February 3, 2011 posts

Business / Economic / Financial

[ This link to a somewhat more cumulative blog posts page will precede current days news since most all topics remain current in terms of impact and longer-term effect and can be searched by topical index term more easily. The same is provided since the blog site http://alpeiablog.blogspot.com has just been censored as to size by google which is typical for google as nsa / cia / gov’t shill as more are becoming aware of. The same is true for microsoft, another co. that’s seen their best days and relies on the government to maintain their monopoly. Up to now the better page http://www.scribd.com/alpeia is provided for ease of formatting and clarity thereby while the Washington Post page is the real deal but without formatting http://www.washingtonpost.com/wp-srv/community/mypost/index.html?plckPersonaPage=PersonaComments&plckUserId=alpeia&newspaperUserId=alpeia . The following is the cumulative archive of blog posts / topics for 2010 as the new year starts anew: http://albertpeia.com/December312010postsarchive.htm or PDF formatted version
http://albertpeia.com/December312010postsarchive.pdf ]

House Republicans propose $32B in budget cuts (Washington Post) [ Well, there you go … all over but the shoutin’ … $14+ trillion debt problem solved … riiiiight! … Timid Tuesday: Is it Safe? Davis ‘… This is how we pay off our current debts and I think bondholders are simply happy to get anything out of a country that admits it owes $15Tn (1/4 of global GDP) but probably owes closer to $60Tn (entire global GDP) in the form of unfunded liabilities. The funniest thing about this (and you have to laugh) is to see Conservative pundits get on TV and talk about how we need to cut $100Bn worth of discretionary spending to "fix" this (while continuing to spend $1Tn on the military and $1Tn on tax cuts for the top 1% each year). There is no fixing this and even a Republican said you can’t fool all of the people all of the time. THIS HOUSE OF CARDS IS TEETERING FOLKS – PLEASE BE CAREFUL OUT THERE! ‘] The figure represents an unprecedented rollback that would force some agencies to cut spending by as much as 20 percent, analysts say.

Egyptian protesters plan new push Government detains foreigners, says it's willing to open talks (Washington Post) [ Open talks? ‘bout what? Building a pyramid in mubarak’s honor before stepping down? He’s done … finito … burnt as an over-micro-waved burrito! The following from the Post is indeed the straw that broke the riders with whips he sent on camels’ and horses’ backs! ‘Wants to die in Egypt? How touching, or the reality, he’s just plain touched as in totally ‘out of it’. ‘…In what the U.S. State Department called a "concerted campaign to intimidate," several dozen journalists were rounded up by security forces and detained for hours, along with foreigners working as teachers, engineers and human rights researchers. Across the city, angry bands of supporters of President Hosni Mubarak also beat journalists; several reporters said that they were threatened with death…’ ] Cairo seeks to shift blame for clashes by rounding up journalists; U.S. worries renewed protests could spark more violence from Mubarak supporters.

Amid Arab protests, U.S. influence has waned (Washington Post) [ And that’s just the way israel likes it … and to america’s detriment, of course … which is not lost on even George Soros … Drudgereport: Soros: 'The main stumbling block is Israel'...

Egyptian protesters plan new push Government detains foreigners, says it's willing to open talks (Washington Post) [ Open talks? ‘bout what? Building a pyramid in mubarak’s honor before stepping down? He’s done … finito … burnt as an over-micro-waved burrito! The following from the Post is indeed the straw that broke the riders with whips he sent on camels’ and horses’ backs! ‘Wants to die in Egypt? How touching, or the reality, he’s just plain touched as in totally ‘out of it’. ‘…In what the U.S. State Department called a "concerted campaign to intimidate," several dozen journalists were rounded up by security forces and detained for hours, along with foreigners working as teachers, engineers and human rights researchers. Across the city, angry bands of supporters of President Hosni Mubarak also beat journalists; several reporters said that they were threatened with death…’ ] Cairo seeks to shift blame for clashes by rounding up journalists; U.S. worries renewed protests could spark more violence from Mubarak supporters. Demonstrations in Egypt take bloody turn In Cairo square, Mubarak backers confront anti-government crowds (Washington Post) [ Not too difficult for desperate and done mubarak to contrive: Mubarak Says Egyptians Have to Choose Between “Chaos” and Him … Then Sends In His Thugs to Stir Up Chaos (Infowars.com) In order to justify staying in power until elections are held in September, President Mubarak said on tv that the people had to choose between him and “chaos”. ] The coordinated nature of day's events suggested that Mubarak's supporters were determined to show, as he had warned, that the country faced a "choice between chaos and stability." [ Previous: Mubarak's pledge seen as not enough Egyptian president plans to stay in office to transfer power (Washington Post) [ Let me put it another way: Mubarak is as done as an over-cooked tamale … He seems to be stalling for time and even in his age impaired mind certainly knows his position is untenable, unsustainable, and even more irrational as each second passes. There is a possibility that he’s using same to move money / treasure for himself and others, literally as well, buying time. See infra … Previous: Mubarak seeks dialogue, shows no sign of relenting Demonstrators call for massive protest but lack leadership (Washington Post) [ He relented when he resorted to media / internet blackout. Indeed, this lack of sign thing is a testament to how far from reality 30 years has taken him, not to mention the other 52 years that have taken their toll on his cognitive processes. Whether it is plaques ‘on the brain’ or outright senility, that he is so disengaged from the events unfolding around him, one may only wonder how he lasted this long. Nor did his choice of cia standin / shill, new VP Suleiman enhance his now untenable position which leaves him as ‘done as a burnt enchilada’. Kissinger on Egypt unrest – “This is only the first scene of the first act of a drama that is to be played out” [ The import of this so-called interview, and it is here that I part company with alex jones, et als (who by the way, censored me for this very thesis, which puts him and his at the top of my hypocrite list), is that the so-called elite have orchestrated these events and ‘are in control’. First, there are no elites in this world; you can’t derive elites from apes, notochordates, and initially single celled organisms. Second, almost by definition and certainly by history, there are no elites in america even if you were to accept the first proposition (though true) as untrue. What you do have, in this world and america particularly (with few exceptions as I’ve discussed elsewhere / comments / my website), are inherent criminals and mentally ill people of varying degrees of unscrupulousness and insanity who do commit crimes, both small and large, to further their interests or fortunes (sociopaths / psychopaths). The ’so-called alpha-dogs’ of the human species at most, but still incompetent vegetables who, if you look at anything they touch (to use a term term of such incompetent vegetables as historically pertains to their role in the mideast – and generally the state of the world) it invariably goes ‘pear shaped’ (english term). What hasn’t zionist kissinger not messed up as appointee or ‘consultant’ – what does he get paid for? No! The fact is, they have absolutely no idea how this unfolds and as with most of their lives, they will predictably choose the most sordid, despicable, and diabolical course at every turn because … that is their inherently criminal, mentally ill / unstable nature to do so. ]

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Home buyers may get less government support (Washington Post) [ Uut, oh! Less help from the pervasively corrupt, defacto bankrupt government? Well, on the bright side, a percentage of near zero is still near zero … I guess that non-wall street addresses just don’t rate! ] Administration officials are looking at scaling back the aid provided during the mortgage crisis to help the ailing real estate market. The move could make home loans in high-priced areas such as the Washington region more expensive.

Fed dismisses inflation concerns (Washington Post) [ If you’re not used to Dave of Dave’s Daily, see infra, ‘he talks with tongue in cheek’; meaning, inflation’s here, including the inflated stock bubble that the frauds on wall street commission and sell into, just as he planned and admitted, with hyperinflation around the corner, and the typical ‘bust’. Initial Claims Drop More Than Expected [ Come on! Who believes anything they say and at what cost with money not really there in pervasively corrupt, defacto bankrupt america, with manipulated programmed suckers’ rally into the close. …‘In the U.S. market, Slothower concludes: “This is a hard one to gauge, given the QE2 manipulations verses skyrocketing food and energy prices, which have now reached prices levels that have choked off growth in the past and caused recessions, as we saw in 2008 when oil prices hit $100 a barrel (in March of that year).” “It is like walking in a mine field. You move very carefully now with your eyes wide open and on every move, knowing that any day something out of the blue could blow thing up, given these extreme risks.” But he’s now only 70% in cash. The balance is split equally between: iPath Dow Jones-AIG Grains Total Return Sub-Index …’ ‘Kung Hei Fat Choy!: Dave's Daily …Speaking of the man with printers ink stains up to his neck, Bernanke spoke Thursday to the Press Club stating, among other things, "inflation remains quite low". He continued saying, "Since August, when we announced our policy of reinvesting maturing securities and signaled we were considering more purchases, equity prices have risen significantly...") I believe that sums things up from an investing view. Silly people like me are standing by watching those that can like GS and JPM take this easy money and route it directly to the S&P futures pits, among other similar places, taking on risk the Fed expects. Oh, and speaking of JPM, the Madoff Trustees have sued the bank for complicity in helping steer client funds to Madoff despite complaints from within that his results were "too good to be true"…’ Monthly Market Valuation: Investors Are Too Bullish, Valuations Are Too High The conclusion of the following detailed, documented analysis: ‘Wolinsky :In conclusion, the market is over-valued based on the above data. Tobin's Q, Shiller P/E and AAII data are all indicating that investors are too bullish and valuations are too high.’ ]

] Bernanke gives a mixed assessment of the nation's economic prospects.

Kung Hei Fat Choy!: Dave's Daily ‘ The above tribute to the "metal rabbit" was not the cheer from Tahrir Square Thursday. But, U.S. investors are ignoring that in favor of making money with some dip buying abetted by focusing on good news (retail results) and ignoring any negative news from Egypt or even MRK's results. The Fed tossed in another round of POMO to the tune of nearly $9 billion which encouraged buying from trading desks. Speaking of the man with printers ink stains up to his neck, Bernanke spoke Thursday to the Press Club stating, among other things, "inflation remains quite low". He continued saying, "Since August, when we announced our policy of reinvesting maturing securities and signaled we were considering more purchases, equity prices have risen significantly...") I believe that sums things up from an investing view. Silly people like me are standing by watching those that can like GS and JPM take this easy money and route it directly to the S&P futures pits, among other similar places, taking on risk the Fed expects. Oh, and speaking of JPM, the Madoff Trustees have sued the bank for complicity in helping steer client funds to Madoff despite complaints from within that his results were "too good to be true". Again dip buying was dominant with an "Egypt be damned" attitude although it looked like some bought gold perhaps as insurance. Rumors of bank runs throughout North Africa are present. Volume was just average with most coming early and late. Breadth per the WSJ was mixed to positive. (You'll note the Nasdaq share volume data means investors buying the bigger names.) … ‘ See also re: bernanke’s folly-If You're Going to Do Economics, Don't Do Macro [ Truth be told, I find Mr. Falkenstein’s article a bit too subtle and somewhat shy about getting to the point, but have included same here solely for the reprint of William Buckley’s famous quote which comports with my own view of the ivy league vegetable gardens which turn out as you would expect, vegetables; viz., ‘he would prefer the first 100 names in the Boston phonebook to the Harvard faculty‘. The reality is that ‘harvard professor’, ‘no-recession bernanke’ has given an obfuscating, ephemeral feel good but lucrative to the few gift to the frauds on wall street with ultimately devastatingly great cost / pain to come. ]

Market Crash on 2/28/11? Technical indicators suggest market collapse may begin by February 28th

Investment Themes for the Next Decade Simon Maierhofer, February 3, 2011, ‘Calm seas don't make sailors. Bull markets don't make investors. Will the coming years be calm seas or the calm before the storm?Judging by various developments brewing in the pipeline, investors will get a chance to prove their worth in the decade following the 'lost decade.'Investing is not a sprint it's a marathon. So it behooves us to look beyond just the next earnings season, unemployment report, or FOMC meeting and address what could be the biggest opportunities or stumbling blocks of this decade.
Generational Shift
Starting this year, more than 10,000 baby boomers a day will turn 65, a pattern that will continue for the next 19 years. As baby boomers age, the traditional population pyramid is becoming top-heavy with retirees, while the workforce is shrinking.Social Security will be strained by the growing number of baby boomers retiring and applying for benefits. New congressional projections show Social Security running deficits every year until its trust funds are eventually drained around 2037.A debt commission appointed by President Obama recommended a series of changes such as increasing the retirement age and lowering benefits. With the disappearance of pension guarantees, flat 10-year investment returns and upside down mortgages, retirees depend on Social Security more than ever.As a sum total, this generational shift will result in higher taxes for younger generations (generations X and Y) and less income for baby boomers. This in turn will shrink spendable income.A consumer that doesn't consume and/or a shrinking consumer base is bad for business and should provide a steady headwind for the economy and broad indexes a la the Dow Jones (DJI: ^DJI), S&P 500 (SNP: ^GSPC) and Nasdaq (Nasdaq: ^IXIC).Sectors that might be adversely affected include consumer discretionary (NYSEArca: XLY - News) and retail (NYSEArca: XRT - News).
The Full Faith and Credit of the United States - Worth how Much?
If the debt ceiling was a real ceiling and deficit was water, we'd have drowned by now. But since the deficit ceiling is imaginary it's easier to kick the can down the road and raise the ceiling.Investors of U.S. debt have taken note and are demanding more interest to loan their money to the United States government. Interest rates for Treasury bonds have gone up, even though the Federal Reserve's QE2 bond buying program was supposed to do the opposite.The ETF Profit Strategy Newsletter saw the onset of rising interest rates (in the bond world, rising interest means falling prices) and warned subscribers on August 26, 2010:'Our technical analysis, along with fundamentals suggests that T-Bonds are getting ready to roll over. A look at the overall picture suggests that this is more than just a minor correction. The rally in municipal, corporate, and high yield bonds is showing signs of weakness too. Investors should start exiting from those markets.'30-year T-Bonds, along with municipal bonds (NYSEArca: MUB - News), recorded their top tick on that very day and have since erased more than three years worth of gains.A weak economy in need of more government stimulus is likely to keep the pressure on interest rates. It would be prudent to avoid interest sensitive, long-term maturities such as the iShares Barclays 20+ Year Treasury Bond (NYSEArca: TLT - News) and stick with short-term debt such as iShares Barclays 1-3 Year Treasury Bond (NYSEArca: SHY - News).
Valuations
To many, using valuations to determine the stock market's (NYSEArca: VTI - News) real worth is about as antiquated as using smoke signals. Those ancient smoke signals may cloud the perception of most, but they are nevertheless signals for those willing to listen and learn.Valuations have been ignored before. Ideas and promises eclipsed profits at the height of the technology (NYSEArca: XLK - News) boom, but just temporarily. A few years later, real estate tried to defy the notion of fair value.It seems that periods where valuations are out of favor are particularly susceptible to price corrections. So, where are valuations at today?There are three main ways to measure valuations. The first one - P/E ratios - is somewhat flawed because it is subject to financial engineering. Accounting rule changes have made it possible for banks to inflate their earnings by hiding real estate related losses (see June 2010 ETF Profit Strategy Newsletter for details).But even with artificially engineered profits, the current P/E ratio is historically rich.The second valuation measure - the Dow Jones measured in gold - takes the Federal Reserve's money spigot out of the equation and values stocks in real money - gold (NYSEArca: GLD - News). Ever since its 1999 high, the Gold Dow has been declining. Based on historical patterns, the Dollar Dow always catches up with the Gold Dow - eventually.The third valuation measure - dividend yields - is near an all-time low. Unlike P/E ratios, you can't fudge dividend yields. Either a company has cash to spread among investors or it doesn't. Despite dividend increases by some companies, cumulative dividends paid by the 500 S&P constituents are about the same today as in March 2009. In general, low dividend yields coincide with major market tops.
What Valuations Do for You TODAY
Valuations are a long-term indicator, so what can they do for you TODAY?Valuations set the trend. In an overvalued market the larger trend is down. That doesn't mean you have to be out of the market all the time. On March 2, 2009 the ETF Profit Strategy Newsletter foresaw the biggest counter trend rally since the 2007 all-time high.This counter trend rally is still going on. In fact, it has gone much further than initially expected, but the higher prices rally the more dangerous it becomes to hold positions.Knowing that stocks are at least 30% overvalued, it would be prudent to monitor any decline carefully and pull the trigger before a minor correction turns into something financially painful…’

World food prices hit record high AFP | World food prices reached their highest level ever recorded in January and are set to keep rising for months.

