What do 1929, 2000 and 2007 all have in common? Those were all years in which we saw a dramatic spike in margin debt. In all three instances, investors became highly leveraged in order to “take advantage” of a soaring stock market. But of course we all know what happened each time. The spike in margin debt was rapidly followed by a horrifying stock market crash. Well guess what? It is happening again. In April (the last month we have a number for), margin debt rose to an all-time high of more than 384 billion dollars. The previous high was 381 billion dollars which occurred back in July 2007. Margin debt is about 29 percent higher than it was a year ago, and the S&P 500 has risen by more than 20 percent since last fall. The stock market just continues to rise even though the underlying economic fundamentals continue to get worse. So should we be alarmed? Is the stock market bubble going to burst at some point? Well, if history is any indication we are in big trouble. In the past, whenever margin debt has gone over 2.25% of GDP the stock market has crashed. That certainly does not mean that the market is going to crash this week, but it is a major red flag.
The funny thing is that the fact that investors are so highly leveraged is being seen as a positive thing by many in the financial world. Some believe that a high level of margin debt is a sign that “investor confidence” is high and that the rally will continue. The following is from a recent article in the Wall Street Journal…
The rising level of debt is seen as a measure of investor confidence, as investors are more willing to take out debt against investments when shares are rising and they have more value in their portfolios to borrow against. The latest rise has been fueled by low interest rates and a 15% year-to-date stock-market rally.
Others, however, consider the spike in margin debt to be a very ominous sign. Margin debt has now risen to about 2.4 percent of GDP, and as the New York Times recently pointed out, whenever we have gotten this high before a market crash has always followed…
The first time in recent decades that total margin debt exceeded 2.25 percent of G.D.P. came at the end of 1999, amid the technology stock bubble. Margin debt fell after that bubble burst, but began to rise again during the housing boom — when anecdotal evidence said some investors were using their investments to secure loans that went for down payments on homes. That boom in margin loans also ended badly.
Posted below is a chart of the performance of the S&P 500 over the last several decades. After looking at this chart, compare it to the margin debt charts that the New York Times recently published that you can find right here. There is a very strong correlation between these charts. You can find some more charts that directly compare the level of margin debt and the performance of the S&P 500 right here. Every time margin debt has soared to a dramatic new high in the past, a stock market crash and a recession have always followed. Will we escape a similar fate this time?
What makes all of this even more alarming is the fact that a number of things that we have not seen happen in the U.S. economy since 2009 are starting to happen again. For much more on this, please see my previous article entitled “12 Clear Signals That The U.S. Economy Is About To Really Slow Down“.
At some point the stock market will catch up with the economy. When that happens, it will probably happen very rapidly and a lot of people will lose a lot of money.
And there are certainly a lot of prominent voices out there that are warning about what is coming. For example, the following is what renowned investor Alan M. Newman had to say about the current state of the market earlier this year…
“If anything has changed yet in 2013, we certainly do not see it. Despite the early post-fiscal cliff rally, this is the same beast we rode to the 2007 highs for the Dow Industrials. The U.S. stock market is over leveraged, overpriced and has been commandeered by mechanical forces to such an extent that all holding periods are now affected by more risk than at any time in history.”
Unfortunately, most Americans never get to hear such voices. Instead, most Americans rely on the mainstream media to do much of their thinking for them. And right now the mainstream media is insisting that we are not in a stock market bubble…
ABC News: “AP Survey: Economists See No Stock Market Bubble“
Businessweek: “Prognostications: It’s Not a Stock Bubble“
MarketWatch: “Is a stock bubble coming? No, say economists“
So what do you think?
Do you believe that we are in a stock market bubble that is about to burst, or do you believe that everything is going to be just fine?
Please feel free to express your opinion by posting a comment below…
View full post on The Economic Collapse
“This Is A Glock Block” – Frustrated Homeowners All Over America Are Taking Matters Into Their Own Hands
All over the United States, frustrated homeowners are banding together, arming themselves and patrolling their own streets. One of the primary reasons this is happening is because police budgets all over the nation are being slashed at a time when violent crime rates in the United States are increasing and many our our largest cities are being transformed into crime-infested war zones. So instead of waiting for government to come up with a solution, many Americans are taking matters into their own hands. For example, one community group in Milwaukie, Oregon has started posting flyers with an ominous message for potential criminals: “This is a Glock block. We don’t call 911.” You can see a photo of this flyer right here. One of the founders of the “Glock Block” is a breast cancer survivor named Coy Tolonen. She decided to arm herself after a thief stole one of her favorite statues out of her front yard while she was watching…
It’s mostly petty crime that neighbors are sick and tired of: stolen lawn ornaments, vandalism. But for neighbors like Tolonen, a breast-cancer survivor, that’s enough: “I will defend myself — and my home,” she told KOIN 6 News.
Tolonen recently had a beloved statue she calls “Lilly Rose” stolen off her front porch. She said she even saw the man who stole it and tried to chase him down — but he got away.
This was the last straw for Tolonen, who decided to take a class to get her concealed carry permit.
We are seeing similar things happen in other areas of the nation. As I wrote about yesterday, the size of the police force has been cut in half in the city of Detroit over the past ten years. Meanwhile, crime rates have skyrocketed. So frustrated citizens are now teaming up with the police to patrol their own neighborhoods…
Volunteers given radios and matching T-shirts help officers protect neighborhoods where burglaries, thefts and thugs drive away people who can’t rely on a police force that lost a quarter of its strength since 2009. With 25 patrols on the streets, the city hopes to add three each year. Meanwhile, the homicide rate continues rising.
