End of the Week - S&P 500's Daily & Weekly Charts:

http://day-trading-the-stock-market.blogspot.com/

First, let's take a look at last week's Daily Chart...Tuesday was the first price that set a new high on a closing basis...The big move up on Wednesday, Thursday, and Friday was the market's reaction to the mid-term election on Tuesday, and hearing from the Fed that it would go ahead with $600 Billion Dollars worth of Quantitative Easing - Part II...

What "usually" happens after a big breakout to the upside out of a long standing Level of Resistance (the dotted blue line) is that the Index will quite often pull back to the blue line to re-test it, and then it can "possibly" become a Level of Support...One reason I called for a pullback last weekend was the candlesticks closed way above the upper Bollinger Band last Friday, and the rule about BBands is that candles cannot survive outside of them for more than a few days at a time...It's like a fish jumping up above the surface of a lake...It can't breath up there, and must return to it's normal environment to catch it's breath before it can jump again...Or not...



This week's Daily Chart shows that it did pull all the way back to the dotted blue line on last week's chart (at 1195.) during Friday's session...Why?...For many reasons...Most of the Economic Reports on this very light week for reports were mixed, and so were Earnings with the exception of a really poor report out of Cisco (Nasdaq-CSCO) that sent that Index tumbling late in the week...The "excitement" over the mid-term elections wasn't long lived because of the Gridlock in Congress we'll be experiencing for the next two years...Next, there was a huge amount of negative press related to QE2 out all week...Also, there was the negative reaction to the astronomical cost of the President's trip to India (plus a couple of thousand of his friends/advisors/security forces) on his way to Seoul, South Korea for the G20 meeting...

Then came the actual G20 meeting that didn't go very well for the USA on a number of issues...First, the President failed to get the Trade Agreement with South Korea he was hoping to sign before returning home...Second, was the backlash over QE2 from much of the world...And third, the failure of many G20 nations to support the USA's position of getting the Chinese to change their monetary policy...Plus, the big news of Friday was the fear of Inflation in China...

I'm starting to get the feeling that the previous week's action may have been what I like to call "The PUMP Before THE DUMP!"...As evidenced by: Insider Selling Hits All Time Record Of $4.5 Billion In Prior Week...

The $SPX has bounced UP off of the 15 Moving Average/Middle Bollinger Band four times in the past since the current rally began in late August (green arrows)...

The BIG QUESTION at this point in time is: Will it do it again, or NOT?...I'm beginning to think it WON'T this time, but that all depends on the News, Earnings, and Economic Reports that come out next week...But there appears to me to be a Paradigm Shift in the air, with problems with China and the EU cropping up again...Plus, all of the problems we face here at home...Only time will tell...



The Weekly Chart looks BAD for the first time since late August when the rally began...Take a gander at that UGLY/Bearish looking candlestick it formed this week...Many of the major pullbacks we've seen in recent years begin with a candlestick that looks like this...For example, the candle that formed at the end of April, which was much more Bearish looking because it was a Fully Engulfing candle over the previous week...Now notice that the Parabolic SAR showed up as Negative the following week, which was the first week of May...IF we see a negative SAR at the end of next week on this weekly chart, that would be VERY Bearish...The Index still hasn't given either of my primary Sell Signals YET, and that happens when the candle CLOSES below the 5 Moving Average at the end of the week, and the CCI drops below the +100 line at around the same time...



Here's a breakdown of how each of the nine major Sectors performed this week...Industrial Goods (-3.5%) and Financials (-3.8%) took a huge hit:


http://finviz.com/grp_image.ashx?bar_sector_w.png&rev=633755108690766250

Next week on the Economic Calendar is a BUSY one!...Retail Sales, the PPI, the CPI, Industrial Production, Housing Starts, and the Philly Fed Survey all have RED Stars, meaning these reports have the ability to MOVE the markets...Also of importance are the Treasury International Capital and the Housing Market Index on Tuesday, and Leading Indicators and Weekly Jobless Claims on Thursday...


http://online.barrons.com/public/page/barrons_econoday.html
(be sure to click on November 15th to get to next week's reports)

I don't usually comment on things of a "political" nature, unless they directly effect the market...But I'm going to make an exception here, and spout of some off my observations of recent events...It's called blowing off some STEAM!...