Concerns Over Possible Suez Canal Disruptions New York Times | Concern has turned to the risk of the blocking of the Suez Canal or nearby pipelines, which could pose a threat to world energy supplies.

IMF Board To Discuss Expanded SDR Dow Jones | The board of the International Monetary Fund will discuss a possible expansion of the basket of currencies that compose the Special Drawing Right, IMF deputy managing director John Lipsky said Friday.

Even mobster / lightweight / scoundrel wrapped in the flag donald trump Is Warning That An Economic Collapse Is Coming In a shocking new interview, Donald Trump has gone farther than he ever has before in discussing an economic collapse in America.

Bernanke, BLS Lie About Inflation: Dr. Doom Faber Global inflation is far higher than official statistics reveal, Marc Faber, editor and publisher of the “Gloom, Boom and Doom” report told CNBC on Wednesday, with increases in the cost of living amounting to between five and eight percent in the United States and just below that in Europe.

Ron Paul To Ask Fed Why After Trillions In Free Money, Unemployment Is Still Sky High Congressman Ron Paul has announced that the first Monetary Policy subcommittee meeting will focus on one of those two now forgotten Fed mandates, that of creating jobs.

Gold:Silver Ratio Falls as Silver Rises On September 26th, 2010, we released a Chart Blog showing a Gold/Silver ratio that was 60.34, and specified that silver has outperformed gold in the market by far. Now, a few months later, we return to the same graph, only to show a different Gold/Silver ratio of 46.96!

Gallup Finds U.S. Unemployment Up Slightly in January to 9.8% Unemployment, as measured by Gallup without seasonal adjustment, increased to 9.8% at the end of January — up from 9.6% at the end of December, but down from 10.9% a year ago.

Rumsfeld Finally Confesses He Was Wrong About WMD In New Autobiography [ Nice to know … a nation’s bankruptcy (america) and another nation’s destruction (Iraq) later. ]Former Defence Secretary Donald Rumsfeld has finally confessed he was wrong to claim America knew where Saddam Hussein had stockpiled weapons of mass destruction in the first days after the Iraq invasion.

12 Economic Collapse Scenarios That We Could Potentially See In 2011 What could cause an economic collapse in 2011? Well, unfortunately there are quite a few “nightmare scenarios” that could plunge the entire globe into another massive financial crisis.
The Economic Collapse Jan 20, 2011 ‘What could cause an economic collapse in 2011? Well, unfortunately there are quite a few “nightmare scenarios” that could plunge the entire globe into another massive financial crisis. The United States, Japan and most of the nations in Europe are absolutely drowning in debt. The Federal Reserve continues to play reckless games with the U.S. dollar. The price of oil is skyrocketing and the global price of food just hit a new record high. Food riots are already breaking out all over the world. Meanwhile, the rampant fraud and corruption going on in world financial markets is starting to be exposed and the whole house of cards could come crashing down at any time. Most Americans have no idea that a horrific economic collapse could happen at literally any time. There is no way that all of this debt and all of this financial corruption is sustainable. At some point we are going to reach a moment of “total system failure”.

So will it be soon? Let’s hope not. Let’s certainly hope that it does not happen in 2011. Many of us need more time to prepare. Most of our families and friends need more time to prepare. Once this thing implodes there isn’t going to be an opportunity to have a “do over”. We simply will not be able to put the toothpaste back into the tube again.

So we had all better be getting prepared for hard times. The following are 12 economic collapse scenarios that we could potentially see in 2011….

#1 U.S. debt could become a massive crisis at any moment. China is saying all of the right things at the moment, but many analysts are openly worried about what could happen if China suddenly decides to start dumping all of the U.S. debt that they have accumulated. Right now about the only thing keeping U.S. government finances going is the ability to borrow gigantic amounts of money at extremely low interest rates. If anything upsets that paradigm, it could potentially have enormous consequences for the entire world financial system.

#2 Speaking of threats to the global financial system, it turns out that “quantitative easing 2″ has had the exact opposite effect that Ben Bernanke planned for it to have. Bernanke insisted that the main goal of QE2 was to lower interest rates, but instead all it has done is cause interest rates to go up substantially. If Bernanke this incompetent or is he trying to mess everything up on purpose?

#3 The debt bubble that the entire global economy is based on could burst at any time and throw the whole planet into chaos. According to a new report from the World Economic Forum, the total amount of credit in the world increased from $57 trillion in 2000 to $109 trillion in 2009. The WEF says that now the world is going to need another $100 trillion in credit to support projected “economic growth” over the next decade. So is this how the new “global economy” works? We just keep doubling the total amount of debt every decade?

#4 As the U.S. government and the Federal Reserve continue to pump massive amounts of new dollars into the system, the floor could fall out from underneath the U.S. dollar at any time. The truth is that we are already starting to see inflation really accelerate and everyone pretty much acknowledges that official U.S. governments figures for inflation are an absolute joke. According to one new study, the cost of college tuition has risen 286% over the last 20 years, and the cost of “hospital, nursing-home and adult-day-care services” rose 269% during those same two decades. All of this happened during a period of supposedly “low” inflation. So what are price increases going to look like when we actually have “high” inflation?

#5 One of the primary drivers of global inflation during 2011 could be the price of oil. A large number of economists are now projecting that the price of oil could surge well past $100 dollars a barrel in 2011. If that happens, it is going to put significant pressure on the price of almost everything else in the entire global economy. In fact, as I have explained previously, the higher the price of oil goes, the faster the U.S. economy will decline.

#6 Food inflation is already so bad in some areas of the globe that it is setting off massive food riots in nations such as Tunisia and Algeria. In fact, there have been reports of people setting themselves on fire all over the Middle East as a way to draw attention to how desperate they are. So what is going to happen if global food prices go up another 10 or 20 percent and food riots spread literally all over the globe during 2011?

#7 There are persistent rumors that simply will not go away of massive physical gold and silver shortages. Demand for precious metals has never been higher. So what is going to happen when many investors begin to absolutely insist on physical delivery of their precious metals? What is going to happen when the fact that far, far, far more “paper gold” and “paper silver” has been sold than has ever actually physically existed in the history of the planet starts to come out? What would that do to the price of gold and silver?

#8 The U.S. housing industry could plunge the U.S. economy into another recession at any time. The real estate market is absolutely flooded with homes and virtually nobody is buying. This massive oversupply of homes means that the construction of new homes has fallen off a cliff. In 2010, only 703,000 single family, multi-family and manufactured homes were completed. This was a new record low, and it was down 17% from the previous all-time record which had just been set in 2009.

#9 A combination of extreme weather and disease could make this an absolutely brutal year for U.S. farmers. This winter we have already seen thousands of new cold weather and snowfall records set across the United States. Now there is some very disturbing news emerging out of Florida of an “incurable bacteria” that is ravaging citrus crops all over Florida. Is there a reason why so many bad things are happening all of a sudden?

#10 The municipal bond crisis could go “supernova” at any time. Already, investors are bailing out of bonds at a frightening pace. State and local government debt is now sitting at an all-time high of 22 percent of U.S. GDP. According to Meredith Whitney, the municipal bond crisis that we are facing is a gigantic threat to our financial system….

“It has tentacles as wide as anything I’ve seen. I think next to housing this is the single most important issue in the United States and certainly the largest threat to the U.S. economy.”

Former Los Angeles mayor Richard Riordan is convinced that things are so bad that literally 90% of our states and cities could go bankrupt over the next five years….

#11 Of course on top of everything else, the quadrillion dollar derivatives bubble could burst at any time. Right now we are watching the greatest financial casino in the history of the globe spin around and around and around and everyone is hoping that at some point it doesn’t stop. Today, most money on Wall Street is not made by investing in good business ideas. Rather, most money on Wall Street is now made by making the best bets. Unfortunately, at some point the casino is going to come crashing down and the game will be over.

#12 The biggest wildcard of all is war. The Korean peninsula came closer to war in 2010 than it had in decades. The Middle East could literally explode at any time. We live in a world where a single weapon can take out an entire city in an instant. All it would take is a mid-size war or a couple of weapons of mass destruction to throw the entire global economy into absolute turmoil.

Once again, let us hope that none of these economic collapse scenarios happens in 2011.

However, we have got to realize that we can’t keep dodging these bullets forever.

As bad as 2010 was, the truth is that it went about as good as any of us could have hoped. Things are still pretty stable and times are still pretty good right now.

But instead of using these times to “party”, we should be using them to prepare.

A really, really vicious economic storm is coming and it is going to be a complete and total nightmare. Get ready, hold on tight, and say your prayers.’

Perception vs. Reality: Four Reasons to Remain Cautious on U.S. Equities [ Hey, Abbott … That’s Lou Costello calling him from the other side … Wake up! … Just kidding … but I’m not kidding when I say that contrary to Abbott’s view, infra, if you’re not a successful market timer you should rethink your position as an equity investor. Moreover, in contradistinction to Mr. Abbott’s implication, if you’re not a successful speculator (there are very few), you should rethink your position as a short seller: reason…, you could be wiped out, lose more than your principal, forced to cover (that’s why the same is considered a contrary market indicator, particularly in these manipulated, contrived markets). When I did my MBA thesis (1977, NYU, GBA, Eve.Prog., Finance), a review of the data revealed even then (and much more so now with computer programmed market manipulation) that the market remained biased / propped up (artificially, especially now with computerized manipulation) to the upside for far longer periods of time than for the downside which meant that dollar-cost averaging (through regular, periodic investment, for example), meant you were accumulating shares at higher prices generally for longer periods of time skewing the average cost to the upside (dollar-cost-averaging in declining markets was ok if analysis / forecast saw resurgence based on fundamentals - now absent – which is timing, as even senile wall street / gov’t shill Buffet would attest, that ‘greedy when others are fearful thing’). Abbott discusses perception which is the psychological factor involved in security evaluation / analysis; but investors need not and should become nuts themselves, particularly when as now, the inmates are running the asylum. ] Abbott ‘Perception determines short-term market movements. The difference between perception and reality determines the direction of major market trends. Though I generally try to avoid making macro prognostications, I believe bottom-up analysis can be informative about the current level of stock prices. I want to share what my recent work tells me about where stocks are (and where they might be headed). I will outline some various nuggets of collective wisdom that are taken for granted right now by stock bulls, and I will attempt to demonstrate how reality is likely to differ from these perceptions.

First, a disclaimer. This is not a market timing call. At all times, I stay away from market timing predictions. I think that's a loser's game in the long run. Even if I'm correct about the discrepancies between the following perceptions and realities, there's no saying when people will change their minds or shift their focuses. That said, let's dive in.

Perception vs. Reality #1
Perception: Low Interest Rates, Questionable Bond Outlook Means Stocks are Attractive
Reality: Interest Rates Are Being Artificially and Deliberately Manipulated

It's no secret that the Federal Reserve's low interest rate policy and quantitative easing efforts have held interest rates very low for very long. However, when people talk about stock market implications of bond yields, they rarely mention the fact that bond yields are artificially low. In an unmanipulated market, bond prices and stock valuations should be related, but I regard that connection as highly dubious right now. Investors who say that stocks deserve higher multiples (lower earnings yields) because bond yields are so low may well be setting themselves up for disappointing returns/frustrating losses when bond prices normalize. Again, this isn't a market timing call, and yields may remain low for quite some time. But, eventually this discrepancy will correct itself, and stock performance is likely to suffer at that time.

Perception vs. Reality #2
Perception: Earnings Growth Has Been Strong and Will Remain That Way
Reality: Top-Line Growth Will Have to Pick Up; Cost-Cutting has Run Its Course

Earnings growth has certainly been robust, but much of the strength has come from companies running lean cost structures and wringing as much efficiency as possible out of their employees and their assets. Though the recession has ended, the economy is not yet healthy enough to fuel strong sales growth. Companies can only boost profits by cutting costs and increasing productivity for so long. Therefore, top-line growth will have to play a larger role going forward than it has over the past 4-6 quarters. Whether or not economic growth is strong enough to drive revenue increases is unsure, but the current level of stock prices undoubtedly assumes it is. Any stagnation of the recovery and concomitant sluggish sales will likely hit stock prices.

Perception vs. Reality #3
Perception: European Debt Crisis Drives Short-Term Volatility, but It's Not a Long-Term Concern
Reality: Crisis May Be a Harbinger of What's to Come in the U.S. if States, the Feds Don't Improve Balance Sheets

So far, turmoil in Greece and Ireland has served only as a temporary headwind to U.S. stocks. In keeping with the investment world's increasingly short-term focus, people seem more concerned with what fiscal crises in Europe mean for U.S. stocks over the coming days and months than with what they might mean down the road. I believe that this interpretation misses the mark. Since the U.S. fiscal situtation is generally considered to be stronger than that in many European countries, U.S. federal and municipal debt issuance has been relatively smooth, and interest rates have only risen modestly. If the U.S. doesn't get serious about its fiscal woes, eventually the crisis will arrive on American shores. There's no way of telling when this might happen, but the current level of stock prices seems to imply that it never will.

Here's the problem with that. To fix the federal balance sheet and/or to improve state and municipal balance sheets, legislators will have to raise taxes and/or cut spending. Tax hikes and spending cuts both reduce consumer spending. This hurts growth. There's no way around this. Stocks can certainly continue to rise for some time, but austerity will be bearish if/when it comes. If it doesn't come, we're in for a much bigger crisis some time down the road.

Perception vs. Reality #4
Perception: Everywhere You Look, You See Good Companies at Cheap Prices
Reality: It's Hard to Find Genuine Bargains, but There are Intriguing Short Prospects Everywhere

There is no shortage of stock market commentators who claim that they see bargains everywhere they look. Perhaps I'm not looking in the right places, but I've been having a difficult and increasingly impossible time finding good companies at reasonable prices. I use similar criteria to assess long and short investments, and I find intriguing shorts in lots of sectors right now. This tells me that valuations are stretched. Certainly they can become more so before we get a selloff, but every day that stocks rally, they get more expensive.

I've written on Seeking Alpha about a number of stocks which I regard as expensive (CRM, OPEN, GMCR), and take my word for it: there are plenty more than these whose shares I do not want to own at present levels. A few weeks ago, I also mused about the Facebook-Goldman deal and argued that this valuation is indicative of excessive investor enthusiasm. Bargains are hard to find, and as valuations go up, so does positive sentiment. While this is not a prediction of an impending correction or bear market, it is a message of caution for people who think stocks are cheap right now.

All that said, I always try to consider both sides of any investment issue, and there are some reasons for optimism. Job growth has shown signs of improvement, and some economic data have been increasingly (though not uniformly) positive. The Federal Reserve remains accommodative, and I'm skeptical about whether or not there is political will for austerity. For these reasons, stocks could continue onward and upward. That said, I see too many reasons for caution, and investors are turning a blind eye to these concerns as their complacency rises.’

