Attempts to manipulate GOOG in thinly traded after hours impress nobody.

An interesting thing about herding behavior is how it can make the entire herd look either smart or stupid as a while while switching between the two in an eye blink.  The poster child for this line of thought is the Blue Angels flying team.  There is a leader who all of the others follow.  If he flies right then the group does amazing stunts.  But if he blows it, they all end up in the same fiery ball and impact crater.  The herding works by sending signals.  When the signals are no longer working to make the herd follow, chaos cannot be far off.

There have been many stories of market manipulation during the past 2 years (upward for stocks, downward for metals).  I consider manipulations really to be signals.  The amount of manipulation is usually small enough to be more of a market suggestion or even a test.  People have been talking about the mini "flash crashes" and subsequent recoveries in gold of late.  Trust me when I tell you that the "fat finger" story is laughable.  Professionals do not have fat fingers.  They input orders through computers which sanity check the action.  Do rogue traders exist?  Perhaps but unlikely.  But the fat fingers excuse for flash crashes is complete bull$hit.  These are simply pokes at the herd, carefully crafted, to gauge its reaction.  When the herd did not react with panic buying it was a clear signal not to fight the tape in the following trading day.  And so, as you can see below, they let GOOG shares free fall.

A word on the coming collapse.

I want to take a few minutes to explain how the con men running the show at the top of the US debt Ponzi will likely spin their involvement in the coming collapse.  In short, they will blame it on someone else.  It sickens me how they get away with this crap but it is as old as history.  Those at the top know that our species has a strong built in herding instinct and they use it against us.   It affects all of us, myself included but I have grown to sense it perhaps more than many others I know.   One of their tricks is to deny everything.  It doesn’t matter if they are caught red handed.  They simply use herding signals to befuddle their detractors and then they go about their way.  In many ways they are sociopaths.  They do not give two $hits about the people they hurt.  They sleep well at night.  The more people they hurt, the happier they are.  Not because they hurt the people per se, but because they were able to do it without punishment.  It makes them above the law, special, and that is what they crave.  

As a young man in the early 70s, I saw a film whose name I sadly cannot recall.  In one scene the main player, a man, was cheating on his wife with another woman.  He was in in own bed with the tramp when his wife walked into the room.  His wife was dumbfounded at the sight.  She could hardly speak but the man and his tramp had it all figured out.  She got up, got dressed quickly.  He said “hello dear, I did not expect you home so soon”.  The wife was standing there stuttering at the sight.  The man kept saying things like “looks like good weather today” and “I’m late for work, did you finish the laundry?” (paraphrased of course because it was decades ago and I don’t remember the exact details).  He just kept talking.  The wife managed a “who is that woman” and the man quickly replied “what woman?”.   In 90 seconds the tramp had left the house, the bed was made, the man was dressed and was already asking “what do you think we will have for breakfast” on the way out the room.  At the end of the scene, the woman was left wondering if she had actually seen what she thought she saw.  

This is how the con men will play it.  The US “leaders” are responsible for the global collapse that is coming but they will never admit it.  They have been printing money like crazy in order to cover their tracks knowing that the rest of the world will either follow suit or collapse because of the rising value of their own fiat currencies relative to a weakening dollar.  Look at Venezuela right now.  Their hope was to be able to inflate their troubles away but the US has been inflating too.  So they had to inflate for themselves and then also inflate to keep ahead of the US on a relative basis.  The result is money that is heading towards hyperinflation.  Each time the US makes a small policy move to ease or tighten, it whipsaws everyone else in the world causing turmoil, turbulence and chaos.  The reason is that 3rd world nations export or die because their own people cannot consume all of their production which itself was purchased by debt.  