In some wealthier neighborhoods around the country, citizens are pooling their resources and are hiring private security firms to ward off criminals. Just check out what is happening in Oakland…
After people in Oakland’s wealthy enclaves like Oakmore or Piedmont Pines head to work, security companies take over, cruising the quiet streets to ward off burglars looking to take advantage of unattended homes.
“With less law enforcement on the streets and more home crime or perception of home crime, people are wanting something to replace that need,” says Chris de Guzman, chief operating officer of First Alarm, a company that provides security to about 100 homes in Oakland. “That’s why they’re calling us and bringing companies like us aboard to provide that deterrent.”
According to Steve Amitay, the executive director of the National Association of Security Companies, this is also happening in other high crime cities such as Atlanta and Detroit. In fact, it is being projected that the “private cop” business is going to absolutely boom in the years ahead.
But not everyone can afford to hire private cops. Those with more limited resources are trying to cope with rising crime any way that they can.
In Chicago, firefighters are actually being enlisted to provide security for public school students walking to and from school…
The city of Chicago has ordered its firefighters to provide security for public school students walking to and from class through the city’s gang turf, according to an official memo from the Chicago Fire Department that WND obtained.
The memo, signed by Chicago Fire Commissioner Jose Santiago, states that the fire department will have “a strong physical presence” along student walking routes for three weeks at the beginning of the school year in the fall.
Sadly, this is just the beginning. As the U.S. economy continues to get even worse, so will crime, gang activity and social decay.
But that doesn’t mean that everyone will be bad.
The truth is that there are still some decent people out there.
Today, someone sent me a story about human decency that made me smile. In Laguna Niguel, California a man accidentally sold a wooden watch box for $10 that contained his wife’s $23,000 wedding ring. When his wife found out about it, she was absolutely crushed…
Racquel Cloutier was distraught after her husband, Eric, told her he had sold the wooden watch box in which she had hidden the ring before going to hospital to have their fifth child. “I immediately started crying,” said Mrs. Cloutier, 31, of Laguna Niguel, California. “I just wanted the ring to be in a safe place and out of reach from my two-year-old twins.”
Fortunately, the box had ended up with a very honest couple…
A dozen kilometres away, in Mission Viejo, Alyssa and Andrew Lossau were frantically searching for a set of keys. They looked inside a box that Mrs. Lossau’s mother, Chaundel Holladay, had bought at a garage sale and given them as a gift.
Inside, they discovered the three-carat diamond ring. Mrs. Lossau found an email address for Mrs Cloutier and contacted her. “It is giving me faith in people again,” said Mr. Cloutier, 38. “By the grace of God it ended up with the most honest people,” said his wife.
So that story had a very happy ending.
There are still people out there that are ready and willing to do the right thing.
But not everyone is that way. It has been said that desperate people do desperate things, and when the next major wave of the economic collapse strikes there are going to be millions of very desperate people out there on the streets of America.
Now is the time to get prepared for that.
View full post on The Economic Collapse
It isn’t just Internet and phone companies that are giving your personal information to the U.S. government. According to an astounding report by Bloomberg, “four people familiar with the process” say that “makers of hardware and software, banks, Internet security providers, satellite telecommunications companies” and a whole host of other sources are handing over your personal data to federal agencies. The truth is that there is so much more to this NSA snooping scandal than the American people know so far. When U.S. Representative Loretta Sanchez said that what Edward Snowden had revealed was “just the tip of the iceberg“, she wasn’t kidding. The U.S. government is trying to collect as much information about everyone on the planet as it possibly can. And this incredibly powerful intelligence machine is not going to go away just because a few activists get upset about it. The United States government spends more than 80 billion dollars a year on intelligence programs. Those that have spent their careers constructing this monolithic intelligence apparatus are doing to defend it to the bitter end, as will the corporate partners in the private sector that rake in enormous profits thanks to big fat government contracts. But if the American people don’t stand up and demand change now, it is going to be a signal to those doing the snooping that they can push the envelope even more because nobody is going to stop them.
So why are thousands of companies handing over your personal data to the NSA? Well, according to Bloomberg they are getting things in return…
Thousands of technology, finance and manufacturing companies are working closely with U.S. national security agencies, providing sensitive information and in return receiving benefits that include access to classified intelligence, four people familiar with the process said.
These programs, whose participants are known as trusted partners, extend far beyond what was revealed by Edward Snowden, a computer technician who did work for the National Security Agency. The role of private companies has come under intense scrutiny since his disclosure this month that the NSA is collecting millions of U.S. residents’ telephone records and the computer communications of foreigners from Google Inc (GOOG). and other Internet companies under court order.
Thanks to the recent revelations by Edward Snowden, much of the focus so far has been on the information that the NSA gets from Internet and telecommunications companies, but apparently government agencies collect information about all of us from a vast array of sources…
Makers of hardware and software, banks, Internet security providers, satellite telecommunications companies and many other companies also participate in the government programs. In some cases, the information gathered may be used not just to defend the nation but to help infiltrate computers of its adversaries.
Along with the NSA, the Central Intelligence Agency (0112917D), the Federal Bureau of Investigation and branches of the U.S. military have agreements with such companies to gather data that might seem innocuous but could be highly useful in the hands of U.S. intelligence or cyber warfare units, according to the people, who have either worked for the government or are in companies that have these accords.