Poor Recovery: The Problem Is Institutional [ Well it’s true that the problem is institutional as in pervasively corrupt, incompetent, nonproductive in real terms relative to their cost / damage (still no pros on the wall street fraud which is ongoing in terms of the last crisis, the worthless paper marked to anything, and the current bubble fraud that’s high-frequency computerized churn-and-earn high-frequency commissioned / sold into, 360 tons of $100 bills disappear in Iraq, etc.. What do they get paid for?) ( Peter Schiff: Washington a parasite to economy ‘US foreclosures hit record highs in 2010, but that may not be the worst of it. 2011 may be even worse. Meanwhile, JP Morgan Chase exceeded market expectations, announcing a 47% rise in quarterly profits and released details on a $28.1 billion pay and bonus pool. Peter Schiff, the President of Euro Pacific Capital said Washington and Wall Street are becoming one force and are sucking the underlying American dry like a parasite’.); but the problem is structural, as in transfer of jobs, industries, etc. (among the sources of the huge over-compensation to wall street, company executives), never to return in any meaningful sense; and as in the defacto bankruptcy of the nation with insurmountable record debt / deficits or stated another way, broke. Unlike in the past, once beyond the propaganda, rhetoric, and smoke and mirrors / obfuscation, there is no prospective way for america to grow its way out, nor are there funds in real money with which to do it. Quite simply, america’s broke / bankrupt in every which way. ] Loundsbury ‘Harold Meyerson, Op Ed Columnist at The Washington Post, has hit the nail right on the head, in the opinion of GEI. Meyerson says the debate about whether the recession and poor recovery is a cyclical problem or a structural problem is misguided. He says the problem is institutional - - - and is he ever right!

In a column last week, Myerson points out that the devastation of The Great Recession has fallen disproportionately on the blue collar population, those without a college degree. And he traces the rolling over of median family income in this century, not just in the downturn, but since the turn of the century. Even at the peak, in 2007, median family income was less than in 2000.

What Meyerson doesn't point out is that average incomes have faired better in the 21st century and in all of the past 50 years. In fact, average family income has risen more than 2.5 times as much and median income over the last 30 years. Why is this important? Because the more there is a fat tail of ever higher incomes for a few, the greater the difference between average and median income becomes.

Myerson says:

The great sociologist William Julius Wilson has long argued that the key to the unraveling of the lives of the African American poor was the decline in the number of "marriageable males" as work disappeared from the inner city. Much the same could now be said of working-class whites in neighborhoods that may not look like the ghettos of Cleveland or Detroit but in which productive economic activity is increasingly hard to find.

This grim new reality has yet to inform our debate over how to come back from this mega-recession. Those who believe our downturn is cyclical argue that job-creating public spending can restore us to prosperity, while those who believe it's structural - that we have too many carpenters, say, and not enough nurses - believe that we should leave things be while American workers acquire new skills and enter different lines of work. But there's a third way to look at the recession: that it's institutional, that it's the consequence of the decisions by leading banks and corporations to stop investing in the job-creating enterprises that were the key to broadly shared prosperity.

Since Meyerson has chosen income disparity as a cornerstone of his argument, let's look at how incomes have grown over the last 50 years. These are shown in the following graph, not adjusted for inflation.

click to enlarge images [chart]

Real median income and average income seem to grow similarly in the 1950s and 1960s, the growth of average income starts to pull away in the mid-1960s and appears to continue to gain gound for the the next 40+ years. The more average income deviates from median income the more money is found in the high income tail on the distribution curve. This is often called a "fat tail", which is very appropriate in this discussion because that is where the fat cats are. The fat tail has not gotten so because ten times as many people equaled the incomes of the former fat cats, but more because a few fat cats have received 10 times the income. This is exemplified by the often quoted statistic that average CEO salaries were 40x average worker pay 50 years ago and today are more like 400x.

The change income distribution that seems to be appearing in the above graph becomes more apparent in the following graph where real income gains are shown for the last six decades starting with the ten years from 1949 - 1959 (the 1950s) and ending with 1999 - 2009 (the 2000s). [chart]

The 1950s and 60s were real boom years. Starting with the 1970s a lower level of income growth was established, but even that lower level could not be maintained in the 2000s.

After the 1950s every decade has seen average real income grow more than the median. The fat tail has gotten fatter over the past half century in every decade, without exception. Yes the average did decline in the 2000s, but the median declined 76% more!

The most dramatic pattern of change is evident when the data is divided into two halves: 1949 to 1979 and 1979 - 2009. This is done in the following graph: [chart]

For thirty years after World War II the wealth of the country increased in a balanced manner. The average income containing the greater contribution from the top earners of the day, grew at a rate very similar to the income growth of the broader population, represented by the median.

Yes there were "fat cats" and they had significantly larger incomes than the bulk of the population. And these top incomes grew over those three decades, but at almost the same rate as the majority of the populace.

Then something happened. From 1979-2009 it appears that the American pie suddenly got smaller. In the later three decades the real median income growth was less than 10% of the rate seen from 1949 to 1979. And as the pie got smaller, the fat cats took a much larger share. The average income grew at a rate 254% that of the median income. You might say that, as the cow gave less milk, the top of the economic ladder skimmed more and more cream off the top.

Meyerson identifies the force majuere to be corporate America:

Our multinational companies still invest, of course - just not at home. A study by the Business Roundtable and the U.S. Council Foundation found that the share of the profits of U.S.-based multinationals that came from their foreign affiliates had increased from 17 percent in 1977 and 27 percent in 1994 to 48.6 percent in 2006. As the companies' revenue from abroad has increased, their dependence on American consumers has diminished. The equilibrium among production, wages and purchasing power - the equilibrium that Henry Ford famously recognized when he upped his workers' pay to an unheard-of $5 a day in 1913 so they could afford to buy the cars they made, the equilibrium that became the model for 20th-century American capitalism - has been shattered. Making and selling their goods abroad, U.S. multinationals can slash their workforces and reduce their wages at home while retaining their revenue and increasing their profits. And that's exactly what they've done.

Meyerson doesn't get into some of the other areas that might be brought to bear on the current condition of the American economy:

• He doesn't address the fact that the U.S. ranks below some third world countries in education.
• He doesn't discuss the increasing burden of health care, both because costs have been running out of control and because an ever increasing portion of the population is kept from making the contribution they might have otherwise because of poor health.
• He doesn't discuss the capture of much potential domestic capital by financial engineers who find it much easier to get rich in a rigged casino than to make money the old fashioned way.

Part of the problem is that Americans have fallen into the way of the easiest path, where, either by credit card or by making quick trades, the desires of the moment are satisfied with no seemingly current cost.

It seems that few want to think about the needs of tomorrow. This is true starting with the masses who kiss off the idea of working hard in school to prepare for what they will need 20 years down the road. This is also true of the "capitalist" who finds that skimming a few percent off each of many deals a year to get quick, large quarterly returns is much easier than investing and building something that will will make much larger returns extending over decades and producing things of real economic utility.

There are a number of things that Meyerson does not address, but if you want to hit one nail at a time, I think he has picked the baddest nail in the plank. He finishes his column thusly:

Our economic woes, then, are not simply cyclical or structural. They are also - chiefly - institutional, the consequence of U.S. corporate behavior that has plunged us into a downward cycle of underinvestment, underemployment and under-consumption. Our solutions must be similarly institutional, requiring, for starters, the seating of public and worker representatives on corporate boards. Short of that, there will be no real prospects for reversing America's downward mobility.

If we were to address all the other issues I mentioned previously and did not address the institutional problem Meterson has identified, we would not ultimately solve our economic puzzle.’

20 Shocking New Economic Records That Were Set In 2010 2010 was quite a year, wasn’t it? 2010 will be remembered for a lot of things, but for those living in the United States, one of the main things that last year will be remembered for is economic decline…The Economic Collapse Jan 14, 2011 ‘2010 was quite a year, wasn’t it? 2010 will be remembered for a lot of things, but for those living in the United States, one of the main things that last year will be remembered for is economic decline. The number of foreclosure filings set a new record, the number of home repossessions set a new record, the number of bankruptcies went up again, the number of Americans that became so discouraged that they simply quit looking for work reached a new all-time high and the number of Americans on food stamps kept setting a brand new record every single month. Meanwhile, U.S. government debt reached record highs, state government debt reached record highs and local government debt reached record highs. What a mess! In fact, even many of the “good” economic records that were set during 2010 were indications of underlying economic weakness. For example, the price of gold set an all-time record during 2010, but one of the primary reasons for the increase in the price of gold was that the U.S. dollar was rapidly losing value. Most Americans had been hoping that 2010 would be the beginning of better times, but unfortunately economic conditions just kept getting worse.

So will things improve in 2011? That would be nice, but at this point there are not a whole lot of reasons to be optimistic about the economy. The truth is that we are trapped in a period of long-term economic decline and we are now paying the price for decades of horrible decisions.

Amazingly, many of our politicians and many in the mainstream media have declared that “the recession is over” and that the U.S. economy is steadily improving now.

Well, if anyone tries to tell you that the economy got better in 2010, just show them the statistics below. That should shut them up for a while.

The following are 20 new economic records that were set during 2010….

#1 An all-time record of 2.87 million U.S. households received a foreclosure filing in 2010.

#2 The number of homes that were actually repossessed reached the 1 million mark for the first time ever during 2010.

#3 The price of gold moved above $1400 an ounce for the first time ever during 2010.

#4 According to the American Bankruptcy Institute, approximately 1.53 million consumer bankruptcy petitions were filed in 2010, which was up 9 percent from 1.41 million in 2009. This was the highest number of personal bankruptcies we have seen since the U.S. Congress substantially tightened U.S. bankruptcy law several years ago.

#5 At one point during 2010, the average time needed to find a job in the United States had risen to an all-time record of 35.2 weeks.

#6 Back in 1970, 25 percent of all jobs in the United States were manufacturing jobs. Today, only 9 percent of the jobs in the United States are manufacturing jobs, which is believed to be a new record low.

#7 The number of Americans working part-time jobs “for economic reasons” was the highest it has been in at least five decades during 2010.

#8 The number of American workers that are so discouraged that they have given up searching for work reached an all-time high near the end of 2010.

#9 Government spending continues to set new all-time records. In fact, at the moment the U.S. government is spending approximately 6.85 million dollars every single minute.

#10 The number of Americans on food stamps surpassed 43 million by the end of 2010. This was a new all-time record, and government officials fully expect the number of Americans enrolled in the program to continue to increase throughout 2011.

#11 The number of Americans on Medicaid surpassed 50 million for the first time ever in 2010.

#12 The U.S. Census Bureau originally announced that 43.6 million Americans are now living in poverty and according to them that was the highest number of Americans living in poverty that they had ever recorded in 51 years of record-keeping. But now the Census Bureau says that they miscalculated and that the real number of poor Americans is actually 47.8 million.

#13 According to the FDIC, 157 banks failed during 2010. That was the highest number of bank failures that the United States has experienced in any single year during the past decade.

#14 The Federal Reserve brought in a record $80.9 billion in profits during 2010. They returned $78.4 billion of that to the U.S. Treasury, but the real story is that thanks to the Federal Reserve’s continual debasement of our currency, the U.S. dollar was worth less in 2010 than it ever had been before.

#15 It is projected that the major financial firms on Wall Street will pay out an all-time record of $144 billion in compensation for 2010.

#16 Americans now owe more than $881 billion on student loans, which is a new all-time record.

#17 In July, sales of new homes in the United States declined to the lowest level ever recorded.

#18 According to Zillow, U.S. housing prices have now declined a whopping 26 percent since their peak in June 2006. Amazingly, this is even farther than house prices fell during the Great Depression. From 1928 to 1933, U.S. housing prices only fell 25.9 percent.

#19 State and local government debt reached at an all-time record of 22 percent of U.S. GDP during 2010.

#20 The U.S. national debt has surpassed the 14 trillion dollar mark for the first time ever and it is being projected that it will soar well past 15 trillion during 2011.

There are some people that have a hard time really grasping what statistics actually mean. For people like that, often pictures and charts are much more effective. Well, that is one reason I like to include pictures and graphs in many of my articles, and below I have posted my favorite chart from this past year. It shows the growth of the U.S. national debt from 1940 until today. I honestly don’t know how anyone can look at this chart and still be convinced that our nation is not headed for a complete financial meltdown….[chart]

14 Eye Opening Statistics Which Reveal Just How Dramatically The U.S. Economy Has Collapsed Since 2007 Most Americans have become so accustomed to the “new normal” of continual economic decline that they don’t even remember how good things were just a few short years ago. ‘The Economic Collapse Jan 10, 2011

’Most Americans have become so accustomed to the “new normal” of continual economic decline that they don’t even remember how good things were just a few short years ago. Back in 2007, unemployment was very low, good jobs were much easier to get, far fewer Americans were living in poverty or enrolled in welfare programs and government finances were in much better shape. Of course most of this prosperity was fueled by massive amounts of debt, but at least times were better. Unfortunately, things have really deteriorated over the last several years. Since 2007, unemployment has skyrocketed, foreclosures have set new all-time records, personal bankruptcies have soared and U.S. government debt has gotten completely and totally out of control. Poll after poll has shown that Americans are now far less optimistic about the future than they were in 2007. It is almost as if the past few years have literally sucked the hope out of millions upon millions of Americans.

Sadly, our economic situation is continually getting worse. Every month the United States loses more factories. Every month the United States loses more jobs. Every month the collective wealth of U.S. citizens continues to decline. Every month the federal government goes into even more debt. Every month state and local governments go into even more debt.

Unfortunately, things are going to get even worse in the years ahead. Right now we look back on 2005, 2006 and 2007 as “good times”, but in a few years we will look back on 2010 and 2011 as “good times”.

We are in the midst of a long-term economic decline, and the very bad economic choices that we have been making as a nation for decades are now starting to really catch up with us.

So as horrible as you may think that things are now, just keep in mind that things are going to continue to deteriorate in the years ahead.

But for the moment, let us remember how far we have fallen over the past few years. The following are 14 eye opening statistics which reveal just how dramatically the U.S. economy has collapsed since 2007….

#1 In November 2007, the official U.S. unemployment rate was just 4.7 percent. Today, the official U.S. unemployment rate is 9.4 percent.

#2 In November 2007, 18.8% of unemployed Americans had been out of work for 27 weeks or longer. Today that percentage is up to 41.9%.

#3 As 2007 began, there were just over 1 million Americans that had been unemployed for half a year or longer. Today, there are over 6 million Americans that have been unemployed for half a year or longer.

#4 Nearly 10 million Americans now receive unemployment insurance, whichis almost four times as many as were receiving it back in 2007.

#5 More than half of the U.S. labor force (55 percent) has “suffered a spell of unemployment, a cut in pay, a reduction in hours or have become involuntary part-time workers” since the “recession” began in December 2007.

#6 According to one analysis, the United States has lost a total of approximately 10.5 million jobs since 2007.

#7 As 2007 began, only 26 million Americans were on food stamps. Today, an all-time record of 43.2 million Americans are enrolled in the food stamp program.

#8 In 2007, the U.S. government held a total of $725 billion in mortgage debt. As of the middle of 2010, the U.S. government held a total of $5.148 trillion in mortgage debt.

#9 In the year prior to the “official” beginning of the most recent recession in 2007, the IRS filed just 684,000 tax liens against U.S. taxpayers. During 2010, the IRS filed over a million tax liens against U.S. taxpayers.

#10 From the year 2000 through the year 2007, there were 27 bank failures in the United States. From 2008 through 2010, there were 314 bank failures in the United States.

#11 According to the U.S. Department of Housing and Urban Development, the number of U.S. families with children living in homeless sheltersincreased from 131,000 to 170,000 between 2007 and 2009.