During the recent mid-term election, America spoke out quite CLEARLY that we are tired of our government "as is"..."Change you can believe in"???...I've seen LOTS of changes in the past two years, and have YET to see ANYTHING I can believe in...Quite to the contrary in fact...

The main concerns of the American people as expressed at the exit polls was JOBS, THE DECIFIT, and THE ECONOMY...Plus, massive government waste, government interference being forced down our throats (Obummer Care)...And what happens the very next day after the election is over?...Helicopter Ben takes off again to start throwing ANOTHER $600 BILLION DOLLARS out of the window, on a misguided mission to save our failing economy...

Then, the President takes a few thousand of his closest friends, advisors, and the huge assortment of security personnel and equipment necessary to insure everyone's safety on a week long trip to India (and a few other countries) on the way to the G20 meeting in South Korea...AT WHAT DAILY COST TO THE AMERICAN PEOPLE???...All kinds of news reports give various numbers, the highest of which is $200 MILLION per DAY!...It probably wasn't really that much per day, but none the less, I'm sure it was very high...

So...The American people SPEAK that they are tired of massive government waste and spending, AND THE VERY NEXT DAY the Fed slaps them across the face with another huge bill future generations are stuck paying, and the President sticks his middle finger up at the American people with an extremely costly trip halfway around the world...I'm SURE he could have planned this trip MUCH more economically...But what else can you expect from the man who had THE MOST expensive inauguration in the entire History of the USA?...

This government is completely OUT OF CONTROL, and this will certainly show up in the Market in due course...I've been calling for a MAJOR pullback to happen for a while now...It's not of matter of "IF"...It's a matter of "WHEN"!!!...Our FIAT economy is built out of a house of cards, that is SURE to come crashing down...Sooner, rather than later...In my humble opinion...

Got SILVER?...Got GOLD?...Solar and/or Wind Power?...Your own water well with a manual backup pump?...At least a years worth of beans and bullets?...

Happy Trading! next week...
chartaholic
zigzagman
Tom
;0)

To read the articles I found most interesting this week, go to my Twitter page:
http://twitter.com/chartaholic

End of the Week - S&P 500's Daily & Weekly Charts:

http://stockmarketchartanalyst.blogspot.com/

The daily chart did exactly what everyone said it would do if the mid-term election went the way it did, and the Fed's QE2 number was above $500 Billion...Making money the second half of the week was too easy!...Friday's candlestick closed waaayyyyyy above the upper Bollinger Band, and the market may have to move sideways or downtick for a few days until the candles are back inside the upper BB...The exciting and market moving news from last week about the election and QE2 is over, plus it is a very light week for economic reports on the Economic Calendar, and also a light week for Earnings Reports...So what's the motivation for a strong move to the upside to continue?...Many times after a breakout above a big Resistance level, the market will drop back to test that level of Resistance, so a drop back to 1195. seems possible sometime during next week...



The weekly chart broke out to a new 52 week high on decent Volume...All of the indicators are Bullish, and even though it is VERY Overbought (and has been for weeks), that doesn't mean a whole lot...Because Stochastics is an over rated indicator when it reaches Overbought conditions, since it can remain that way for much longer than many people think it can...