We have become a “surveillance society”, and this is exactly the sort of thing that the Fourth Amendment was supposed to protect us against. The government is only supposed to invade our privacy and investigate us when there is probable cause to do so.
But now the government is trying to collect as much information about all of us as it possibly can even though the vast majority of us will never be charged with any crime.
There seems to be no limit when it comes to how much personal data the government wants to gather on all of us. As I have written about previously, the chief technology officer at the CIA says that they “fundamentally try to collect everything and hang onto it forever.”
And this does not just apply to American citizens. The U.S. government is compiling data on everyone on the planet. And since such a high percentage of Internet traffic flows through U.S. networks and U.S. companies, that gives the U.S. intelligence community a tremendous “home-field advantage”. The following is from a recent piece authored by Ronald Deibert, a professor of political science at the University of Toronto…
While cyberspace may be global, its infrastructure most definitely is not.
For example, a huge proportion of global Internet traffic flows through networks controlled by the United States, simply because eight of 15 global tier 1 telecommunications companies are American — companies like AT&T, CenturyLink, XO Communications and, significantly, Verizon.
The social media services that many of us take for granted are also mostly provided by giants headquartered in the United States, like Google, Facebook, Yahoo! and Twitter. All of these companies are subject to U.S. law, including the provisions of the U.S. Patriot Act, no matter where their services are offered or their servers located. Having the world’s Internet traffic routed through the U.S. and having those companies under its jurisdiction give U.S. national security agencies an enormous home-field advantage that few other countries enjoy.
But what is really the point of all of this intelligence gathering?
Is it to make us a little bit safer?
If so, we are making a massive mistake.
Benjamin Franklin once wrote the following: “They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety.”
Are you willing to give up your Fourth Amendment rights in order to feel a little more safe?
I hope not.
The U.S. Constitution never guaranteed us safety. But it is supposed to guarantee our privacy.
Fortunately, it appears that at this point public opinion is very much against all of the snooping that the government has been doing. According to the Guardian, most of the recent surveys that have been done are coming up with very consistent results…
Thursday, the Guardian released a poll conducted on Monday and Tuesday nights by Public Policy Polling looking at America’s reaction to the National Security Agency (NSA) controversy. The public appears to be reacting negatively to the revelations – and it seems to be hurting President Obama.
We found 50% of American voters believe the NSA should not be collecting telephone or internet records, compared to the 44% who think they should. The results hold even when respondents were told that the data the government is collecting is “metadata” (and not necessarily actual content of communications).
These results are consistent with a CBS News poll, Fox News poll, and YouGov survey that showed only 38%, 32%, and 35% of Americans respectively approved of phone record collection in order to reduce the chance of a terrorist attack. A Gallup poll was consistent with these, showing only 37% approved monitoring of Americans’ phone and internet use.
And Americans also seem to be very suspicious about what the government will do with our personal data once they have it.
In fact, according to a new Rasmussen survey, 57 percent of Americans believe that the government will use the information that it collects “to harass political opponents”.
And of course many of the recent scandals that have erupted this year involve the government harassing political opponents. We have seen this with the IRS scandal, and we have seen this with the spying on reporters scandal.
Just this week it was reported that CBS reporter Sharyl Attkisson has had her computers hacked repeatedly. If you are not familiar with Attkisson, she is the one reporter in the mainstream media that has been relentless when it has come to pursuing the Operation Fast and Furious and Benghazi stories. Now we are learning that a “sophisticated” intruder hacked into her computer “on multiple occasions” in late 2012…
CBS News announced Friday that correspondent Sharyl Attkisson’s computer was hacked by “an unauthorized, external, unknown party on multiple occasions,” confirming Attkisson’s previous revelation of the hacking.
CBS News spokeswoman Sonya McNair said that a cybersecurity firm hired by CBS News “has determined through forensic analysis” that “Attkisson’s computer was accessed by an unauthorized, external, unknown party on multiple occasions in late 2012.”
“Evidence suggests this party performed all access remotely using Attkisson’s accounts. While no malicious code was found, forensic analysis revealed an intruder had executed commands that appeared to involve search and exfiltration of data. This party also used sophisticated methods to remove all possible indications of unauthorized activity, and alter system times to cause further confusion. CBS News is taking steps to identify the responsible party and their method of access.”
Meanwhile, in a desperate attempt to deflect attention away from all of these scandals, Barack Obama is starting a war with Syria.
In this war, we are actually going to be helping al-Qaeda rebels that are beheading Christians to take over Syria.
If you aren’t aware of the deep connection between al-Qaeda and the Syrian rebels, just read the recent USA Today article entitled “Syrian rebels pledge loyalty to al-Qaeda” or any of the dozens of other articles that you can find on the Internet that document this very clearly.
And the sick thing is that a large number of Republicans are actually applauding Barack Obama for teaming up with al-Qaeda.
Has it suddenly become “conservative” to help al-Qaeda?
What in the world is going on?
And you know what?
The truth was that our troops were in position long before Barack Obama made his “stunning announcement” on Thursday. In fact, it has been confirmed that U.S. troops are already in Jordan along the Syrian border.
And could this conflict with Syria actually set the stage for a much larger conflict?
The Russians have been providing “mortars, light artillery, antiaircraft guns, antitank weapons and ammunition” to the Syrian government and they have loudly denounced the latest moves by the Obama administration.
Yes, the Assad government is horrible, but what Obama is doing in Syria is a terrible, terrible mistake.