#12 In 2007, one poll found that 43 percent of Americans were living “paycheck to paycheck”. Sadly, according to a survey released very close to the end of 2010, approximately 55 percent of all Americans are now living paycheck to paycheck.

#13 In 2007, the “official” federal budget deficit was just 161 billion dollars. In 2010, the “official” federal budget deficit was approximately 1.3 trillion dollars.

#14 As 2007 began, the U.S. national debt was just under 8.7 trillion dollars. Today, the U.S. national debt has just surpassed 14 trillion dollars and it continues to soar into the stratosphere.

So is there any hope that we can turn all of this around?

Unfortunately, the massive amount of debt that we have piled up as a society over the last several decades has made that impossible.

If you add up all forms of debt (government debt, business debt, individual debt), it comes to approximately 360 percent of GDP. It is the biggest debt bubble in the history of the world.

If the federal government and our state governments stop borrowing and spending so much money, our economy would collapse. But if they keep borrowing and spending so much money they will continually make the eventual economic collapse even worse.

We are in the terminal stages of the most horrific debt spiral the world has ever seen, and when the debt spiral gets stopped the house of cards is going to finally come down for good.

So enjoy these times while you still have them. Yes, today is not nearly as prosperous as 2007 was, but today is most definitely a whole lot better than 2015 or 2020 is going to be.

Sadly, we could have avoided this financial disaster completely if only we had listened more carefully to those that founded this nation. Once upon a time, Thomas Jefferson said the following….

I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing.’

Tipping Point: 25 Signs That The Coming Financial Collapse Is Now Closer Then Ever The financial collapse that so many of us have been anticipating is seemingly closer then ever. Over the past several weeks, there have been a host of ominous signs for the U.S. economy.

The Economic Collapse
Dec 17, 2010

The financial collapse that so many of us have been anticipating is seemingly closer then ever. Over the past several weeks, there have been a host of ominous signs for the U.S. economy. Yields on U.S. Treasuries have moved up rapidly and Moody’s is publicly warning that it may have to cut the rating on U.S. government debt soon. Mortgage rates are also moving up aggressively. The euro and the U.S. dollar both look incredibly shaky. Jobs continue to be shipped out of the United States at a blistering pace as our politicians stand by and do nothing. Confidence in U.S. government debt around the globe continues to decline. State and local governments that are drowning in debt across the United States are savagely cutting back on even essential social services and are coming up with increasingly “creative” ways of getting more money out of all of us. Meanwhile, tremor after tremor continues to strike the world financial system. So does this mean that we have almost reached a tipping point? Is the world on the verge of a major financial collapse?

Let’s hope not, but with each passing week the financial news just seems to get eve worse. Not only is U.S. government debt spinning wildly toward a breaking point, but many U.S. states (such as California) are in such horrific financial condition that they are beginning to resemble banana republics.

But it is not just the United States that is in trouble. Nightmarish debt problems in Greece, Spain, Portugal, Ireland, Italy, Belgium and several other European nations threaten to crash the euro at any time. In fact, many economists are now openly debating which will collapse first – the euro or the U.S. dollar.

Sadly, this is the inevitable result of constructing a global financial system on debt. All debt bubbles eventually collapse. Currently we are living in the biggest debt bubble in the history of the world, and when this one bursts it is going to be a disaster of truly historic proportions.

So will we reach a tipping point soon? Well, the following are 25 signs that the financial collapse is rapidly getting closer….

#1 The official U.S. unemployment rate has not been beneath 9 percent since April 2009.

#2 According to the U.S. Census Bureau, there are currently 6.3 million vacant homes in the United States that are either for sale or for rent.

#3 It is being projected that the U.S. trade deficit with China could hit 270 billion dollars for the entire year of 2010.

#4 Back in 2000, 7.2 percent of blue collar workers were either unemployed or underemployed. Today that figure is up to 19.5 percent.

#5 The Chinese government has accumulated approximately $2.65 trillion in total foreign exchange reserves. They have drained this wealth from the economies of other nations (such as the United States) and instead of reinvesting all of it they are just sitting on much of it. This is creating tremendous imbalances in the global economy.

#6 Since the year 2000, we have lost 10% of our middle class jobs. In the year 2000 there were approximately 72 million middle class jobs in the United States but today there are only about 65 million middle class jobs.

#7 The United States now employs about the same number of people in manufacturing as it did back in 1940. Considering the fact that we had 132 million people living in this country in 1940 and that we have well over 300 million people living in this country today, that is a very sobering statistic.

#8 According to CoreLogic, U.S. housing prices have now declined for three months in a row.

#9 The average rate on a 30 year fixed rate mortgage soared 11 basis points just this past week. As mortgage rates continue to push higher it is going to make it even more difficult for American families to afford homes.

#10 22.5 percent of all residential mortgages in the United States were in negative equity as of the end of the third quarter of 2010.

#11 The U.S. monetary base has more than doubled since the beginning of the most recent recession.

#12 U.S. Treasury yields have been rising steadily during the 4th quarter of 2010 and recently hit a six-month high.

#13 Incoming governor Jerry Brown is scrambling to find $29 billion more to cut from the California state budget. The following quote from Brown about the desperate condition of California state finances is not going to do much to inspire confidence in California’s financial situation around the globe….

“We’ve been living in fantasy land. It is much worse than I thought. I’m shocked.”

#14 24.3 percent of the residents of El Centro, California are currently unemployed.

#15 The average home in Merced, California has declined in value by 63 percent over the past four years.

#16 Detroit Mayor Dave Bing has come up with a new way to save money. He wants to cut 20 percent of Detroit off from essential social services such as road repairs, police patrols, functioning street lights and garbage collection.

#17 The second most dangerous city in the United States – Camden, New Jersey – is about to lay off about half its police in a desperate attempt to save money.

#18 In 2010, 55 percent of Americans between the ages of 60 and 64 were in the labor market. Ten years ago, that number was just 47 percent. More older Americans than ever find that they have to keep working just to survive.

#19 Back in 1998, the United States had 25 percent of the world’s high-tech export market and China had just 10 percent. Ten years later, the United States had less than 15 percent and China’s share had soared to 20 percent.

#20 The U.S. government budget deficit increased to a whopping $150.4 billion last month, which represented the biggest November budget deficit on record.

#21 The U.S. government is somehow going to have to roll over existing debt and finance new debt that is equivalent to 27.8 percent of GDP in 2011.

#22 The United States had been the leading consumer of energy on the globe for about 100 years, but this past summer China took over the number one spot.

#23 According to an absolutely stunning new poll, 40 percent of all U.S. doctors plan to bail out of the profession over the next three years.

#24 As 2007 began, there were just over 1 million Americans that had been unemployed for half a year or longer. Today, there are over 6 million Americans that have been unemployed for half a year or longer.

#25 All over the United States, local governments have begun instituting “police response fees”. For example, New York Mayor Michael Bloomberg has come up with a plan under which a fee of $365 would be charged if police are called to respond to an automobile accident where no injuries are involved. If there are injuries as a result of the crash that is going to cost extra.

16 Nightmarish Economic Trends To Watch Carefully In 2011 The American Dream Dec 15, 2010 ‘If you only watch the “economic pundits” on television, it can be very confusing to figure out exactly what is happening with the U.S. economy. One pundit will pull out a couple statistics that got a little bit better over the past month and claim that we have entered a time of solid recovery. Another pundit will pull out a couple statistics that got a little worse over the past month and claim that we are headed for trouble. So what is the truth? Well, if you really want to get a clear idea of what is really going on you have to look at the long-term trends. There are some economic trends which just keep getting worse year after year after year, and it is those trends that tell the real story of the decline of our economic system.

As you examine the long-term trends, you quickly come to realize that the U.S. is trapped in an endless spiral of debt, the middle class is being wiped out, the U.S. dollar is being destroyed and America is rapidly becoming a post-industrial wasteland.

Posted below are 16 nightmarish economic trends to watch carefully in 2011. It is becoming exceedingly apparent that unless something is done rapidly we are heading for an economic collapse of unprecedented magnitude….

#1 Do you want to see something scary? Just check out the chart below. Since the beginning of the economic downturn, the U.S. monetary base has more than doubled. But don’t worry – Federal Reserve Chairman Ben Bernanke has promised us that this could never cause inflation. In fact, Bernanke says that we need to inject even more dollars into the economy. So if you are alarmed by the chart below, you are just being irrational according to Bernanke….

[chart]

#2 Thousands of our factories, millions of our jobs and hundreds of billions of dollars of our national wealth continue to be shipped overseas. In 1985, the U.S. trade deficit with China was 6 million dollars for the entire year. In the month of August alone, the U.S. trade deficit with China was over 28 billion dollars. Nobel economist Robert W. Fogel of the University of Chicago is projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040 if current trends continue.

#3 The United States is rapidly becoming a post-industrial wasteland. Back in 1959, manufacturing represented 28 percent of all U.S. economic output. In 2008, it represented only 11.5 percent and it continues to fall. Sadly, the truth is that America is being deindustrialized. As of the end of 2009, less than 12 million Americans worked in manufacturing. The last time that less than 12 million Americans were employed in manufacturing was in 1941.

#4 The number of Americans that have been out of work for an extended period of time has absolutely exploded over the last few years. As 2007 began, there were just over 1 million Americans that had been unemployed for half a year or longer. Today, there are over 6 million Americans that have been unemployed for half a year or longer.

#5 The middle class continues to be squeezed out of existence. According to a poll taken in 2009, 61 percent of Americans ”always or usually” live paycheck to paycheck. That was up substantially from 49 percent in 2008 and 43 percent in 2007.

#6 The number of Americans living in poverty is absolutely skyrocketing. 42.9 million Americans are now on food stamps, and one out of every six Americans is now enrolled in at least one anti-poverty program run by the federal government. Unfortunately, many of those that have been hardest hit by this economic downturn have been children. According to one new study, approximately 21 percent of all children in the United States are living below the poverty line in 2010 - the highest rate in 20 years.

#7 Many American families have been pushed beyond the breaking point during this economic downturn. Over 1.4 million Americans filed for personal bankruptcy in 2009, which represented a 32 percent increase over 2008. The final number for 2010 is expected to be even higher.

#8 The U.S. real estate market continues to stagnate. During the third quarter of 2010, 67 percent of mortgages in Nevada were “underwater”, 49 percent of mortgages in Arizona were “underwater” and 46 percent of mortgages in Florida were “underwater”. So what happens if home prices go down even more?

#9 More elderly Americans than ever are being forced to put off retirement and continue working. In 2010, 55 percent of Americans between the ages of 60 and 64 were in the labor market. Ten years ago, that number was just 47 percent. Unfortunately, it looks like this problem will only get worse in the years ahead. In America today, approximately half of all workers have less than $2000 saved up for retirement.

#10 In the United States today, there are simply far too many retirees and not nearly enough workers to support them. Back in 1950 each retiree’s Social Security benefit was paid for by 16 workers. Today, each retiree’s Social Security benefit is paid for by approximately 3.3 workers. By 2025 it is projected that there will be approximately two workers for each retiree.

#11 Financial assets continue to become concentrated in fewer and fewer hands. For example, the “big four” U.S. banks (Citigroup, JPMorgan Chase, Bank of America and Wells Fargo) had approximately 22 percent of all deposits in FDIC-insured institutions back in 2000. As of the middle of 2009 that figure was up to 39 percent.

#12 The Federal Reserve has been destroying the value of the U.S. dollar for decades. Since the Federal Reserve was created in 1913, the U.S. dollar has lost over 95 percent of its purchasing power. An item that cost $20.00 in 1970 would cost you $112.35 today. An item that cost $20.00 in 1913 would cost you $440.33 today.

#13 Commodity prices continue to soar into the stratosphere. Ten years ago, the price of a barrel of oil hovered around 20 to 30 dollars most of the time. Today, the price of oil is rapidly closing in on 100 dollars a barrel and there are now fears that it could soon go much higher than that.

#14 Federal government spending is completely and totally out of control. The U.S. government budget deficit increased to a whopping $150.4 billion last month, which represented the biggest November deficit on record. But our politicians can’t seem to break their addiction to debt. In fact, Democrats are trying to ram through a 1,924 page, 1.1 trillion dollar spending bill in the final days of the lame-duck session of Congress before the Republicans take control of the House of Representatives next year.

#15 The U.S. national debt is rapidly closing in on 14 trillion dollars. It is more than 13 times larger than it was just 30 short years ago. According to an official U.S. Treasury Department report to Congress, the U.S. national debt is projected to climb to an estimated $19.6 trillion by 2015.

#16 Unfortunately, the official government numbers grossly understate the horrific nature of the crisis we are facing. John Williams of Shadow Government Statistics has calculated that if the federal government would have used GAAP accounting standards to measure the federal budget deficit for 2009, it would have been approximately 8.8 trillion dollars. Not only that, but John Williams now says that U.S. government debt is so wildly out of control that it is mathematically impossible for us to “grow” our way out of it….

The government’s finances not only are out of control, but the actual deficit is not containable. Put into perspective, if the government were to raise taxes so as to seize 100% of all wages, salaries and corporate profits, it still would be showing an annual deficit using GAAP accounting on a consistent basis. In like manner, given current revenues, if it stopped spending every penny (including defense and homeland security) other than for Social Security and Medicare obligations, the government still would be showing an annual deficit. Further, the U.S. has no potential way to grow out of this shortfall.

The more one examines the U.S. economic situation, the more depressing it becomes. The U.S. financial system is trapped inside a horrific debt spiral and we are headed straight for economic oblivion.

If our leaders attempt to interrupt the debt spiral it will plunge our economy into a depression. If our leaders attempt to keep the debt spiral going for several more years it will just make the eventual crash even worse. Either way, we are headed for a financial implosion that will be truly historic.

The debt-fueled good times that we have been enjoying for the last several decades are rapidly coming to an end. Unfortunately for the tens of millions of Americans that are already suffering, our economic problems are only going to get worse in the years ahead.’

Jobless Recovery?: 25 Unemployment Statistics That Are Almost Too Depressing To Read ‘… Unemployment is up again! That’s right – even though Wall Street is swimming in cash and the Obama administration is declaring that “the recession is over”, the U.S. unemployment rate has gone even higher. So are you enjoying the jobless recovery? Economic Collapse Blog Dec 4, 2010 ‘Guess what? Unemployment is up again! That’s right – even though Wall Street is swimming in cash and the Obama administration is declaring that “the recession is over”, the U.S. unemployment rate has gone even higher ... Times are really, really tough and unfortunately the long-term outlook is very bleak. We should have compassion on those who are out of work right now, because soon many of us may join them.

The following are 25 unemployment statistics that are almost too depressing to read….

#1 According to the Bureau of Labor Statistics, the U.S. unemployment rate for November was 9.8 percent. This was up from 9.6 percent in October, and it continues a trend of depressingly high unemployment rates. The official unemployment number has been at 9.5 percent or higher for well over a year at this point.

#2 In November 2006, the “official” U.S. unemployment rate was just 4.5 percent.

#3 Most economists had been expecting the U.S. economy to add about 150,000 jobs in November. Instead, it only added 39,000.

#4 In the United States today, there are over 15 million people who are “officially” considered to be unemployed for statistical purposes. But everyone knows that the “real” number is even much larger than that.

#5 As 2007 began, there were just over 1 million Americans that had been unemployed for half a year or longer. Today, there are over 6 million Americans that have been unemployed for half a year or longer.

#6 The number of “persons not in the labor force” in the United States recently set another new all-time record.

#7 It now takes the average unemployed American over 33 weeks to find a job.

#8 When you throw in “discouraged workers” and “underemployed workers”, the “real” unemployment rate in the state of California is actually about 22 percent.