The Economic Calendar for next week is VERY light...There is only one red starred report (a potential market mover), and only two gold stars, which means those reports have a chance to MOVE the markets...The big report due out next week is International Trade on Wednesday at 8:30am ET, and weekly Jobless Claims numbers at the same time...Friday's big report is Consumer Sentiment for the month of October, due out at 9:55am...

http://online.barrons.com/public/page/barrons_econoday.html
(Click on the "Consensus" button to see what the market is expecting for these reports)



Stocks go UP, while the Dollar CRASHES!...And Gold, Silver, and most of the other Commodities go up, Up, UP!!!...Is this what Helicopter Ben intended with all of his Quantitative Easing?...Hyperinflation of food, gas, and other basic necessities?...This is a very interesting article that explains how the rise in equities is not such a good thing after all:

Stocks Have Collapsed in 2010 - When Priced in Wheat

http://www.oftwominds.com/blognov10/stocks-quatloos11-10.html




Don't forget that Thursday is Veterans Day!...

Happy Trading next week!...
chartaholic
zigzagman
Tom

End of the Week - S&P 500's Daily & Weekly Charts:

http://stockmarketchartanalyst.blogspot.com/

This will be one of the most interesting weeks this Quarter! By the opening bell on Wednesday, we will know the outcome of the mid-term election for the US House and Senate. It will be interesting to know the new balance of power there, but the market may or may not react much because it has already baked that outcome in. It's clear that the Democrats will lose a number of seats in both houses of Congress. The most important task for them to complete before the end of the year will be to decide if the Bush Tax Cuts will be continued, eliminated, or some kind of compromise is made to extend some (or all) of them.

Also on Wednesday at 2:15pm ET, we will hear what the Fed is going to do in the way of Quantitative Easing - Part 2 (QE2). The amount of QE2 they decide upon will be critical to how the market reacts to it. Not enough, say under $500 Billion, and the market probably will react in a negative way. Too much, say over $1 Trillion, and the market may not like that either. Anywhere between $500 Billion to $750 Billion is what the market is hoping for. And to hear the details of how the Fed will go about it will also get some kind of reaction from the market.

We are still in the middle of third quarter Earnings Reporting season, and it is also a very busy week on the Economic Calendar. So how the market moves this week will be decided by the outcome of the mid-term election, what the Fed decides to do with QE2, and the reaction to all of the week's Earnings and Economic Reports.

The Daily Chart shows a lot of Volatility last week, but by the end of the week the Index only closed up by 0.18 Points, and only up 0.02% I've been mentioning the Bearish Divergences on the CCI, STO, and MACD Histogram for a few weeks now, and with diminishing Volume every day last week, and large downticks on these three indicators, it looks to me like the market is running out of steam. But...the market was in "wait and see" mode the entire week waiting to see the outcome of the mid-term election, and what the Fed will do about QE2 next Wednesday. Basically, the Index churned (or consolidated) in an uptrend all week, and that is quite often Bullish. A close above the closing price from the previous Friday (10/18/10) with a tall white candlestick with above average Volume would be a breakout into Blue Sky Territory, and would obviously be Bullish...So would be a close above the 200Day Moving Average on the Weekly Chart, that currently sits at 1194.20



The Weekly Chart appears to be running out of steam. Volume has diminished the past three weeks, and the CCI has downticked the past two weeks. It is still in very Overbought territory in the mid-90's, and the fast line of Stochastics is now below the slow line. And the MACD Histogram also downticked last week. The Doji candlestick that formed this week may very well be a reversal signal this time, since the intra-week high last Monday finally tagged the 200Day Moving Average early in the session, and then pulled back hard the rest of the day to form a Bearish Shooting Star candlestick on the Daily Chart (see the daily chart above). A close below the low of the week from last week would be confirmation that the Doji candlestick formed last week was indeed a reversal signal.



I see a possible Bearish Double-Top Chart Pattern developing on the Daily Chart:



IF there is to be a Pullback, the Fibonacci's 61.8% level on the Weekly Chart is 1136.88 but there are some minor levels of Support to break below before it can get down to there.



The Commitment Of Traders (COT) chart is showing Large & Institutional Traders have been moving to the Short Side for a while now. These kinds of traders are hardly ever wrong. It is the Small and Individual Traders that are usually behind the curve.