If the U.S. takes down the Assad government, forces loyal to al-Qaeda and other radical jihadists are going to take over and we will have made Russia and China very angry. If the U.S. is unsuccessful in removing the Assad government, it will be considered a crushing defeat for the United States.
Either way, we lose.
So what do you think about all of this? Please feel free to post a comment with your thoughts below…
View full post on The Economic Collapse
Last updated: June 9, 2013 8:52 pm
Backlash over US snooping intensifies
By Geoff Dyer in Washington
The Obama administration came under mounting political pressure on Sunday from both political parties to scale back electronic surveillance following revelations last week that have raised new questions about government intrusion of privacy.
The calls came as the Guardian newspaper revealed that the whistleblower who leaked information about surveillance activities is Edward Snowden, a 29-year-old former CIA employee who later became a contractor, who has now taken refuge in Hong Kong, setting up a potentially delicate political issue with the Chinese authorities about his fate.
Democratic senator Mark Udall called on Sunday for the US to reopen the far-reaching Patriot Act, which was written in the aftermath of the 9/11 attacks. He was speaking after revelations that US government surveillance of telephone calls and online activity was more extensive than previously thought and could go beyond what is authorised by federal court warrants.
Mr Udall, who has been warning for years about the expansion in government surveillance, said the law needed to be revised to restore public confidence that privacy was being protected. “My main concern is Americans don’t know the extent to which they are being surveilled,” he told ABC’s Sunday talk show.
Rand Paul, the Republican senator with libertarian leanings, said on Sunday that he would consider organising a class-action lawsuit over the collection of telephone and internet information. “We are looking through so much data that I think it makes our fight against terrorism worse.”
Following controversies over drones and leak inquiries, President Barack Obama is now being accused of pursuing the anti-terror policies he once denounced.
Last week, the Guardian and the Washington Post newspapers published stories alleging that the National Security Agency collects details about the phone calls of millions of Americans and downloads emails and other online information of non-Americans from the servers of leading US tech companies.
While the administration has admitted that the telephone data story is true, technology companies such as Google and Yahoo and the head of the US intelligence services denied at the weekend that any online information not covered by a federal court warrant was handed over to the government.
The Guardian revealed on Sunday that the leaks had come from Mr Snowden, who had been working at the NSA for the past four years while being employed by outside contractors. Mr Snowden, who asked for his identity to be disclosed, said he had gone to Hong Kong three weeks ago because it “was one of the few places in the world that both could and would resist the dictates of the US government”, according to the Guardian.
US officials have said that they will pursue an investigation of the leak, however they might need to secure his extradition from China in order to speak with him. Mr Snowden reflected that the Chinese authorities might also want to speak to him.
Senators Udall and Paul, who are part of a growing group of members of Congress who believe the surveillance activities are going too far, are opposed by some influential figures in the Congress.
Mike Rogers, the House intelligence committee chair, said the collection of telephone data had been instrumental in preventing a 2009 plot to explode a bomb on the New York subway.
Dianne Feinstein, chair of the Senate intelligence committee, said that there was substantial oversight of surveillance activities by both the courts and Congress. “Part of our obligation is keeping Americans safe,” she said. “Human intelligence isn’t going to do it.”
The accusation that US authorities routinely snoop on the online activity of non-Americans has drawn strong condemnation from Microsoft’s former chief privacy adviser. Caspar Bowden, who advised the software company on privacy until 2011 and is now a privacy campaigner, warned that the US’s access to global personal data consigned the rest of the world’s cloud data to a “privacy -Guantánamo Bay”.
Mr Bowden said US legislation provided a “carte blanche” for the US to collect business and technical data, and that political information was also expressly covered.
He said the definition of “foreign intelligence information” covered by the US law included anything “with respect to a foreign territory that relates to the conduct of the foreign affairs of the US”.
Mr Bowden added: “We’ve reached a decision point about European sovereignty. Either we rely on the US for our data capacity forever or we bite the bullet and say we need our own cloud software industry.”
Meanwhile, William Hague, UK foreign secretary, has dismissed as “nonsense” fears that the UK’s GCHQ eavesdropping service has been seeking to circumvent Britain’s spy laws by using data gathered by foreign intelligence systems.
Statistics: Posted by yoda — Sun Jun 09, 2013 4:31 pm
View full post on opinions.caduceusx.com
This is no time to be complacent. Massive economic problems are erupting all over the globe, but most people seem to believe that everything is going to be just fine. In fact, a whole bunch of recent polls and surveys show that the American people are starting to feel much better about how the U.S. economy is performing. Unfortunately, the false prosperity that we are currently enjoying is not going to last much longer. Just look at what is happening in Europe. The eurozone is now in the midst of the longest recession that it has ever experienced. Just look at what is happening over in Asia. Economic growth in India is the lowest that it has been in a decade and the Japanese financial system is beginning to spin wildly out of control. One of the only places on the entire planet where serious economic problems have not already erupted is in the United States, and that is only because we have “kicked the can down the road” by recklessly printing money and by borrowing money at an unprecedented rate. Unfortunately, the “sugar high” produced by those foolish measures is starting to wear off. We are going to experience a massive amount of economic pain along with the rest of the world – it is just a matter of time.
But for the moment, there are a lot of skeptics out there.
For the moment, there are a lot of people that are declaring that the problems of the past have been fixed and that we are heading for incredibly bright economic times ahead.