#9 In America today there are not nearly enough jobs for everyone. In fact, there are now approximately 5 unemployed Americans for every single job opening.

#10 According to The New York Times, Americans that have been unemployed for five weeks or less are three times more likely to find a new job in the coming month than Americans that have been unemployed for over a year.

#11 The U.S. economy would need to create 235,120 new jobs a month to get the unemployment rate down to pre-recession levels by 2016. Does anyone think that there is even a prayer that is going to happen?

#12 There are 9 million Americans that are working part-time for “economic reasons”. In other words, those Americans would gladly take full-time jobs if they could get them, but all they have been able to find is part-time work.

#13 In 2009, total wages, median wages, and average wages all declined in the United States.

#14 As of the end of 2009, less than 12 million Americans worked in manufacturing. The last time that less than 12 million Americans were employed in manufacturing was in 1941.

#15 The United States has lost at least 7.5 million jobs since the recession began.

#16 Today, only about 40 percent of Ford Motor Company’s 178,000 workers are employed in North America, and a big percentage of those jobs are in Canada and Mexico.

#17 In 1959, manufacturing represented 28 percent of U.S. economic output. In 2008, it represented 11.5 percent.

#18 Earlier this year, one poll found that 28% of all American households had at least one member that was looking for a full-time job.

#19 In the United States today, over 18,000 parking lot attendants have college degrees.

#20 The United States has lost a staggering 32 percent of its manufacturing jobs since the year 2000.

#21 As the employment situation continues to stagnate, millions of American families have decided to cut back on things such as insurance coverage. For example, the percentage of American households that have life insurance coverage is at its lowest level in 50 years.

#22 Unless Congress acts, and there is no indication that is going to happen, approximately 2 million Americans will stop receiving unemployment checks over the next couple of months.

#23 A poll that was released by the Pew Research Center back in June discovered that an astounding 55 percent of the U.S. labor force has experienced either unemployment, a pay decrease, a reduction in hours or an involuntary move to part-time work since the economic downturn began.

#24 According to Richard McCormack, the United States has lost over 42,000 factories (and counting) since 2001.

#25 In the United States today, 317,000 waiters and waitresses have college degrees.

But this is what we get for creating the biggest debt bubble in the history of the world. For decades we have been digging a deeper hole for ourselves by going into increasingly larger amounts of debt. In America today, our entire economy is based on debt. Even our money is debt. We were fools if we ever thought this could go on forever. Just think about it. Have you ever gone out and run up a bunch of debt? It can be a lot of fun sitting behind the wheel of a new car, running your credit cards up to the limit and buying a beautiful big house that you cannot afford. But in the end what happens? It always catches up with you. Well, our collective debt is starting to catch up with us. There is a sea of red ink on every level of American society. It is only a matter of time before it destroys our economy. IF YOU THINK THAT THINGS ARE BAD NOW, JUST WAIT. THINGS ARE GOING TO GET A WHOLE LOT WORSE. A HORRIFIC ECONOMIC COLLAPSE IS COMING, AND IT IS GOING TO BE VERY, VERY PAINFUL.’

Howard Davidowitz on the Economy: "Here Are the Numbers ... WE'RE BROKE!" 11-25-10 ‘The U.S. economy "is a complete disaster," Howard Davidowitz declared here in July, the most recent in a string of dire predictions from Tech Ticker's most entertaining guest.On the eve of Thanksgiving, I asked Davidowitz if he had any regrets, or was ready to throw in the towel given recent signs of economic revival. Are you kidding me? "Here are the numbers...we're broke," Davidowitz declares, noting the U.S. government goes $5 billion deeper into debt every day and is facing $1 trillion-plus annual deficits for the next decade. "In other words, we're bankrupt."As with the economy, Davidowitz is unwaveringly consistent in his views on President Obama, calling him "deranged, dysfunctional and discredited."Results of the midterm election show "the people of this country think we are in a catastrophe," he says. "I'm with them."Check the accompanying video for more of Howard's unfettered opinions and stay tuned for additional clips from this interview. And...Happy Thanksgiving! Aaron Task is the host of Tech Ticker. You can follow him on Twitter at @atask or email him at altask@yahoo.com’

17 Things Worrying Investors Lloyd's Wall of Worry

Worry Count: 17


CHINA: 1,330,044,605 people can’t be wrong.

The PIIGS: Fasten your seatbelts. It’s gonna be a long, bumpy, expensive, weird, (insert your own adjective here) freak show of a ride.

CALIFORNIA AND THE OTHER 49 STATES: Not yet as dire as “The PIIGS”. Might I suggest the classier moniker of “The Prosciuttos” for the American basket-case states?

QE II: Gobble?

U.S. ECONOMY: The “Punky Brewster” of the global economic landscape.

UNEMPLOYMENT: Only thing worse than losing your job, losing your unemployment check. At least there’s the holiday season to cheer everyone up (read: heavy sarcasm).

TAXES: Praying to the Financial Market Gods that we don’t have another TARP-like vote fiasco.

OBAMA ADMINISTRATION PART II: Still two years before the Pres. election and the peanut gallery is already pleading for a Hail Mary Pass to get them back in the game.

HFT: Instead of beating up these liquidity supplying traders, let’s honor them with their very own stock exchange. But wait -- with no retail saps to pick-off they will never get that Day 1 opening bell tick. Perfect.

XMAS 2010: As my professor friend Nick says, “Nowadays Americans are dining off of two menus – The Million Dollar and the $0.99 Cent.” And both are pissed about it.

CURRENCIES: Poor Mr. Greenback. Does someone need a hug?

HOUSING CRISIS: Price Stabilization – Are we there yet? Just a little bit more. Are we there yet? Just a little bit more. Are we there yet? Just a little bit more….

INFLATION/DEFLATION: Fed Chief Ben B. comes out swinging from his heels in defense of inflation promotion. Don’t punch yourself out as this one is likely to go the distance.

COMMODITIES: Corrected but still sky high; fortunately these prices are only affecting core, basic, life-sustaining necessities and sparing our electronic gadgets and plus-sized SUVs. Whew!

INSIDER TRADING: Another black eye for Hedge Funds. I estimate that makes black eye number 6,597.

INTEREST RATES: South Korea and China slowly turning up the dial to “11”. On the other hand the U.S. has removed the dial altogether. This never ends well….

NORTH KOREA: Here we go again. (and now Egypt, etc.)

Consumer confidence down, LiveLeak.com - Loonie closes above U.S. dollar … dollar for first time closes below parity on Canadian loonie … hey, hey, hey … 'Huge' stock decline — but not yet MarketWatch - Brimelow ‘Commentary: Adens … ‘mega trend’ looks grim … The Adens expect a hyperinflationary collapse … ‘ Oh come on! Manipulated dollar decline with inflated earnings, stock prices thereby, etc., … we’ve seen this all before … the last few crashes … Jobless rate jumps to 9.8% as hiring slows (Washington Post) [ The reality is not a mystery! The nation’s been thrown under the bus for the greater good (wealth) of the very few (frauds on wall street, etc.); wall street giving out record bonuses from their accomplished fraud (with no-recession b.s. bernanke help) of $144 BILLION: Come on! This is gettin’ even more downright ridiculous (if that’s even possible)! Pending home foreclosure / distress sales up, oil prices (and oil stocks) up, debased dollar down, plus a little familiar ‘better than expected’ thrown in along with prospects of a ‘no-recession bernanke’ market-frothing bull session on 60 minutes and, voila, suckers’ rally into the close to keep the suckers suckered! What’s good for the frauds on wall street is bad for just about everyone else which includes the vast majority of people and businesses, domestically and globally, as current dollar manipulation / debasement ultimately results in higher costs and loss of purchasing power (ie., oil, etc.). Clearly, this is one of those fraudulent wealth transfers to the frauds on wall street et als which will ultimately be paid for by those who least are in a position to afford it, courtesy of the ever more worthless Weimar dollar, etc., inflating earnings, eps, lowering p/e multiples, etc., see infra. This is an especially great time to sell / take profits while you can since there's much worse to come! Previous: Rosy numbers on consumer sentiment, unemployment (far better than private forecasts) from the government prior to the holiday so-called ‘shop till you drop’? How can anyone believe anything they say? Najerian interviewed by Motek chimes in with the reason for good retail cheer; viz., people have stopped paying their mortgages and are using the funds to purchase retail goods; while Davidowitz adds that with record numbers of americans on food stamps, real unemployment at 17+, and wall street giving out record bonuses from their accomplished fraud (with no-recession b.s. bernanke help) of $144 BILLION … the high end stores / jewelers will do well … daaaaah! And, with insiders and wall street frauds selling into the bubble as preceded last crash, this is an especially great opportunity to sell / take profits! Suckers’ rally on light volume, full moon, and government complicity (false data / reports) to keep suckers suckered (easy for the wall street frauds to do with just a mouse click / push of the button – and, they know all those technical trade lines that are easy to program in this current phase of the scam/fraud with the debased dollar). Keep in mind, the totally mindless blather from the ‘cottage industries’ of and fraudulent wall street itself in talking up lower P/E multiples when the same is a direct result of the debasement of the dollar and the consequent manipulation / translation (not real, see Davis, infra) which preceded the financial crisis / last crash. Unemployment, trade, deficit, etc., numbers continue decidedly worse than expected along with other negative data (and in the ‘wrong direction’, that spin accorded ‘down but not as bad as before’ b*** s*** ) yet the market has rallied like no tomorrow with used home foreclosure / distressed sales, though abated owing to ‘foreclosuregate’, the other ‘heralded’ good news. Moreover, the dumbo lemmings of Europe have jumped on the fraudulent defacto bankrupt american crazy train propelled to the precipice also as if no tomorrow. This is about keeping the suckers sucked in with the help of a market-frothing pre-election debased dollar for favorable currency translation and paper (but not real when measured in, ie., gold, etc.) profits which preceded the last crisis, inflating a bubble as in the last crisis to facilitate the churn-and-earn, particularly with computerized (and high frequency) trades and which commissions they’ll get again on the way down. There is nothing to support these overbought stock prices, fundamentally or otherwise. These are desperate criminals ‘at work’. Even wall street shill, the senile Buffett is saying we’re still in a recession (depression) [ Davis: ‘… all profits are inflated by 10% (from falling, debased dollar) and that 10% is the E that gets divided from the P and gives us a much better price/multiple to hang our hats on and that gets investors to BUYBUYBUY …’ The bull market that never was / were beyond wall street b.s. when measured in gold ] This is a great opportunity to sell / take profits (these lower dollar, hyperinflationary currency manipulations / translations to froth paper stocks will end quite badly as in last crash)! This is a global depression. This is a secular bear market in a global depression. The past up moves were manipulated bull (s***) cycles (at best) in a secular bear market. This has been a typically manipulated bubble as has preceded the prior crashes with great regularity that the wall street frauds and insiders commission and sell into. This is a typical wall street ‘programmed computerized high-frequency churn and earn pass the hot potato scam / fraud as in prior crashes ( widely reported, high-frequency trading routinely accounts for more than 50% of daily U.S. equity trading volume and regularly approaches 70%. )’. This national decline, economic and otherwise, will not end until justice is served and the wall street frauds et als are criminally prosecuted, jailed, fined, and disgorgement imposed.The Stock Market's Long Decline Has Begun Smith ]

(2-3-11) Dow 12,062 +20 Nasdaq 2,753 +4 S&P 500 1,307 +3 [CLOSE- OIL $90.54 (-54% for year 2008) (RECORD TRADING HIGH $147.27) GAS $3.11 (reg. gas in LAND OF FRUITS AND NUTS $3.35 REG./ $3.53 MID-GRADE/ $3.62 PREM./ $3.68 DIESEL) / GOLD $1,353 (+24% for year 2009) / SILVER $28.72 (+47% for year 2009) PLATINUM $1,837(+56% for year 2009) / DOLLAR= .73 EURO, 81 YEN, .61 POUND STERLING, ETC. (How low can you go - LOWER)/ http://www.federalreserve.gov/releases/h15/update 10 YR NOTE YIELD 3.54% …..… AP Business Highlights ...Yahoo Market Update... T. Rowe Price Weekly Recap – Stocks / Bonds / Currencies - Domestic / International This Is a Secular Bear Market and The End of Buy and Hold … and Hope MARKET MANIPULATION AND HOW THE LATEST BUBBLE-FRAUD PRE-COMING CRASH IS BEING ACCOMPLISHED 3-11-10 6 Theories On Why the Stock Market Has Rallied 3-9-10 [archived website file] Risks Lurk for ETF Investors The bull market that never was/were beyond wall street b.s. when measured in gold Property Values Projected to Fall 12% in 2010 Jan 31, 2010 The Week Ahead: Risk Is Off the Cliff; Unwind Has Begun Jan 31, 2010 01-13-10 Forecast for 2010 from Seeking Alpha Contributor THE COMING MARKET CRASH / CORRECTION 1-28-10 Maierhofer (01-15-10) 11 Clear Signs Economy Sinking Economic Black Hole 1-22-10: 20 Reasons Why The U.S. Economy Is Dying And Is Simply Not Going To Recover Current Economic / Fiscal Charts Trendsresearch.com forecast for 2009 1-7-10 Crash is coming! ‘WORST ECONOMIC COLLAPSE EVER’ Must Read Economic / Financial Data This Depression is just beginning The coming depression… thecomingdepression.net MUST READ: JEREMY GRANTHAM’S QUARTERLY UPDATE 25 January 2010 (850 on the S&P) by TPC The Next Wave of Collapse is Coming Sooner than you think Sliding Back Into the Great Depression ABSOLUTELY, ABSURDLY, RIDICULOUS! SELL / TAKE PROFITS WHILE YOU CAN SINCE MUCH, MUCH WORSE TO COME!

National / World

George Noory & Alex Jones: Egypt Could be “Shot Heard Around The World” to Start WW3 Infowars.com | Weekday host of the late-night radio talk show Coast to Coast AM, George Noory talks with Alex about the conflict in Egypt.

“Obama Triggers Blackouts” Hits Number One On Google Trends Paul Joseph Watson | Thanks for all our great listeners for their great effort in helping us get the word out on this vital issue.

You Are the Resistance: Great Videos and Posters Continue to Roll In Infowars.com | Act today so there is a tomorrow.

Days of Rage, Oil Prices, and the Suez Canal Kurt Nimmo | Concern that oil prices will skyrocket to $250 per barrel on Suez Canal closure mirror predictions by Lindsey Williams.

Obama Agenda To Bankrupt Power Plants Triggers Blackouts Paul Joseph Watson | Fury as hospitals hit with outages while post-industrial collapse of America accelerates.

Rolling Blackouts Fraud: ERCOT Admits Overcapacity Joe Wäges | The Electric Reliability Council of Texas reported an overcapacity of about a 22%,

Shots fired inside Alabama courthouse New York Post | Shots were fired inside a municipal courthouse in Goodwater, Ala., on Thursday with reports at least one person being taken away on a stretcher.

Mexico supplies electricity to wintry Texas AFP | Mexico’s Federal Electricity Commission “was determined to support Texas with electrical energy faced with the problems the state is suffering due to climatological conditions,” a statement said.

Egypt army takes on journalists Washington Bangla Radio USA | Authorities on Thursday cracked down on international reporters in Egypt.

NYC Council Bans Smoking In Parks, Beaches [ Sinkhole new york has become a national joke! ] Jessica Naziri | The council voted 36 to 12 in favor of the ban, much to the chagrin of those who think the government is overstepping its role into its residents’ lives.

Rebranding Big Brother Kurt Nimmo | Say hello to a boot stamping on a human face — forever.