It is a very busy week for Earnings Reports and the Economic Calendar. There are too many S&P 500 companies reporting this week to name them all, but the most important Economic Reports due out this week are signified by gold and red stars. A gold star report has the potential to move the market a small amount, and a red star has the potential to move the market in a big way. One of the most important reports due out this week besides the FOMC Announcement on Wednesday at 2:15pm is the Employment Situation report for the month of October, which is due out on Friday an hour before the opening bell:

http://online.barrons.com/public/page/barrons_econoday.html



I posted a number of very interesting news articles last week. Too many to list all of them here. They are posted on my Twitter page. Many of these articles discuss how effective will QE2 be, plus there are a number of articles about the economy in general and more about the Foreclosure-Gate fiasco.

My Twitter Page:

http://twitter.com/chartaholic

Happy Trading! next week...
It should be an exciting one!...
Stay Nimble...It could go either way...
zigzagman/chartaholic

Dodging Rocks & "The Recession is Over" - by Casey Research

http://day-trading-the-stock-market.blogspot.com/

Dodging Rocks...

Dear Reader,

As I write, the Fed is meeting, and Mr. Market waits with bated breath to see if the coven of central planners will change a sentence from the notes of their last meeting. According to Bloomberg:

Fifty-four of 63 economists in the survey said the central bank will leave unchanged a sentence saying high unemployment and low inflation warrant “exceptionally low” rates. The Fed has kept its benchmark interest rate in a range of zero to 0.25 percent since December 2008.

If the central planners do change the sentence, perhaps to something that suggests that maybe the Fed scents that the economy is actually improving, then Mr. Market might get all worried that rates will soon rise and the big bond bubble blow-up will begin.

Alternatively, if the central planners were to hint at the potential for a pocket of economic dead air ahead, then Mr. Market might jump to the conclusion that the rising calls for the Fed to create another $2 trillion to be used in buying up long-dated Treasuries at today’s suppressed rates will be answered. In that case the dollar’s fall, and gold’s recent rally, could really gather steam.

While no one can be certain what the Fed will do in today’s meeting – or in the next – one thing is certain: the business community and we as individuals have been reduced to the role of participants in a one-sided rock fight.

We watch the guys with the rocks – the Fed, the Treasury, Congress, and the many agencies I touched upon yesterday – and try to anticipate when and where they are going to throw the next rock so that we might duck.

This uncertainty makes it very, very hard to focus on other things – building businesses or making investments, for example. How can it be otherwise when you’re constantly trying to calculate where the next rock is coming from?

Get it right, and you might buy yourself a brief respite before the next rock comes flying your way. Get it wrong, however, and the consequences can be dire. I get a lot of emails from readers, many of them entrepreneurs, and many contain tales of woe, the result of running afoul of the rock throwers and ending up out of luck and out of business.

And the setup is much the same in all of the aging, degraded, and indebted democracies. An eye-opening case in point was sent over this morning by one dear UK correspondent in the form of an article out of the Daily Mail. As you’ll read, that country’s new coalition government is about to start throwing a lot of rocks at anyone with an income. Some relevant quotes…

Clegg tax war on the middle class: Families could face 'lie detector tests'

Middle-class families could be forced to undergo lie detector tests as part of a major crackdown on tax avoidance being spearheaded by Nick Clegg.

Tens of thousands will face intrusive new tax investigations under the plans unveiled by the Deputy Prime Minister yesterday.

…The moves, unveiled at the Liberal Democrat conference, were designed to guarantee Mr Clegg's popularity with mutinous grassroots members, but were described by critics as ‘bully boy tactics’.

…Today Mr Clegg will accuse middle class earners who pay accountants to minimise their tax bills of behaving like ‘benefit cheats’.

He will say that legal tax avoidance and illegal evasion are ‘just as bad’ as falsely claiming benefits, adding: ‘Both come down to stealing money from your neighbours.’