Unfortunately, those people appear to be purposely ignoring the economic horror that is breaking out all over the globe.
The following are 18 signs that massive economic problems are erupting all over the planet…
#1 The eurozone is now in the midst of its longest recession ever. Economic activity in the eurozone has declined for six quarters in a row.
#2 Italy’s economy has now been contracting for seven quarters in a row.
#3 Industrial production in Italy has fallen for 15 months in a row. It has now fallen to its lowest level in about 25 years.
#4 The number of people that are considered to be “seriously deprived” in Italy has doubled over the past two years.
#5 Consumer confidence in France has just hit a new all-time low.
“I’ve sent CVs everywhere, I come to the unemployment agency every day, for 3 or 4 hours to look for work as a truck driver and there’s never anything,” said 42-year old Djamel Sami, who has been unemployed for a year, leaving a job agency in Paris.
#7 Unemployment in the eurozone as a whole has just hit a brand new all-time record high of 12.2 percent.
#8 Youth unemployment continues to soar to unprecedented heights in Europe. The following is from an article that was recently posted on the website of the Guardian that detailed how bad things are getting in some of the worst countries…
In Greece, 62.5% of young people are out of work, in Spain it’s 56.4%, then Portugal with 42.5%, and then Italy with 40.5%.
#9 Youth unemployment is being partially blamed for the worst rioting that Sweden has seen in many years. The following is how the Daily Mail described the riots…
Sweden is reeling after a third night of rioting in largely run-down immigrant areas of the capital Stockholm.
In the last 48 hours violence has spread to at least ten suburbs with mobs of youths torching hundreds of cars and clashing with police.
It is Sweden’s worst disorder in years and has shocked the country and provoked a debate on how Sweden is coping with youth unemployment and an influx of immigrants.
#10 An astounding 10 percent of all banking deposits were pulled out of banks in Cyprus during the month of April alone.
#11 Economic growth in India is the slowest that it has been in an entire decade.
#12 Suddenly Australia is experiencing some tremendous economic challenges. The following quotes are from a recent Zero Hedge article…
-“We’re seeing a much sharper contraction in the Australian economy than we’d anticipated four or five months ago”. Coffey MD, John Douglas. The engineering group has seen its shares, which traded above $4 in 2007, hit 10c last week.
-“By 10am, the Fitness First gym in the city is packed full of brokers who’ve had a gutful of sitting at their desk doing nothing – salary cuts are starting and next it will be jobs” Perth broker
-“Oh mate, the funding market is dead. You are now seeing a few deeply discounted rights issues for those that are reaching desperate levels ….. liquidity has completely disappeared” Perth broker
#13 The financial system in Japan is beginning to spin wildly out of control. The Japanese stock market has now declined about 15 percent from the peak, and many believe that the yen will continue to get weaker and that interest rates in Japan will start to rise significantly.
#14 Global cash flow is declining at a rate not seen since the last recession. This indicates that we could be headed for a global credit crunch.
#15 Real wages continue to decline in the United States. Even though we are being told that the U.S. is experiencing an “economy recovery”, real weekly earnings have declined from $297.79 in 2010 to $295.49 in 2011 to $294.83 in 2012. (The preceding calculation is based on 1982-1984 dollars)
#16 Wall Street is buzzing about the fact that “the Hindenburg Omen” appeared at the end of last week. So exactly what is “the Hindenburg Omen”? The following are the criteria that are used to determine whether it has appeared or not…
1. The daily number of NYSE new 52 Week Highs and the daily number of new 52 Week Lows must both be greater than 2.2 percent of total NYSE issues traded that day.
2. The smaller of these numbers is greater than or equal to 69 (68.772 is 2.2% of 3126). This is not a rule but more like a checksum. This condition is a function of the 2.2% of the total issues.
3. That the NYSE 10 Week moving average is rising.
4. That the McClellan Oscillator ( a market breadth indicator used to evaluate the rate of money entering or leaving the market and interpretively indicate overbought or oversold conditions of the market)is negative on that same day.
5. That new 52 Week Highs cannot be more than twice the new 52 Week Lows (however it is fine for new 52 Week Lows to be more than double new 52 Week Highs).
When the Hindenburg Omen makes an appearance, it supposedly means that the U.S. stock market is likely to experience a serious decline within the next 40 days.
#17 As I wrote about the other day, the SentimenTrader Smart/Dumb Money Index is now the lowest that it has been in more than two years. That means that lots of “smart money” has been getting out of the market and lots of “dumb money” has been pouring in.
#18 Margin debt on the New York Stock Exchange has set a new all-time high. The following is from a recent Market Oracle article…
Margin debt—that’s the amount of money borrowed to purchase stocks—on the New York Stock Exchange (NYSE) reached its all-time high in April. Margin debt on the NYSE registered at $384.3 billion as the key stock indices hit new record-highs. (Source: New York Stock Exchange web site, last accessed May 29, 2013.) The highest margin debt ever reached prior to this was in July of 2007, when it stood just above $381.0 billion. At that time, just like today, the key stock indices were near their peaks and “buy now before it’s too late” was the prominent theme of the day
Whenever margin debt spikes like this, a stock market crash almost always follows. If you doubt this, just check out the chart in this article.
