ANY con man on con man legal activity against politicians in the news).

It's simple folks.  While the money was flowing the con men like Jindal went along for the ride, complicit and guilty as all Hell.  Now that the money is slowing he is reading the new tea leaves (and a bit slow on the uptake for a pollitician IMO) and changing his tune.  He's trying to make a big noise by attacking dear leader Omama outright but of course, Bobby Jindal is just another cockroach that should be stepped on and swept out the front door like the trash he is.