Tax evasion by the better off is to be aggressively pursued in a £900million drive which will see the number of people targeted for tax checks rise from 5,000 a year to 150,000.

Half of all the people paying the new 50p top rate of tax will have their tax affairs raked over by a dedicated team of investigators every year.

Lib Dem sources said the number of criminal prosecutions would increase five-fold. The tax crackdown will be undertaken by HM Revenue and Customs, the beleaguered department which recently admitted getting the tax codes of millions of workers wrong. A team of investigators will be created to catch those hiding money offshore.

They will use the benefits fraud model, which does include the use of lie detectors, as a template for what action they can take.

'Voice recognition analysis', which picks up when a caller sounds nervous on the phone, could be used to help work out if someone is misleading tax inspectors.

Read the full article here...

Maybe the British income earners will just suck up this latest effort by their own government to bean them, but if I were a UK resident, I can assure you that the minute they started rolling out the lie detectors, I’d begin shopping for flights elsewhere.

Which, at the end of the day, is pretty much the only rational thing for a business and individual to do when confronted by such manifestations of a dysfunctional, and ultimately doomed, democracy.

Simply, once the business/legal/regulatory/tax environment in a country becomes extraordinarily changeable, and therefore unpredictable, your choices boil down to continuing to try to dodge rocks or moving to a steadier clime.

What’s the Fed going to do in today’s meeting?

Frankly, Ben, I don’t give a damn.

Unless and until the government makes an honest attempt at slashing its expenses well below the level of current revenue – in the process bringing an abrupt halt to the endless cycle of both raising revenue and taxes, with a solid dose of expensive new regulation thrown in – then the ultimate outcome is carved in stone.

And that outcome is that the dollar and likely all of the fiat currencies are going to crash. That’s what gold is telling us, and it’s speaking very loudly just now.

Now, you may not believe me, but I’m not a gold bug per se. Rather, I am a raging fiat currency bear, and that only because I’m doubly bearish that the insane levels of debt now overhanging the large Western economies can be resolved without serious monetary, political, and social consequences.

Unfortunately, the rock throwing is only just beginning, and it’s only going to grow in tempo as the powers-that-be and the powers-that-wannabe increasingly are forced to do “whatever it takes” to maintain the status quo – as broken and bent as that may be.

Don’t forget to duck!...

=====================

The Recession Is Over!

By Doug Hornig, Casey Research

Woo-hoo, break out the Moët et Chandon. The recession is over. That’s right, over. Officially.

You might not think so, what with continuing record foreclosure levels and double-digit unemployment and all the rest of the negative economic indicators. But you’d be wrong.

Because the National Bureau of Economic Research has declared an end to the recession, and they’re the ones who get to decide. A self-proclaimed “private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of how the economy works,” the NBER makes the call because they know things that we don’t.

Here’s another thing we didn’t know: Not only is the recession over, it ended in June. Of 2009! And then the recovery began.

Skeptical? No need. It’s simply a matter of definition, you see. A recession begins with a period of at least two quarters of falling economic growth. And it ends when GDP hits its low point and returns to some form of growth, no matter how pitiful. The length and strength of the recovery seen during the past 15 months is sufficient, the NBER panel said.

The stock market rallied on the news, but the reaction from other quarters was less enthusiastic. In fact, one of the NBER panel members got a bit defensive, writing that “we are only saying that things started to get better in June 2009, not that times are good.”

It’s clear that they are not. True, GDP did bottom at -0.7% in the second quarter of ’09, and it then advanced to +1.6% in the third quarter and a seemingly robust +5% in the fourth. But at that point it stalled out and has been declining since, from +3.7% in 1Q10 back to +1.6% again, in 2Q10.

At that rate, job creation will be non-existent. The Organization for Economic Cooperation and Development figures the U.S. economy will wind up growing 2.6% this year. It would take growth twice that fast to drive down unemployment by a single percentage point.