“Obama Triggers Blackouts” Tops Google Trends The Obama administration’s drive to de-industrialize the US by shutting down and restricting power plants and how this has caused rolling blackouts across the country this week has topped both the “Hot Topics” and “Hot Searches” categories on Google Trends today.

Days of Rage, Oil Prices, and the Suez Canal Bloomberg warns today that an act of sabotage or a decision by a new regime – possibly headed up by the Muslim Brotherhood – to close the canal and its oil pipeline to punish supporters of Egyptian dictator Hosni Mubarak could send oil prices through the stratosphere.

Obama’s Blocking Of New Power Plants Triggers Nationwide Blackouts The rolling blackouts now being implemented in Texas and across the country as record cold weather grips the United States are a direct consequence of the Obama administration’s agenda to lay siege to the coal industry, launch a takeover of infrastructure under the contrived global warming scam, and help usher in the post-industrial collapse of America.

Obama Creates New Global Warming Rules; Exempts GE The proposed Avenal Energy project will be a combined-cycle generating plant consisting of two natural gas-fired General Electric 7FA Gas Turbines with Heat Recovery Steam Generators (HRSG) and one General Electric Steam Turbine.

Revealed: “Less Naked” Body Scanners Still Store Unfiltered Naked Images As the Transport Security Agency begins rolling out new “less revealing” body scanners in airports, gaining much media coverage, The Electronic Privacy Information Center (EPIC), a watchdog group that has brought several lawsuits against the TSA over the body imaging program, has warned that the new machines do little to allay privacy violations, indeed, they are still capable of capturing and storing naked images.

Big Sis Cites Staged Portland Terror Plot To Expand Domestic Spy Program Homeland Security is gearing up to accelerate the roll out of its domestic spying program by teaming up with the Department of Justice to expand the Nationwide Suspicious Activity Reporting (SAR) Initiative, and in doing so cites the justification of the alleged plot to bomb a Christmas tree lighting ceremony in Portland, a case of entrapment where the would-be bomber was groomed, set-up and even provided with a fake bomb by the FBI.

Why Did Mubarak’s Thugs Ride In On Camels? The photos of Mubarak’s thugs riding in on camels to attack the peaceful protesters with whips is getting worldwide attention.

Overcoming Shame And Guilt About 9/11 Truth In The Media Nearly a decade after the 9/11 attacks, the media’s continual silence on the worldwide grassroots campaign to launch a new investigation into those attacks demands an explanation.

Busted: Pro-Mubarak Thugs Are Police Officers Busted: Pro-Mubarak Thugs Are Police Officers It should surprise no one that some if not all of the violent pro-Mubarak forces are plain clothes police officers.

Drudgereport:'DAY OF DEPARTURE'

White House, Egypt Discuss Plan for Mubarak's Exit...
'If I Resign Today There Will Be Chaos'...
Blames Muslim Brotherhood for violence...
Crackdown Widens to Foreign Observers...
Obama response draws criticism in Israel...
UN to evacuate staff...
LIVE... WIRE... BBC...
Muslim Brotherhood wants end to Egypt-Israeli peace deal...
Kenneth Cole tweets: Egypt is rioting over our spring collection...
Jon Stewart Jokes: 'Hands off Anderson Cooper!'
Speeding Police Truck Runs Over Protesters...
ABCNEWS REPORTER THREATENED WITH BEHEADING...
CBSNEWS Lara Logan, Crew Detained...
FOXNEWS reporter, cameraman beaten, hospitalized...
The Arab revolution and Western decline...
Soros: 'The main stumbling block is Israel'...
GALLUP: Unemployment Up in January to 9.8%...
GOOGLE Gets Record 75,000 Job Applications in One Week...
Bernanke warns on 'wide' deficit; Gold goes up...
...policy 'not to blame for record food prices' [ Can anyone believe the gall of this incompetent, lying vegetable ‘no-recession bernanke’ … this very scenario was predicted as a natural concomitant to his inflation strategy along with his fraudulent wall bubble / wealth effect strategy (remember those same words from senile greenspan. ]
Oil price shoots above $103...

Dems warn of shutdown over debt...
Republicans Propose Spending Cuts...

Health-care fight shifts to courts (Washington Post) [ Wow! Heck of a way to run a nation … now in the hands of corrupt, corruptible plushly accoutered lifetime-appointees for whom legal principles, meaningful rules of law are never a problem or impediment nor even a predictable guide … Wall Street firm targets District-based energy practice (Washington Post) [ From one corrupt sinkhole (d.c. / no. virginia) to another, perhaps the largest ( wall street/new york/jersey/ct. metro); ho, hum. The pervasively corrupt american illegal system … corrupt u.s. courts / (lawyers) / judges: Their lifetime plush appointments should be abolished, which corrupt entities are unheard of in productive societies as China, Japan, etc.. Time to abolish these drags on society and eliminate their lifetime stipends and costly bureaucracies. Rules of law mean nothing to these typically corrupt americans. Most, including sam alito of the u.s. supreme court, concerning drug money laundering and obstruction of justice in the 3^rd circuit ( also maryanne trump barry who covered-up drug money laundering through her brother’s casinos in a civil RICO case) should have gone to or belong in jail. Contrary to popular belief, they do it for the money, personal money, big, cash, untraceable money. The fog of war is great for such things (360 tons $100 bills flown into Iraq and missing, etc.).

[ http://www.albertpeia.com/112208opocoan/ricosummarytoFBIunderpenaltyofperjury.pdf http://www.albertpeia.com/112208opocoan/PeiavCoanetals.htm ]. america’s just a fraudulent and failed defacto bankrupt nation. ] It's part of a push by law firms to expand their D.C. footprint in an era of increased regulatory scrutiny. ]

The unlikely face of Egypt's protesters (Washington Post) [ Unlikely? … I don’t think so in light of the strength and prevalence of the ‘anyone but mubarak (and his)’ sentiment. ] Mohamed ElBaradei, the Nobel Prize-winning former United Nations bureaucrat, has emerged this week as an improbable revolutionary, clamoring for the overthrow of Egypt's President Hosni Mubarak.

Milbank: Rand Paul's at odds with his state (Washington Post) [ Mr. Milbank … that perpetual off-key that invariably sounds passable on an old, hopelessly out-of-tune piano. Not even credit to Mr. Rand’s prospective ‘elections be damned’ attitude and putting reality and conscience first (an attitude which got him elected and which he stands by). In case Mr. Milbank hasn’t noticed, pervasively corrupt, defacto bankrupt america has declined substantially, particularly of late, and has strayed quite afar from the laudible principles upon which it was founded. Mr. Milbank, organized crime families, even less organized gangs, and certainly corrupt politicians compromise all of the time … and that’s the nation’s problem … because some things are not compromisable. ]

Facebook treads carefully after role in protests (Washington Post) [ Facebook should show nor have any fear inasmuch as any such nations as would self-destructively limit the free flow of information so limit the tenure of such leadership of said nations. Moreover, historically, such authoritarian, totalitarian regimes never withstand the test of time. Finally, if not facebook, then another (choose) will step up. ] The recent unrest in Egypt and Tunisia is forcing Facebook officials to grapple with the prospect that other governments will grow more cautious of permitting the company to operate in their countries without restrictions or close monitoring.

Demonstrations in Egypt take bloody turn In Cairo square, Mubarak backers confront anti-government crowds (Washington Post) [ Not too difficult for desperate and done mubarak to contrive: Mubarak Says Egyptians Have to Choose Between “Chaos” and Him … Then Sends In His Thugs to Stir Up Chaos (Infowars.com) In order to justify staying in power until elections are held in September, President Mubarak said on tv that the people had to choose between him and “chaos”. ] The coordinated nature of day's events suggested that Mubarak's supporters were determined to show, as he had warned, that the country faced a "choice between chaos and stability." [ Previous: Mubarak's pledge seen as not enough Egyptian president plans to stay in office to transfer power (Washington Post) [ Let me put it another way: Mubarak is as done as an over-cooked tamale … He seems to be stalling for time and even in his age impaired mind certainly knows his position is untenable, unsustainable, and even more irrational as each second passes. There is a possibility that he’s using same to move money / treasure for himself and others, literally as well, buying time. See infra … Previous: Mubarak seeks dialogue, shows no sign of relenting Demonstrators call for massive protest but lack leadership (Washington Post) [ He relented when he resorted to media / internet blackout. Indeed, this lack of sign thing is a testament to how far from reality 30 years has taken him, not to mention the other 52 years that have taken their toll on his cognitive processes. Whether it is plaques ‘on the brain’ or outright senility, that he is so disengaged from the events unfolding around him, one may only wonder how he lasted this long. Nor did his choice of cia standin / shill, new VP Suleiman enhance his now untenable position which leaves him as ‘done as a burnt enchilada’. Kissinger on Egypt unrest – “This is only the first scene of the first act of a drama that is to be played out” [ The import of this so-called interview, and it is here that I part company with alex jones, et als (who by the way, censored me for this very thesis, which puts him and his at the top of my hypocrite list), is that the so-called elite have orchestrated these events and ‘are in control’. First, there are no elites in this world; you can’t derive elites from apes, notochordates, and initially single celled organisms. Second, almost by definition and certainly by history, there are no elites in america even if you were to accept the first proposition (though true) as untrue. What you do have, in this world and america particularly (with few exceptions as I’ve discussed elsewhere / comments / my website), are inherent criminals and mentally ill people of varying degrees of unscrupulousness and insanity who do commit crimes, both small and large, to further their interests or fortunes (sociopaths / psychopaths). The ’so-called alpha-dogs’ of the human species at most, but still incompetent vegetables who, if you look at anything they touch (to use a term term of such incompetent vegetables as historically pertains to their role in the mideast – and generally the state of the world) it invariably goes ‘pear shaped’ (english term). What hasn’t zionist kissinger not messed up as appointee or ‘consultant’ – what does he get paid for? No! The fact is, they have absolutely no idea how this unfolds and as with most of their lives, they will predictably choose the most sordid, despicable, and diabolical course at every turn because … that is their inherently criminal, mentally ill / unstable nature to do so. ]

Monthly Market Valuation: Investors Are Too Bullish, Valuations Are Too High [ The conclusion of the following detailed, documented analysis: ‘In conclusion, the market is over-valued based on the above data. Tobin's Q, Shiller P/E and AAII data are all indicating that investors are too bullish and valuations are too high.’ ] Wolinsky ‘I update market valuations on a monthly basis. The point of this article is to measure the stock market based on seven different metrics. This article does not look at the macro picture and try to predict where the economy is headed. It only uses these several metrics which have been very good past indicators of whether the market is fairly valued.This month I added in GMO’s chart at the bottom. The GMO chart shows what the firm expects different asset classes to return over the next seven years.I collaborate with two colleagues of mine for some of the data in this article, Doug Short of dshort.com and my friend who runs seekingdelta. Both are great sites, and I encourage readers to check them out.As always, I must mention that just because the market is over or undervalued does not mean that future returns will be high or low. From the mid to late 1990s the market was extremely overvalued and equities kept increasing year after year. However, as I note at the end of the article, I expect low returns over the next ten years based on current valuations. In addition, individual stocks can be found that will outperform or underperform the market regardless of current valuations.To see my previous market valuation article from last month, click here.Below are six different market valuation metrics as of February 2nd, 2011:The current P/E TTM is 16.8, which is slightly higher than the TTM P/E of 16.6 from last month (This specific data is from the market close February 1st).click to enlarge[chart]This data comes from my colleague Doug Short of dshort.com.Based on this data the market is fairly valued. However, I do not think this is a fair way of valuing the market since it does not account for cyclical peaks or downturns. To get an accurate picture of whether the market is fair valued based on P/E ratio, it is more accurate to take several years of earnings.
Numbers from Previous Market lows:
Mar 2009 110.37
Mar 2003 27.92
Oct 1990 14.21
Nov 1987 14.45
Aug 1982 7.97
Oct 1974 7.68
Oct 1966 13.96
Oct 1957 12.67
Jun 1949 5.82
Apr 1942 7.69
Mar 1938 10.63
Feb 1933 14.92
July 1932 10.16
Aug 1921 14.02
Dec 1917 5.31
Oct 1914 14.27
Nov 1907 9.35
Nov 1903 11.67
Historic data courtesy of [multpl.com]
Current P/E 10 (Shiller) Year Average 23.94
[chart] http://seekingalpha.com/article/250273-monthly-market-valuation-investors-are-too-bullish-valuations-are-too-high?source=yahoo
The current ten year P/E is 23.94; this is much higher than the P/E of 22.94 from the previous month. This number is based on Robert Shiller’s data evaluating the average inflation-adjusted earnings from the previous 10 years. Robert Shiller stated in an interview last week that he believes the S&P500 will be at 1430 in 2020. Shiller believes that based on his metric the market is overvalued, and will offer subpar returns over the next 10 years.
Based on my colleague, Rob Bennett’s market return calculator, the returns of the market should be as follows:
[chart]
My colleague Doug Short thinks this numbers are a bit inaccurate, because the number I used does not include the past several months of earnings, nor revisions. Doug calculates P/E 10 at 23.3.
[chart]
Mean: 16.39
Median: 15.77
Min: 4.78 (Dec 1920)
Max: 44.20 (Dec 1999)
Numbers from Previous Market lows:
Mar 2009 13.32
Mar 2003 21.32
Oct 1990 14.82
Nov1987 13.59
Aug 1982 6.64
Oct 1974 8.29
Oct 1966 18.83
Oct 1957 14.15
June 1949 9.07
April 1942 8.54
Mar 1938 12.38
Feb 1933 7.83
July 1932 5.84
Aug 1921 5.16
Dec 1917 6.41
Oct 1914 10.61
Nov 1907 10.59
Nov 1903 16.04
Data and chart courtesy of [multpl.com]
This is moderately over valued from the average P/E as shown above.
Current P/BV 2.30
[chart]
The number is obtained using data from the SPY ETF, and updated using the latest change in the price of SPY. This number will therefore not be 100% accurate since the book value has likely changed (slightly) since the numbers were last updated on November 30th, 2010. The current P/BV is 2.30; this is lower than the P/B of 2.20 I measured in my previous article. The average price over book value of the S&P over the past 30 years has been 2.41. This indicates the market is slighlty undervalued. Book value is considered a better measure of valuation than earnings by many investors, including legendary investor Martin Whitman. He states that book value is harder to fudge than earnings. In addition, book value is less affected by economic cycles than one year earnings are. P/BV therefore provides a longer term accurate picture of a company’s value than a TTM P/E.
Current Dividend Yield 1.74 [chart]
The current dividend yield of the S&P is 1.74. This number is lower than the 1.78% yield from last month.It is hard to determine on this basis whether the market is overpriced. The dividend yield for stocks was much higher in the beginning of this century than the later half. The dividend yield on the S&P fell below the yield on Ten-Year treasuries for the first time in 1958. Many analysts at the time argued that the market was overpriced and the dividend yield should be higher than bond yields to compensate for stock market risk.For the next 50 years, the dividend yield remained below the treasury yield and the market rallied significantly. In addition, the dividend yield has been below 3% since the early 1990s. While I personally favor individual stocks with high dividend yields, I must admit that the current tax code makes it far favorable for companies to retain earnings than to pay out dividends. Finally, as I noted above, the current economic environment has zero percent interest rates and low bond yields. During periods where yields are low, it is logical for income oriented investors hungry for yield to bid on the market, and dividend yields to decrease. I think it is hard to claim the market is overbought based on the low dividend yield.