Wall Street has had a good couple of years, but it has been a “false prosperity” that has been pumped up by reckless money printing by the Federal Reserve. Just like all of the other stock market bubbles that we have seen in recent years, this one is going to burst too. And as Marc Faber recently pointed out, this bubble has been particularly beneficial to the wealthy…
The Fed has been flooding the system with money. The problem is the money doesn’t flow into the system evenly. It doesn’t increase economic activity and asset prices in concert. Instead, it creates dangerous excesses in countries and asset classes. Money-printing fueled the colossal stock-market bubble of 1999-2000, when the Nasdaq more than doubled, becoming disconnected from economic reality. It fueled the housing bubble, which burst in 2008, and the commodities bubble. Now money is flowing into the high-end asset market – things like stocks, bonds, art, wine, jewelry, and luxury real estate.
Money-printing boosts the economy of the people closest to the money flow. But it doesn’t help the worker in Detroit, or the vast majority of the middle class. It leads to a widening wealth gap. The majority loses, and the minority wins.
The fact that the U.S. stock market has set new all-time record high after new all-time record high in recent months means very little. At this point, the stock market has become completely divorced from economic reality. When this current bubble bursts, the adjustment is going to be very painful. Wall Street will likely whine and complain and ask for more bailouts, but they may find that authorities are not nearly as sympathetic this time.
Much of the rest of the world is already experiencing the next major wave of the economic collapse. Reckless money printing by the Fed and reckless borrowing and spending by the federal government may have delayed the inevitable in the United States for a little while, but those measures have also made our long-term problems even worse.
There was one piece of advice that Ben Bernanke included in his commencement speech to students at Princeton recently that I thought was particularly ironic…
“Don’t be afraid to let the drama play out.”
Will he take his own advice when the next great financial crisis strikes the United States?
That seems very unlikely.
Unfortunately, things are not going to be so easy to fix this next time.
What happened back in 2008 was just a preview.
What is coming next is going to absolutely shock the world.
View full post on The Economic Collapse
Michael F. Cannon
From the Washington Post:
Hedge fund executives and other investors are increasingly interested in the timing and nature of health-policy decisions in Washington because they directly affect the profits and stock prices of pharmaceutical, insurance, hospital and managed-care companies…
[Former Centers for Medicare & Medicaid Services] director Thomas Scully, who served during the Bush administration…said he thought that it was useful for CMS officials to have more communication with Wall Street investors as a way for regulators to learn and “explain what an $800-billion-a-year agency” does with its money.
So long as someone is still making a buck, it’s not socialized medicine…right?
View full post on Cato @ Liberty
Electronics outsourcing weakened Boeing’s control over 787’s crucial systems
Boeing once had a division that designed electronic controls and managed suppliers of related components, but as the company geared up for the 787 it outsourced that work and weakened its control over crucial systems.
By Dominic Gates
Seattle Times aerospace reporter
JAIME GREEN / THE WICHITA EAGLE
When Boeing launched the 787 program in 2003, it dismantled its unit that designed electronic controls for airplane systems and outsourced the work.
Ten years ago, Boeing had a unit of 1,200 engineers in Everett designing electronic controls for all its airplanes, and a plant in Texas where another 1,200 people built the hardware.
The company created the unit in the early 1980s because all the systems on a modern jet — including the electrical, hydraulics, engine, fuel, cabin air and flight-control systems — are managed by electronics.
“It was a strategic move to control the electronics itself,” said Dwight Schaeffer, a former senior manager at Boeing Commercial Electronics (BCE).
Yet as Boeing launched the 787 Dreamliner program in 2003, management dispersed all those Everett engineers, outsourced their work, then sold off the Texas plant.
Part of a broad handoff of control to airplane-systems suppliers, the move was intended to cut Boeing’s costs.
On jets before the 787, BCE integrated components from many different suppliers so they worked together properly. And if suppliers got in trouble, BCE stepped in and got the job done.
“Now they don’t have that capability,” said Jerry Packard, another former BCE manager. “That’s all lost.”
In contrast to Boeing’s well-known move to let “global partners” design and manufacture the 787’s wings, tail and fuselage, the way it handed design control to 787 systems partners, including management of subcontractors, received little attention at the time.
After this year’s costly three-month grounding of the plane from January’s battery problems, that approach is getting new scrutiny.
Longtime industry analyst Richard Aboulafia worries it may bring the 787 more grief in future.
“Without complete oversight of the subsystems, they might be finding systems glitches for years,” said Aboulafia.
In the aftermath of a rash of 787 systems problems — in its electrical power-distribution panels and generators as well as its battery system — the dissolution of Boeing Commercial Electronics offers a case study in how Boeing dealt away in-house expertise and relinquished control over systems suppliers.
BCE designed and built electronic boxes and circuit cards that controlled a multitude of crucial systems on all Boeing planes before the 787.
As a senior manager at BCE, Schaeffer managed the budgets for about 230 employees and ran research and development, business development, project management and product support.
He said BCE’s role as an integrator of different subsystems gave it a clear overview of how a jet’s systems were coming together.
“No supplier would trust another,” said Schaeffer. “But the suppliers would trust us not to give away their secrets.”
On the 777 program, for example, Honeywell supplied a system to detect when the weight of the plane was on the landing gear; Allied Signal supplied a smoke-detection system for the cargo hold; Hamilton Standard (which later became Hamilton Sundstrand) supplied an electrical anti-ice system; Fenwal Controls supplied a system to detect leaks in air ducts; Walter Kidde supplied a fire-detection system.
These all fed into and were controlled by a single BCE-designed electronics box, as were other systems designed and built by BCE itself — including the hydraulics monitoring and the passenger cabin’s environmental controls.