While economists might accept the NBER’s conclusion that the recession is technically over, many acknowledge the possibility of a so-called “double dip” that others might see as merely a continuation. Lakshman Achuthan, managing director of the Economic Cycle Research Institute in New York, puts the chances of averting a double dip at no better than 50-50 at this point.

The NBER also pointed out that, at 18 months’ duration, the recession of 2007-2009 was the longest since the 3½-year downturn that ended in 1933. And the recovery from that one petered out in 1937, yielding to a second recession that lasted more than a year.

Whether we’re in for something similar is debatable. But consider this: June 2009 also marks the month when spending from the Recovery Act stimulus was at its maximum.

Which means what?

One conclusion is that the stimulus played an important role in bringing the recession to an end,” says Mark Zandi, chief economist at Moody’s Analytics.

But one might just as well conclude that the stimulus money masked the true extent of our economic weakness, and that as it eased we were destined to fall back to the anemic growth levels seen this year.

In which case the government response is likely to be déjà vu all over again. More “stimulus,” more intervention, and more and more debt...

http://www.caseyresearch.com/displayCdd.php?id=541

Stocks Surge To Celebrate Unprecedented 19th Sequential Equity Outflow - $10 Billion In September Redemptions:

http://stockmarketchartanalyst.blogspot.com/

It is beyond a joke now:

ICI's latest data discloses that in the week ended September 8, domestic funds saw outflows of $2.2 billion, following last week's massive $7.7 billion. And yes, ETFs experienced outflows as well.

So far September has experienced nearly $10 billion in outflows, even as the market has ramped by over 6%. Who is buying this $hit? Just ask The New York Fed and Citadel: they may have a few pointers (wink wink).

This is the 19th sequential outflow from US stocks, and amounts to $65 billion in redemptions for the year.

With the market pretty much unchanged YTD, it means that mutual funds can not resort to capital appreciation as a substitute to outflows, and most are on their last breath (Janus: blink twice if you are still alive please).

The kicker: the S&P is at the level it was when the outflows began back during the flash crash.

If that doesn't restore all your confidence that Uncle Sam will be so good at managing the market (just like he has done with everything else), nothing else will. Throw in a little HFT, a little subpennying, a little Flash trading, a little DMA trading, a little quote stuffing, a little hedge fund clubbing, a little specialist front running, a little daily flash crash in big caps like Nucor Steel, and you can see why next week we will most certainly have our first inflow in 20 weeks. Or not.

It doesn't matter. Nobody that is made of carbon, or who doesn't already have direct access to the Fed for zero cost funding, is trading stocks anymore.





(If you are having a hard time seeing these two charts, click on the link below, and then click on the charts in the original article to expand them to full-size...)

http://www.zerohedge.com/article/stocks-surge-celebreate-unprecedented-19th-sequential-equity-outflow-10-billion-september-re

My Thoughts for The Summer:

I won't be making a video again this week...

Of the $SPX daily and weekly charts...

We're in the busiest weeks for earnings reports, and that can cause a lot of volatility to the indexes...As far as the recent move to the upside early last week, it was waaayyyyyy overdone and was nothing more than a suckers rally IMO...It was more like a Pump Before The DUMP...

Earnings can be (and are) manipulated, as you will see this coming week when many of the biggest banks/brokerage houses report...News for the overall economy continues to be very weak, and I'm still thinking we'll see 950 before we see 1250-1300 like some of the Elliot Wavers here on IHUB are calling for (chichi2)...Even Pretcher put out an article this past week calling for Dow 1000 (not a typo) over the next few years...

http://www.nytimes.com/2010/07/04/your-money/04stra.html

In my last two or three videos, I called for the Head & Shoulders chart pattern that's formed on the weekly chart to yield down to 950 or so, and if/when that happens, I'll get back to posting videos again...This chart pattern is still in effect IMO, and the fall to 950 (if it happens) will most likely not be straight down, but will have a few oversold rallies like we saw two weeks ago...The 50MA on the weekly chart is and will continue to be a major area of resistance IMO...