Mean: 4.35%
Median: 4.29%
Min: 1.11% (Aug 2000)
Max: 13.84% (Jun 1932)
Numbers from Previous Market lows:
Mar 2009 3.60
Mar 2003 1.92
Oct 1990 3.88
Nov1987 3.58
Aug 1982 6.24
Oct 1974 5.17
Oct 1966 3.73
Oct 1957 4.29
Jun 1949 7.30
Apr 1942 8.67
Mar 1938 7.57
Feb 1933 7.84
July 1932 12.57
Aug 1921 7.44
Dec 1917 10.15
Oct 1914 5.60
Nov 1907 7.04
Nov 1903 5.57
Data and chart courtesy of [multpl.com]

Market Cap to GDP is currently 92.8%, which is higher than the 91.1% from last month.

Ratio = Total Market Cap / GDP	Valuation
Ratio <>	Significantly Undervalued
50% <>	Modestly Undervalued
75% <>	Fair Valued
90% <>	Modestly Overvalued
Ratio > 115%	Significantly Overvalued
Where are we today (02/01/2011)?	Ratio = 92.8%, Modestly Overvalued

Stock Market Capitalization as a percentage of GDP is another metric, albeit less commonly used than other metrics, to value the market. Between 90-115% market capitalization as percentage of GDP is considered modestly overvalued (we are at the low end of the range). Based on Guru Focus data, the market should return about 4.6% per year based on the current value.

GuruFocus calculates the 4.6% returns as follows:

The returns of investing in an individual stock or in the entire stock market are determined by these three factors:

1. Business growth

If we look at a particular business, the value of the business is determined by how much money this business can make. The growth in the value of the business comes from the growth of the earnings of the business growth. This growth in the business value is reflected as the price appreciation of the company stock if the market recognizes the value, which it does, eventually.If we look at the overall economy, the growth in the value of the entire stock market comes from the growth of corporate earnings. As we discussed above, over the long term, corporate earnings grow as fast as the economy itself.

2. Dividends

Dividends are an important portion of the investment return. Dividends come from the cash earning of a business. Everything equal, a higher dividend payout ratio, in principle, should result in a lower growth rate. Therefore, if a company pays out dividends while still growing earnings, the dividend is an additional return for the shareholders besides the appreciation of the business value.

3. Change in the market valuation

Although the value of a business does not change overnight, its stock price often does. The market valuation is usually measured by the well-known ratios such as P/E, P/S, P/B etc. These ratios can be applied to individual businesses, as well as the overall market. The ratio Warren Buffett uses for market valuation, TMC/GNP, is equivalent to the P/S ratio of the economy. What Returns Is the Market Likely to Deliver From This Level? Putting all the three factors together, the return of an investment can be estimated by the following formula:

Investment Return (%) = Dividend Yield (%)+ Business Growth (%)+ Change of Valuation (%)

The first two items of the equation are straightforward. The third item can be calculated if we know the beginning and the ending market ratios of the time period (T) considered. If we assumed the beginning ratio is Rb, and the ending ratio is Re, then the contribution in the change of the valuation can be calculated from this:

(Re/Rb)(1/T)-1

The investment return is thus equal to:

Investment Return (%) = Dividend Yield (%) + Business Growth(%) + (Re/Rb)(1/T)-1

This equation is actually very close to what Dr. John Hussman uses to calculate market valuations. From this equation we can calculate the likely returns an investment in the stock market will generate over a given time period. In the calculation, the time period we used was 8 years, which is about the length of a full economic cycle. The calculated results are shown in the final chart. The green line indicates the expected return if the market trends towards being undervalued (TMC/GNP=40%) over the next 8 years from current levels, the red line indicates the return if the market trends towards being overvalued (TMC/GNP=120%) over the next 8 years. The brown line indicates the return if the market trends towards being fair-valued (TMC/GNP=80%) over the next 8 years.The thick light blue line in the bottom chart is the actual annualized return of the stock market over 8 years. We can see the calculations largely predicted the trend in the returns of the stock market. The swing of the market’s returns is related to the change in interest rates.It has been unfortunate for investors who entered the market after the late 1990s. Since that time, the market has nearly always been overvalued, only dropping to fairly valued since the declines that began in 2008. Since Oct. 2008, for the first time in 15 years, the market has been positioned for meaningful positive returns.As of 02/01/2011, the stock market is likely to return 4.6% a year in the next 8 years.Warren Buffett has stated that market capitalization as a percentage of GNP is “probably the best single measure of where valuations stand at any given moment.”According to Barron’s, the ratio got as low as 40% in the late 1940s, when investors feared another depression, and in the inflationary 1970s.

Historic Data:
Min 35% in 1982
Max 148% in 2000.
Data and charts courtesy of Gurufocus.com
Current Tobin’s Q 1.17

[chart]

Tobin's Q is 1.17 compared to 1.15 from last month.

[chart]

[chart]

As can be seen from the above charts, the market is significantly over-valued based on Tobin's Q.The data comes from Doug Short. This is the most accurate data that is available. It is impossible for the data to be 100% precise because the Federal Reserve releases data related to Tobin’s Q on a quarterly basis. The best that can be done is to extrapolate the data and try to provide the most accurate data possible based on the change in the Willshire 5000. This is what Doug and I did to get the current number. This method has proven extremely accurate for calculating Tobin's Q on any given day.The current level of 1.17 compares with the Tobin's Q average over several decades of data of approximately .72. This would indicate that the market is extremely overvalued.In the past, Tobin’s Q has been a good indicator of future market movements. In 1920, the number was at a low of .30, the next nine years included phenomenal gains for the market. In 2000, Tobin’s Q almost reached a record high of nearly 2, and the market declined subsequently about 50% by 2003.

Historic Tobin's Q:

Market Low 1932 0.30

Market High 1929 1.06(this is not the highest number ever reached, just the number reached before the 1929 crash).

Average historic Tobin's Q .72 (source: Stocks for the Long Run by Jeremy Siegel

In my next monthly article, I will have more Tobin’s Q historical data.

AAII Survey-42.00% Bullish, 23.70% Neutral, and 34.30% Bearish: (Data from January 26th 2011)

With the collaboration of my colleague at seekingdelta, I have now added a seventh metric for valuing the market. This data comes from the survey conducted by the American Association of Individual Investors (AAII) conducted on a weekly basis. According to the AAII:

The AAII Investor Sentiment Survey measures the percentage of individual investors who are bullish, bearish, and neutral on the stock market for the next six months; individuals are polled from the ranks of the AAII membership on a weekly basis. Only one vote per member is accepted in each weekly voting period.

[chart]

[chart]

As mentioned above, the survey results indicate investors are quite bullish. The fact that so many investors are bullish is a contrarian warning signal. Investors tend to get the most bullish at market tops, and bearish at market lows.Below is AAII data from previous market bottoms (the AAII began the survey in 1987).The charts essentially show that on average, returns have been more favorable when bullish sentiment is below 28% vs above 50%. The 1yr avg return when sentiment is above 50% is 1.9% vs 13.6% when sentiment is below 28%.

[chart]

[chart]

Chart and data courtesy of seekingdelta
See GMO chart here (.pdf).
To Recap:

1. P/E (TTM) - Fairly Valued

2. P/E 10 year - Very Overvalued

3. P/BV - Undervalued

4. Dividend Yield - Indeterminate/ overvalued

5. Market value relative to GDP - Moderately Overvalued

6. Tobins Q - Extremely overvalued

7. AAII Sentiment - Too bullish (overvalued)

8. GMO - Overvalued

In conclusion, the market is over-valued based on the above data. Tobin's Q, Shiller P/E and AAII data are all indicating that investors are too bullish and valuations are too high.However, the historical data fails to take into account current record low interest rates. I know not many investors take issue with my inclusion of interest rates in the equation. However, I think that investors should look at the stock/bond alternative. Right now, you can get some blue chip stocks with dividend yields close to the ten year treasury yield.However, eventually the market will likely returns to normal valuation ratios as interest rates reach more normal levels. I believe returns over the next 10 years will be sub-par (far below the 9.5% average market return). I think we will likely see returns equal to inflation over the coming decade.Note: I have received numerous suggestions on how to improve my monthly series. I tried to incorporate these ideas in my current article. Please email me or leave a comment if you would like to provide further suggestions. Stay tuned till the beginning of next month for the next monthly valuation article.’

The Dow at 12,000 is 'Buyer Beware' Territory Meyer ‘Well, we finally hit the 12,000 mark and beyond on the Dow Jones Industrials Average and the end-of-the-year rally is still upon us, as many of us on Seeking Alpha forecast. However, this is now officially a buyer's beware market. Long term investors probably don't need to start selling unless they need the money for short-term purchases and debt reduction. But new investors considering buying into the market now are fulfilling the odd-lot theory, at best, and will have a long wait before those newly purchased shares are increasing in value enough to pay back your broker's fees.Does anyone think we are going to eek out another 5% in the averages this quarter? That would bring the DJIA up by more than 600 points to 12,636.The Dow is now at pre-crash levels of 2008. Yet, we still have high unemployment, near zero job growth, an ongoing foreclosure crisis with home ownership at its lowest level since 1998. This wouldn't be so much of a problem if the vast majority of Americans garnered their wealth from their real estate. They surely do not owe their wealth to their 401k or savings accounts. Remember when home prices were rising and rates were low? What were Americans doing? They were going on a ludicrous shopping spree. We are still the world's largest consumer driven economy, so as long as Main Street isn't spending, company profits will eventually suffer. Even though that doesn't seem to be the case now. One can imagine that companies cannot continue posting solid top line growth if their basic customers are struggling to make ends meet. That problem still exists in this economy, as Robert Reich pointed out his blog Wednesday.We also have a municipal debt bomb the Feds and banks are trying to defuse. The fundamentals are not that sound, and that tells me that this is not the time to buy the market. Stock picking strategies of U.S. equities might work, and certain commodity and some emerging market plays are still favorable. But index and ETF investors looking to buy entire markets like the SPDR S&P 500 ETF (SPY) should definitely wait for a correction before buying at these levels. I don't see any indication now that this market can go much higher, given those aforementioned fundamental restraints.Here are a couple more:
The BDI: Ever Hear of It?
Take a look at the Baltic Dry Index chart. It measures the worldwide price of shipping various bulk items across the ocean. It's trading way below its 50 and 200 day moving averages. The BDI is not a leading indicator, or a lagging indicator, of the U.S. economy. But it warrants some attention when the BDI chart looks like a really bad roller coaster like it has since last summer. BDI topped out in June, bounced in July, and began a serious decline in November. The only thing that tends to track the BDI is the Shanghai Composite Equity Index. China is one of the world's biggest exporters, but with costs of capital rising there, importers of Chinese goods are being asked to pay more for their orders, causing many buyers to slow imports. If this slower growth out of China pans out, then economists will be revising their global GDP numbers downward. This indicator could pose to be quite bad for equities simply because it is telling you the growth story of the economy, which has driven the fundamentals behind the current rally, is not sustainable at these levels. The rally continues to be a liquidity driven momentum rally thanks to QE2. The lynchpin of the whole advance was the theme the global economy was in recovery, but I am concerned that this important trade index is showing us something different for the time being.
DJIA vs. Gold Bull Market Peaks
Is the Dow overbought? I think so, and technically speaking we are now seeing less stocks advancing than we have when we were approaching Dow 12k. Corporations are also busy selling their own stock over the last month and a half. There is an important correlation between the Dow and the price of gold in previous bull market peaks. The Dow, as priced in gold, is losing value as the precious metal bull continues to drive to higher prices. For example, in 1980, one ounce of gold bought the Dow. So the ratio of one ounce of gold to the Dow was simple: 1. Said in another way, we had an 850 Dow Jones Industrials Average and $850.00 per ounce gold. The Dow as priced in gold is not making new recovery highs as most people would want to believe.The first peak in the Dow occurred on January 14, 2000 at 11,723. In late 1999 it took 45 ounces of gold to buy the Dow. Gold bottomed at $255.00 per ounce. Everyone wanted equities and the gold-Dow ratio proved it.The second peak in the Dow occurred on October 9, 2007 at 14,164 points. It took just 19 ounces of gold at $750.00 per ounce to buy the market.The Dow is now trading at the 12,000 level again on Wednesday and gold is currently $1325.00 per ounce. It now takes just 9 ounces of Gold to buy the Dow. I don't think we go to a one to one ratio, but I would say we cut the 9 ounces ratio in half and that would likely single a top in at least one of these markets.If we go on the premise that gold is the ultimate money and both a storage of wealth and a hedge against inflation, then the Dow priced in gold has been eroding in value since late 1999 when you needed at least 45 ounces of gold to have the equivalent of the gains in the Dow. The buying power of the dollar propelling the Dow 12k continues to lose value as reflected in the current price of gold at $1,340.00 per ounce, and expectations are for the euro to rebound a bit. The Dow 12k is also occuring in an economy where job growth remains impressively sluggish. This is a buyer beware market when buying broad based indexes like the Dow and S&P 500. Overall, when this market does correct 5% or more, I believe it will drag a lot of the more liquid assets down with it. I'd recommend a hold for long term investors and a sell at these levels for investors with short-term cash needs. We're not seeing an expansion of volume on the advance. This market is resisting any kind of sell-off. I think the pros are fully invested and this market is up two years in a row from the lows so this market looks to me that it's now setting up for a reversal. Don't add at these prices. Get your shopping list together for your sector favorites and wait for a pull back.’

If You're Going to Do Economics, Don't Do Macro [ Truth be told, I find Mr. Falkenstein’s article a bit too subtle and somewhat shy about getting to the point, but have included same here solely for the reprint of William Buckley’s famous quote which comports with my own view of the ivy league vegetable gardens which turn out as you would expect, vegetables; viz., ‘he would prefer the first 100 names in the Boston phonebook to the Harvard faculty‘. The reality is that ‘harvard professor’, ‘no-recession bernanke’ has given an obfuscating, ephemeral feel good but lucrative to the few gift to the frauds on wall street with ultimately devastatingly great cost / pain to come. ] Falkenstein ‘MIT had a celebration of their 150th birthday, a Symposia on Economics and Finance: From Theory to Practice to Policy. Here's Bob Hall's solution to our problems (see around 50:00):

What we really like is for people to perceive that now is a great time to buy stuff instead of later, well there's nothing like inflation to get that mentality going. Normally we don't like to see that, we want to keep inflation under control because it's a sign of an overheated economy, well, we'd like a bit of that overheated economy now ...

When the government buys more stuff, every model agrees that stimulates the economy...any economist who suggests that it doesn't stimulate the economy hasn't looked at a wide range of models, all of which agree ...