To make it all work together, BCE controlled both the physical format of this vital communications nexus, as well as the electrical and software standards for each system.
Another key BCE role was bailing out suppliers that got into trouble.
Lead engineer Ed D’Souza recalls the example of Vickers, a Grand Rapids, Mich.-based supplier of the system for loading and unloading cargo for the 767 freighter.
On previous contracts, Vickers had built only the hardware.
“Failing miserably” at designing the electronic controls, the company appealed to Boeing for help, D’Souza said.
“They only wanted to do the mechanical stuff. They were more than happy to turn the electronics over to us,” he said. “We essentially brought the job back in-house and did the entire design and delivery ourselves.”
787 systems different?
Schaeffer, Packard and D’Souza, now all retired, trace some of Boeing’s 787 problems to a loss of control of systems design and the disbanding of BCE.
It’s uncommon for retired Boeing managers to speak out publicly against company policies, but they agreed to do so in hope that Boeing will reverse direction for future jet programs.
As Dreamliners entered scheduled service in numbers last year, problems surfaced initially with the 787’s electrical system.
At least four times, electrical arcing in circuit boards inside the power panels caused airline-service disruptions, including a Dec. 4 flight diversion by United Airlines.
On Dec. 17, an electrical generator on a United 787 failed after a flight attendant reported a loud bang under the floor.
According to a Federal Aviation Administration incident report, mechanics found a flash mark behind a power panel.
The Wall Street Journal recently cited an internal Boeing report that revealed a total of 350 Dreamliner service disruptions before January. That figure is comparable to the incidence of glitches in the early days of the 777 program, but a person with knowledge of the data said a greater proportion of the 787 problems were electrical.
Then in January, problems with the battery system — a battery fire on the ground in Boston and a smoldering battery in flight in Japan — grounded the entire Dreamliner fleet.
Were these “teething problems” or signs of an underlying systems vulnerability?
Boeing insists that the way it outsourced 787 systems was not significantly different from what it’s done in the past.
Instead of relying on multiple suppliers sending in pieces Boeing integrated, the jet-maker had its major systems partners “design, build and integrate subsystems,” said spokesman Larry Wilson.
“We streamlined our approach,” Wilson said.
Mike Sinnett, Boeing senior vice president and 787 chief project engineer, told a National Transportation Safety Board (NTSB) investigative hearing into the battery failures last month that the company maintained both tight oversight and overall control over its systems partners.
Compared with the radically new role for 787 airframe suppliers, Boeing’s relationship with 787 systems suppliers was “more traditional,” he said.
Batteries, power panels
Some suppliers saw the changes as more radical .
Clay Jones, chief executive of Rockwell Collins, which supplies the 787 cockpit avionics suite, said in an interview last year that on the Dreamliner “Boeing fairly dramatically changed its attitude of how to work with suppliers.”
He said Boeing elevated the role of suppliers like his company to that of “true partners.”
Some of those suppliers would have liked to work with BCE, said Schaeffer.
Before Boeing selected its systems suppliers for the jet, the Hamilton Sundstrand division of United Technologies approached Schaeffer’s group and asked to partner with BCE in making its bid for the electrical systems.
“They were weak on software, and we had helped them out before,” Schaeffer said.
But with BCE already on the chopping block, Boeing’s leadership nixed that idea.
Boeing ultimately chose Hamilton Sundstrand to design the 787’s electrical system and to integrate subsystems such as the power-distribution panels.
The panels, which have proved so troublesome on the 787, were designed in-house on jets before the 787, said Schaeffer.
For the 787 battery system, Boeing selected Thales of France to do the design and integrate subsystems built by subcontractors, including battery-maker GS Yuasa of Japan, and Securaplane of Tucson, Ariz., which made the charging system.
“That would never have happened in the old days,” Schaeffer said. The battery-component suppliers “would have been contracted directly with Boeing.”
At the NTSB investigative hearing, testimony revealed that information from the subcontractors — such as the analysis and testing of certain battery failures — for the most part flowed indirectly to Boeing, through Thales.
“I’ve no problem with outsourcing the build portions,” meaning the making of the hardware, said Schaeffer.
But he said he believes Boeing ought to have kept the design in-house and be responsible for integrating the various components from suppliers into a working system.
“When they outsourced that to the people that make the equipment, like Thales, that’s what really broke the back,” Schaeffer said.
The 787 is the first Boeing jet with all its electronic components sourced from outside suppliers.
Schaeffer said eliminating BCE from the supply chain meant many subsystem suppliers were “out of sight, out of mind,” no longer working directly with Boeing.
“Just by getting rid of us, Boeing outsourced its systems-design responsibilities more on the 787 than on other airplanes,” he said.
At the start of the 787 program, Boeing’s leadership in Chicago insisted on the need to reduce the development cost by bringing in “risk-sharing partners” who would take on — and help pay for — more of the development work.
Hans Weber, a leading aviation-engineering consultant, calls this the “fundamental weakness in the 787 program from the start.”
This was “ultimately a financial invention. It’s not done for technical reasons,” Weber said.
Internal documents obtained by The Seattle Times in the early days of the program showed Boeing planned to spend just $5 billion to develop the 787, a figure Weber calls “unrealistically low” and that later ballooned to at least triple that as production problems mounted.
Once design work had been outsourced, Weber said, an inevitable consequence was that in-house design expertise became surplus and “had to go.”
“We know of the problems on the structures side. We are learning more and more on the systems side,” said Weber.