So for a while to come, I'll be enjoying the summertime and spending less time paying attention to the market...I am 100% cash except for a small position in one microcap biotech stock (CYCC), and I continue to accumulate physical gold and hide it in various places, in and out of the country...

Happy Trading!...
zigzagman

Stocks Surge as Financial and Materials Stocks Jump:

Stocks leap after traders snap up banks, materials shares; Dow gains 275. to top 10,000 again.

Tim Paradis, AP Business Writer, On Wednesday July 7, 2010, 5:54 pm

NEW YORK (AP) -- The Dow Jones industrials climbed back above 10,000 Wednesday after investors had second thoughts about the heavy selling in the stock market during the last two weeks.

Stocks soared and the Dow rose 275 points after a modest gain Tuesday. It was the market's first back-to-back advance since mid-June and the first close above psychological benchmark of 10,000 since June 28. But analysts warn that the buying doesn't mean that investors are more optimistic. They said there wasn't a single catalyst behind the move and that it looked like a case of investors scooping up stocks that had become cheaper after heavy losses. The Dow had fallen 7.3 percent over two weeks.

"It's just more of a reaction to a little bit too much negativity," said Marc Harris, co-head of global research for RBC Capital Markets in New York.

The Dow and broader indexes gained more than 2 percent. Trading volume was light, however, signaling that many skeptical investors were staying out of the market. Interest rates rose as some investors dumped Treasurys in favor of riskier assets like stocks.

Financial stocks rose on an upbeat profit forecast from State Street Corp. The stock gained 9.9 percent. Materials stocks rose after having logged steep drops over worries about the economy. Aluminum producer Alcoa Inc. climbed 3.3 percent, while U.S. Steel rose 5.7 percent

Wednesday's big gain fit into a pattern of volatility that began in late April, when the Dow began tumbling from its 2010 high of 11,205.03. The Dow had fallen 13 percent since then, and the long slide included many triple-digit moves.

The protracted drop began on concerns that debt problems in Greece and other European countries would stifle the continent's recovery and eventually the recovery in the U.S. But in the past few weeks, stocks have been tumbling on signs that the domestic rebound is slowing. Some traders were selling on fears that the country is headed back into recession. They were also buying Treasurys so they could put their money into a safe place.

Jack Ablin, chief investment officer at Harris Private Bank in Chicago, said that what's called a "double-dip" is unlikely, but the idea of one is scary because the government wouldn't have many options to revive the economy a second time.

"When you're driving around on a spare tire you're on the lookout for nails," he said.

There were no economic reports to influence the market on Wednesday. Traders were getting a series of reports Thursday likely to give some insight into consumers' behavior. The government's weekly report on jobless claims is due out, and retailers will report June sales results. Investors will be looking for any signs that layoffs are slowing, and that consumers are feeling better about spending.

The market's other big concern is upcoming earnings reports. Investors want to know if companies are also seeing business slow, and if they're changing their forecasts for the coming quarters.

Ablin said the forecast from State Street bolstered confidence ahead of earnings for the April-June period. However, Ablin said he didn't expect the bounce to continue because investors are anxious about the hundreds of company reports still to come.

"I don't think any investor wants to commit one way or another with the whole string of earnings announcements" ahead, Ablin said.

The Dow rose 274.66, or 2.8 percent, to 10,018.28. The Dow rose 57 points Tuesday. The index hasn't risen two straight days since June 17-18.

The Standard & Poor's 500 index rose 32.21, or 3.1 percent, to 1,060.27, and the Nasdaq composite index rose 65.59, or 3.1 percent, 2,159.47.

Bond prices fell, driving up interest rates. The yield on the 10-year Treasury note rose to 2.99 percent from 2.94 percent late Tuesday. The yield fell below 3 percent last week for the first time since April 2009. The 10-year yield is used as a benchmark for interest rates on consumer loans and mortgages.