Hey, the models all agree! In other words, if you look at the aggregate data, all we have here is a lack of demand. Just replace the missing private sector investment with government purchases, or by confusing investors and hoping they mistake nominal price increases for real demand, and all will be well. Most of the macroeconomists suggested that all we need to do is double down on the stimulus -- only the political will is lacking for this obvious solution.What we had was a misallocation -- too much housing -- and so now must move labor and capital to other areas, which creates temporary unemployment. To try to cover this up via having the government spend more on backfilling teacher's pensions, or have everyone buy an unsustainable amount of everything, would not solve this problem faster. Notice they don't spend any time discussing what government would spend this stimulus on because it doesn't matter to them. It's fun to think a solution to a hangover is more of a different type of alcohol, but I've tried it, and it doesn't work.Unfortunately Keynesians don't have any intuition for this, because everything's all just "aggregate demand," not housing, technology, energy, etc. Aggregation leads to simplifcation, but clearly it has a cost, and I think any macro theory that ignores the fact that an economy is a network of firms and individuals is pointless.Hayek's early work on business cycles focused on misalignments in the structure of production. Alas, this was basically impossible to formalize. Keynes' model, meanwhile, was adopted into the Hansen-Hicks synthesis that looked a lot like the simple Supply/Demand equations economists were used to, so everything seemed copacetic. A bad idea, in a tractable model, has a long life, because everyone forgets about all the hand waiving assumptions that underlie such models.Joshua Bell is a famous violinist, but when he did an experiment, and played his $3.5MM violin at a train station, he made only $32. Reputation matters. In Bell's case, passersby did not realize he was truly a gifted violinist. In this case, while this was supposedly our best and brightest giving insight on the big issue of the day, the audience was treated to standard diagnoses and recommendations you hear everywhere on the left: we had a collapse in demand, so the government needs to spend more, or trick people into spending more via money illusion. If one wanted a better anecdote for William F. Buckley's famous remark that he would prefer the first 100 names in the Boston phonebook to the Harvard faculty, I can't think of one. As Cicero said, the purpose of wisdom is to know the good, in which case these people would have done better with the proverbial dollar fifty in late charges at the public library, rather than attend the esteemed establishment they were celebrating.On the other hand, Google's (GOOG) chief economist, Hal Varian noted that Yahoo! (YHO), Microsoft (MSFT) and the rest are all hiring economists to design services based on game theory and other microeconomic specialties. This is in contrast to banks, that basically all went from having a large economic staffs in the 1970s, but a flak PR guy today for CNBC interviews. Bottom line: if you are going to do economics, don't do macro.’

Stock Averages Straddle Flat Line, Dow Up for Third Day [ Note: ‘…The economy added 187,000 private-sector jobs in January, the 12th consecutive month of private-sector employment growth, according to Automatic Data Processing. BUT ADP LOWERED ITS DECEMBER FIGURE TO 247,000 NEW JOBS FROM A PREVIOUS ESTIMATE OF 297,000…’ (That’s near 20%, do you how many upside points were based on that fudged inflated figure?). ]

40 Percent Of Egyptians Live On 2 Dollars A Day Or Less And The Global Elite Like It That Way After thousands of years of “progress” and “societal evolution”, how is it possible that most of the world is still living in soul crushing poverty?

Here’s The Real Cost Of Food Inflation In America Take a look at the chart we’ve constructed from the Bureau of Labor and Statistics 2009 Consumer Expenditure Survey. It conveys a sense of how Egypt’s poverty combined with the sharp rise in food prices sparked the political revolt against the Mubarek government.

US Mint Sells Absolute Record 6.4 Million Ounces Of Silver In January, 50% More Than Previous Highest Month As the topic of US Mint silver sales is not new to our readers, after we first brought attention to the record January sales by the Mint, we will not dwell much on it, suffice to say that the final January tally is in.

National / World

Resistance is Victory: Check Out the Last Contest Entries Infowars.com | With your creative participation, we will get the message out.

Rebranding Big Brother Kurt Nimmo | Say hello to a boot stamping on a human face — forever.

Minority Report: Companies Push For Ubiquitous Iris Scanning Steve Watson | Expiring technology patent insures that you will soon have your eyes scanned everywhere you go.

Latest Round of Wikileaks Docs Hype Manufactured Terror Kurt Nimmo | It is now obvious Wikileaks is an intelligence operation and its frontman Julian Assange is a useful idiot.

Wikileaks Bombshell Points To 9/11 Stand Down Paul Joseph Watson | Able Danger program confirmed hijackers were identified before attack, CIA allowed them to enter America

300 reported dead in Egypt protests Haareetz | U.N. human rights chief said on Tuesday she had unconfirmed reports that up to 300 people may have been killed and over 3,000 injured.

Move Over Egypt: Homeland Security Shuts Down Sports Websites The federal government has seized the Web addresses of ten websites that allegedly live stream sporting and pay-per-view events online, shutting them down just days before one of the biggest televised sporting events of the year: the Super Bowl.

Minority Report: Companies Push For Ubiquitous Iris Scanning The impending expiration of a key technology patent is paving the way for a scramble amongst scores of biometrics research and development companies, all desperate to make their own brand of iris scanning technology commonplace, effectively creating a real life Minority Report society, where everyone is linked into an identification database.

U.S., U.K. Companies Help Egyptian Regime Shut Down Telecommunications and Identify Dissidents Doing the regime’s bidding, British-based Vodafone shut down Egypt’s phone and internet service. The American company called Narus — owned by Boeing — sold Egypt the surveillance technology that helped identify dissident voices.

V For Superbowl Victory Activists take the V For Victory campaign to Arlington Texas and the Super Bowl, getting right back in Big Sis’ face after Homeland Security announced that they would be bringing airport-style security harassment and See Something, Say Something snitch programs to sporting arenas.

The Father Of Weaponized Weather In this exclusive interview for Prison Planet.tv subscribers, Livingston explains how for decades the US government has had the power to both lessen and increase the severity of adverse weather for their own purposes.

Wikileaks Bombshell Points To 9/11 Stand Down Newly released Wikileaks documents concerning the activities of three Qatari men who conducted surveillance of the World Trade Center and boarded flights on the eve of the 9/11 attacks adds to the plethora of evidence that at the very least US authorities were aware of the plot and deliberately stood down.

Nothing Is Stable Anymore The world is becoming a very unstable place, and the pace at which things are changing all around us has become absolutely mind-numbing. In fact, change has become one of the only constants in today’s world.

Revolutionary Fervor to Spread Beyond Arab States; Europe Next When the Tunisian government toppled, the mass media and their stable of experts ­ who were blindsided by these events ­ quickly stepped in to proclaim the obvious: that citizens of other Arab nations would be emboldened to challenge autocratic and corrupt governments.

Obama administration issues hundreds of health care exemption waivers to friends If Obamacare is everything the administration claims it to be, then why are government officials secretly handing out exemption waivers to friends and insiders?

Internet restored in Cairo after revolt blackout Internet services were at least partially restored in Cairo on Wednesday after a five-day cut aimed at stymieing protests against President Hosni Mubarak’s regime, Internet users said.

Violence Flares As Protesters, Mubarak Supporters Fight in Cairo Opponents and supporters of President Hosni Mubarak fought with fists, stones and clubs in Cairo Wednesday in what appeared to be a move by forces loyal to the Egyptian leader to end protests calling for him to quit.

Wikileaks Documents Recycle Dirty Bomb Propaganda The corporate media today is chock full of stories about the latest round of supposed diplomatic documents purloined by a low level Army intelligence analyst. According to the documents, the CIA asset al-Qaeda has managed to acquire “workable and efficient” biological and chemical weapons and the West stands on the brink of a “nuclear 9/11.”

The Protest Movement in Egypt: “Dictators” do not Dictate, They Obey Orders The Mubarak regime could collapse in the a face of a nationwide protest movement… What prospects for Egypt and the Arab World?

Mubarak Says Egyptians Have to Choose Between “Chaos” and Him … Then Sends In His Thugs to Stir Up Chaos In order to justify staying in power until elections are held in September, President Mubarak said on tv that the people had to choose between him and “chaos”.

“People All Over The World Who Want Freedom, Somehow Or The Other Feel Connected To Other People Who Are Struggling For Freedom.” Nobel Peace Laureate and leader of Burmese democracy movement, Aung San Suu Kyi, told the Egyptian protesters: “People all over the world who want freedom, somehow or the other feel connected to other people who are struggling for freedom.”

Drudgereport: Amanpour: Angry mob surrounded us, shouting they hate America...
WH shuts out media; reporters file complaint...
CNN Anderson Cooper 'punched 10 times in head' by mob in Egypt....
'Camp David made us a slave,' Egyptian protester says...
WIKILEAKS: US threats to China in military standoff over 'Star Wars'...
Student, 14, suspended for 'weapon' -- a plastic pen casing...
WIKILEAKS: FBI hunts the 9/11 gang that got away...
43 Million Use Food Stamps...
Dems object to GOP gov't transparency probe...
JUDGE RULES HEALTH CARE LAW UNCONSTITUTIONAL
Judge cites Obama's own position from 2008 campaign...

Brent crude oil above $100 for 1st time since 2008...
FLASHPOINT

Fighter jets swoop over Cairo in show of force...
Mubarak meets with military commanders...
Generals tell him to quit...
Troops move into Tahrir square as curfew passes...
ElBaradei joins protesters in square...
Says US 'losing credibility by the day'...
Clinton calls for 'orderly transition'...
'We're not advocating any specific outcome'...
Convicts pour out of prisons...
UPDATE: 100+ dead; 2,000 injured...
Flights out halted, tourists trapped...
But 19 private jets get out...
Egypt shuts down Al Jazeera bureau...
LIVE STREAM...
OBAMA CONFUSES IRAQ WITH AFGHANISTAN...
Will be out 'by the end of this year'...
Scientists Discover: Chimpanzees mourn their dead just like humans!

11% of All US Homes Are Now Empty...

Report: U.S. unlikely to reach electric car goal by 2015 (Washington Post) [ I think all benefits of doubt be given to the auto companies in terms of the market and, ultimately, for the following reason: {Previous: S. American mountains hold key to electric car's future: lithium for batteries (Washington Post) [ Well, I don’t know about electric car batteries, but it’s reassuring to know that such american leaders in no short supply, ie., Ted Turner, et als, will have no short supply of lithium to keep them on an even keel (from the ups and downs from, ie., bipolar among other mental conditions). Truth be told, I’ve not followed the ‘adventures of the electric cars’ too closely, but concede that pollution as from gas engine cars is lessened. I know enough about electricity and energy to know that there’s really no net gain in terms of conservation, weening off oil, hydro, nuclear since the same are required to produce the electricity; hence, increases in hydro / nuclear, ie., are necessary to change the reliance on oil (imports). } ] Obama's goal to have a 1M plug-in cars on the road may be stymied by automaker, consumer uncertainty

Israel wary of transition in Egypt, concerned about regional stability (Washington Post) [ Who cares what the paranoid, war criminal, illegal nuke totin’, war criminal israelis are wary of. This country has gone down the tubes cow-towing to the paranoid, self-interested concerns of the psycho / sociopathic zionist israelis who are forever projecting their own pathological motives to every turn of history while ignoring their own culpability in producing the very outcomes they purportedly seek to avoid. War, conflict, greed, bloodshed is the historically based israeli way. ]

Fresno tackles an unusual problem (Washington Post) [ Oh come on! Let’s call things as they are! Sputnik moment … p l e a s e , spare me the b*** s*** wobama the b. This is not ‘up, up, and away’ to bigger and better things, but rather an industry catering to the long predicted aging baby boom population. The structural deficits, including jobs, will continue owing to prior misguided self-interested policy for the ‘few’.] This California city is grappling with one of the most troubling contradictions of the new economy: Even as it has one of the nation's highest unemployment rates, it has thousands of job openings.

Jobless Recovery?: 25 Unemployment Statistics That Are Almost Too Depressing To Read ‘… Unemployment is up again! That’s right – even though Wall Street is swimming in cash and the Obama administration is declaring that “the recession is over”, the U.S. unemployment rate has gone even higher ... Times are really, really tough and unfortunately the long-term outlook is very bleak.

#1 U.S. unemployment rate for November was 9.8 percent. This was up from 9.6 percent in October, and it continues a trend of depressingly high unemployment rates. The official unemployment number has been at 9.5 percent or higher for well over a year at this point.

#2 In November 2006, the “official” U.S. unemployment rate was just 4.5 percent.

#3 economists had been expecting to add about 150,000 jobs in November. Instead, it only added 39,000.

#4 In the US there are over 15 million people who are “officially” considered to be unemployed for statistical purposes. But everyone knows that the “real” number is even much larger than that…

.. biggest debt bubble in the history of the world…our entire economy is based on debt. Even our money is debt. … There is a sea of red ink on every level of American society. It is only a matter of time before it destroys our economy. IF YOU THINK THAT THINGS ARE BAD NOW, JUST WAIT. THINGS ARE GOING TO GET A WHOLE LOT WORSE. A HORRIFIC ECONOMIC COLLAPSE IS COMING, AND IT IS GOING TO BE VERY, VERY PAINFUL.’

#5 As 2007 began, there were just over 1 million Americans that had been unemployed for half a year or longer. Today, there are over 6 million Americans that have been unemployed for half a year or longer.

#6 The number of “persons not in the labor force” in the United States recently set another new all-time record.

#7 It now takes the average unemployed American over 33 weeks to find a job.

#8 When you throw in “discouraged workers” and “underemployed workers”, the “real” unemployment rate in the state of California is actually about 22 percent.

#9 In America today there are not nearly enough jobs for everyone. In fact, there are now approximately 5 unemployed Americans for every single job opening.

#10 According to The New York Times, Americans that have been unemployed for five weeks or less are three times more likely to find a new job in the coming month than Americans that have been unemployed for over a year.

#11 The U.S. economy would need to create 235,120 new jobs a month to get the unemployment rate down to pre-recession levels by 2016. Does anyone think that there is even a prayer that is going to happen?

#12 There are 9 million Americans that are working part-time for “economic reasons”. In other words, those Americans would gladly take full-time jobs if they could get them, but all they have been able to find is part-time work.

#13 In 2009, total wages, median wages, and average wages all declined in the United States.

#14 As of the end of 2009, less than 12 million Americans worked in manufacturing. The last time that less than 12 million Americans were employed in manufacturing was in 1941.

#15 The United States has lost at least 7.5 million jobs since the recession began.

#16 Today, only about 40 percent of Ford Motor Company’s 178,000 workers are employed in North America, and a big percentage of those jobs are in Canada and Mexico.

#17 In 1959, manufacturing represented 28 percent of U.S. economic output. In 2008, it represented 11.5 percent.

#18 Earlier this year, one poll found that 28% of all American households had at least one member that was looking for a full-time job.

#19 In the United States today, over 18,000 parking lot attendants have college degrees.

#20 The United States has lost a staggering 32 percent of its manufacturing jobs since the year 2000.

#21 As the employment situation continues to stagnate, millions of American families have decided to cut back on things such as insurance coverage. For example, the percentage of American households that have life insurance coverage is at its lowest level in 50 years.

#22 Unless Congress acts, and there is no indication that is going to happen, approximately 2 million Americans will stop receiving unemployment checks over the next couple of months.

#23 A poll that was released by the Pew Research Center back in June discovered that an astounding 55 percent of the U.S. labor force has experienced either unemployment, a pay decrease, a reduction in hours or an involuntary move to part-time work since the economic downturn began.

#24 According to Richard McCormack, the United States has lost over 42,000 factories (and counting) since 2001.

#25 In the United States today, 317,000 waiters and waitresses have college degrees.

But this is what we get for creating the biggest debt bubble in the history of the world. For decades we have been digging a deeper hole for ourselves by going into increasingly larger amounts of debt. In America today, our entire economy is based on debt. Even our money is debt. … There is a sea of red ink on every level of American society. It is only a matter of time before it destroys our economy. IF YOU THINK THAT THINGS ARE BAD NOW, JUST WAIT. THINGS ARE GOING TO GET A WHOLE LOT WORSE. A HORRIFIC ECONOMIC COLLAPSE IS COMING, AND IT IS GOING TO BE VERY, VERY PAINFUL.’

Dow closes above 12,000 (Washington Post) [ Which is a manipulated bubble and which amount is worth far less than even 3 years ago owing to dollar debasement… Avoid China, short the U.S. market instead Kee ‘…The subject of international investing begs the buy and hold theme as a result, but because that is dead, and because risk controls are more cumbersome in foreign markets, my focus is on proactive strategies in U.S. markets, on risk controls, and my longer term Periodic Oscillator tells me that the economy, thanks to stimulus, is in bubble-like territory not seen since 2000 and 2007…’ Suttmeier … Stocks remain overvalued fundamentally according to ValuEngine with 15 of 16 sectors overvalued

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