This is the reason Japan’s Abe is inflation as well.  The end game is obvious.  The US will act like it is being responsible by reducing the money printing but it will crash our markets and we we will have to continue accommodation of some sort under the new con woman, Yellen.  The means will become increasingly overt as interest rates rise making it harder to print money outright.  The result will be the same: 3rd world nations will have to print until their money hyper-inflates or they will begin to raise rates (like Turkey) but they will all finally figure out that it is too little too late.  Once confidence is gone in the fake money, it cannot easily be recovered.  At the end of the day, even if interest rates are 100% per day, they will just print it up in order to pay.  The market finally catches on that the money has been literally worthless since the US de-linked from gold in 1971.  They will be confounded by the fact that what used to work (raising interest rates) no longer works.  Again the underlying issue here is that the currency has no value.  So when it goes to a condition of zero buying power, that is just playing catch up to reality.

This is why I have always maintained that exporting in order to make a profit is a scam.  The only valid reason for exporting is trade in like kind.   The only value of trade at all is diversification of consumption.  When you grow dependent upon exports simply in order to make ends meet then you are no longer in control of your own destiny.  Growing dependent upon exports is akin to slavery.  You are not producing things to consume yourself; you live in order to provide goods for others.  Is there any better definition of slavery than that? 

In the short run, the masters of this con will have their way.  The 3^rd world nations will hyper inflate while the US credit Ponzi deflates.  But at some point, the slaves rebel.  Their situation becomes so dire that they decide it is not worth working so hard in order to feed, clothe, and house the masters.   At that point they go into hand to mouth survival mode and they stop trading.  That is when the masters finally get their just due.  That is when the products that the masters have become dependent upon finally stop flowing, or at least stop flowing for nearly free.  That is when the lifestyles of the masters finally collapse.

I’m in Kunshan, China right now.  It is a small suburb of Shanghai that few have ever heard of.  Of course, “small” is relative.  Kunshan proper is about 750k people and if you add the surrounding population it is more like 4 million people.  I had the audacity to ask the bar tender at my hotel here a few personal questions such as how much money she made per month and where she lived.  The answers were not a surprise: she makes 2000 rmb per month (20 working days) which is around 330 USD.  For a whole month of work.  With this pay, she lives in the company dorm.  I did not ask but it would not surprise me to find out that there are more workers than beds (submarine-style “hot bunking” is not uncommon in China).  Between my Cuban cigar and multiple “doubles” of top shelf rum my bill for tonight was 33% of her monthly take home.  She is not educated enough to see what a fvcking rip off this is on her.  But I suspect that this will change as Chinese inflation picks up over the next couple of years.  Of course, Bernanke and Yellen will not care.  In fact they will be proud of it.  

The only justice will be when China and others decide that the US is not worth the trouble and stop exporting to us completely until we begin paying in real money: gold and silver bullion.

Is BP peaking right now at $47 and change?

I’ll go out on a limb here and call a top on BP.  I say “a limb” but actually I think it is an 85% likely call.  So it’s a 15% limb IMO.  I base this on a few key things:

• Media gives bold headlines to the “all clear to buy BP” right at the top.  Herding 101.  NEVER listen to the media.  IF they were right about 1/10^th the stuff they print, those doing the printing would be billionaires instead of useless idiots.

• Broader markets are breaking down.  Missed earnings are no longer forgiven.  Instead, the BBYs of the world are taken out back of the wood shed, given a stiff beating, and then shot before they are hung.  Years of market cap increases evaporate back into the ether from whence they came.  This is a warning for anyone with eyes to see.  As Prechter likes to say “it’s all one market”.  Any trading firm has many positions and they are all trading on high leverage.  When BBY tanked they had to sell something else to pay the margin calls.  They have to sell their winners in order to pay margin calls on the losers.  The only assets that are safe in that type of environment are those that few of the momentum traders own (like gold, silver and mining shares)

• And then of course, there is the chart which to me is everything.  The chart shows a bounce from the lows back up to the 38.2% fib.  In addition, we have a 5 wave rail bump into what is likely a sideways (horizontal) triangle.  Others would call it a flag formation.  I really don’t want to put down in writing what I model the future low on these shares to be.  It would only invoke laughter today.  Some day it will be the source of many, many tears.  BP shares are in real trouble from a technical perspective over the next 3-4 years.  Other traders will call it a triple top IMO.