“These are problems that could very well be traced to a lack of sufficient oversight and inadequate transfer of corporate-engineering expertise.”
Boeing has upgraded both the battery systems and the power panels on the Dreamliners, and airlines around the world expect to resume their full 787 services by next month.
If more systems problems arise for Boeing in future, one mitigating factor is that fixing them is generally much cheaper than making major structural changes to the airframe.
Correcting systems faults may require only swapping out an electronics box or making software changes.
More than ever, though, Boeing must look outside the company for that expertise.
Statistics: Posted by yoda — Sun May 26, 2013 3:42 pm
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Lanworth cautious over world wheat prospects
Lanworth re-opened doubts over the Black Sea grains harvest, and stoked concerns over Australia too, as it cautioned that the world wheat harvest would narrowly fail to cover demand in 2013-14.
The analysis group, which uses satellite imagery to a large extent in its forecast, pegged the world wheat crop at 694.3m tonnes, a sharp rise on last year’s harvest, but nearly 7m tonnes below the US Department of Agriculture’s initial estimate, revealed last week.
It would also fall marginally below demand, fostering a small drop in world stocks over 2012-13 rather than the rise to 186.4m tonnes that Washington foresees.
Lanworth was more upbeat than the USDA on the harvest in the former Soviet Union state of Kazakhstan, upgrading its estimate by 700,000 tonnes to 17.4m tonnes thanks to "recent above-average precipitation and cool temperatures" which have boosted hopes in major producing regions.
However, on most other major producers it was more downbeat, including on Kazakh’s regional peers, Russia and Ukraine, which investors have increasingly focused on thanks to dry weather in some important grain-growing areas.
‘Much lower soil moisture’
Recent rains had been seen by many observers as improving crop prospects, with consultancy Ikar earlier this week raising its forecast for Russia’s wheat crop by 1.3m tonnes to 53.8m tonnes, while the Russian Grains Union lifting its range estimate for the overall grains harvest to 90m-100m tonnes, from 90m-95m tonnes.
But Lanworth kept its forecast for the Russian crop at 50.8m tonnes, flagging soil moisture levels which are "much lower than last year" in the Southern district, a key source of the country’s wheat exports.
For Ukraine, Lanworth cut its wheat harvest forecast by 1.6m tonnes to 20.3m tonnes, "based on expected warm conditions" and flagging "dry conditions that occurred from April through the first half of May".
The downgraded forecast is in line with an estimate from UkrAgroConsult of 20.2m tonnes, but below the USDA figure of 22.0m tonnes.
‘Approaching crunch time’
Separately, at broker RJ O’Brien, Richard Feltes said: "We are approaching crunch time on former Soviet Union rains, so keep your eye on rains across Ukraine and Russia," flagging talk that Russia has dropped wheat offers for October onwards in what would be seen as a sign of declining confidence in the crop.
Agritel, the Paris-based consultancy, which has a Ukraine office, said that in Russia’s South, "the water deficit should have an impact on the yields of the spring crops.
"If the situation does not improve in the coming days, winter crops could be impacted too."
FCStone said it "would like to see additional rains in dry impacted areas of the Russian wheat belt" before backing the ideas of upgraded crops.
Lanworth also reduced its forecast for Australia’s wheat harvest by 200,000 tonnes to 24.1m tonnes, even amid rains which some commentators believe have improved prospects for the sowing season.
"Though recently updated weather outlooks indicate a return to normal precipitation during the second half of May, Lanworth notes a 15% probability of extreme low production due to dry conditions during wheat planting and yield formation," the group said.
"Since 2000, wheat harvested area has declined from Abares’ initial projections as precipitation during and after May has fallen below average."
Abares, the official Australian commodities bureau, has pegged domestic wheat area at 13.83m hectares, a rise of 4.5%year on year.
Lanworth estimated the Canadian crop at 28.1m tonnes, below Washington and Toronto forecasts.
Statistics: Posted by yoda — Wed May 22, 2013 1:41 pm
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Since the dollar continues to be the world reserve currency, and since the mega banks float like clouds over the entire planet paying little attention to borders, we shouldn’t be surprised. But that the Fed has essentially given away $1 trillion to non-American banks is pretty amazing . (Not that American banks are any better than the foreign ones of course.)
What happens when the global banks don’t get their sugar? QE, despite what some may argue (though rarely in public) can’t go on forever. It will have to end at some point.
A few days ago I heard something about Bernanke and company trying to engineer a “soft landing” post QE. When I hear talk of “soft landings” my blood pressure usually lifts a bit as soft landings rarely occur, and are even more rarely “engineered.”
If the entire world is addicted to what the Fed is pushing (and we have long known that it is) the whole world is going to feel a coordinated withdrawal too as QE “ends.”
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Vive le France? Well, one of the reasons there is less “vive” in France these days is because of asinine policies such as the one imposed by France’s current Socialist government which is highlighted below.
Eat the rich? See how many of the rich stick around to be eaten.
How on earth would a country ever turn itself around with this sort of economic mentality? The French are basically saying that they don’t want capital creation within their borders.
“…the exceptionally high level of taxation was due to a one-off levy last year on 2011 incomes for households with assets of more than 1.3 million euros ($1.67 million).
President Francois Hollande’s Socialist government imposed the tax surcharge last year, shortly after taking office, to offset the impact of a rebate scheme created by its conservative predecessor to cap an individual’s overall taxation at 50 percent of income.”
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