The dollar fell against other major currencies, including the euro.

Crude oil rose $2.09 to $74.07 per barrel on the New York Mercantile Exchange. Gold rose.

State Street rose $3.29, or 9.9 percent, to $36.63. Alcoa advanced 34 cents, or 3.3 percent, to $10.55, while U.S. Steel rose $2.17, or 5.7 percent, to $40.39.

About six stocks rose for every one that fell on the New York Stock Exchange, where consolidated volume came to 5.1 billion shares, compared with 4.7 billion Tuesday.

The Russell 2000 index of smaller companies rose 21.63, or 3.7 percent, to 611.66.

Overseas markets closed higher after sliding in early trading. Investors awaited a Thursday meeting of the European Central Bank. Traders are expecting the bank to keep interest rates unchanged, but will want to get details on the European Union's "stress tests" of bank balance sheets. The notion that the examination could be more rigorous than first thought helped U.S. stocks and drove the euro higher. Similar tests of U.S. banks in May last year helped bolster confidence in the financial system by reassuring investors that big banks likely would survive a deeper slide in the economy.

Britain's FTSE 100 rose 1 percent, Germany's DAX index rose 0.9 percent, and France's CAC-40 climbed 1.8 percent. Japan's Nikkei stock average fell 0.6 percent.

http://yhoo.it/czkRsc

Britain Is the First To Choose Deflation:

http://day-trading-the-stock-market.blogspot.com/2010/06/britain-is-first-to-choose-deflation.html

by Rick Ackerman - Wednesday, June 9, 2010

Over the last three years, the Federal Reserve has conjured up trillions of dollars of funny money in an attempt to breathe some inflation back into the economy. The attempt has cleared failed...

Now, it would appear, Britain has become the first country to throw in the towel on fiscal and monetary black magic. In effect, the country has decided to let deflation take its course, allowing the chips to fall where they may. In the essay below, Cameron Fitzgerald, a frequent contributor to the Rick’s Picks forum, takes a close look at the decision and what it will mean not only for Britain, but the world. He concludes with a list that spells out what to expect, and the kind of pain we will experience as the world’s financial system comes very slowly back into balance in the years ahead. If his predictions are borne out, the standard of living is about to fall sharply for billions of people around the world.

David Cameron's new Government in England announced Tuesday that it will introduce austerity measures to begin paying down the estimated one trillion (U.S. value) in debts held by the British Government. Lets let that sink in for a moment, for it is a stunning announcement. Now repeat it: England will introduce austerity measures in order to eliminate the deficit and begin paying down the national debt. And that being said, we have just received the signal to an end to global stimulus measures -- one that puts a nail in the coffin of the debate on whether or not Britain would “print” her way out of the debt crisis. That would have virtually guaranteed an eventual hyperinflation that would have spread to all Western nations, destroying the U.S. dollar as the world’s reserve currency in the process and ending several hundred years of Western economic dominance.

This is actually a celebratory moment although it will not feel like it for most. But wait. The U.S. did not say it would pay down its debts. And anyway, everyone knows that debt pile is too large to ever be repaid. They are wrong. And the U.S. does not need to send any particular message at this time anyway. The U.S. has been in a deflationary spiral since 2006, having discovered that nothing, not even oil flooding the Gulf, a nuclear North Korea threatening war, campaigns in Afghanistan and Iraq, nor threats that Israel might one day bomb Iran and shut down the oil pipe, can pump up energy prices enough to drive future inflation or save the economy the old-fashioned way. Not nearly enough to escape the gravity of the housing and asset collapse anyway.

Out of Ammo

We have run out of the ammo of cynicism and old-style politics. Debts will have to be paid. Creditor arrangements will be made, concessions granted, standards of living will decline and countries will be sent to the table to bargain in a cooperative effort to resolve credit imbalances. There will be horse-trades, payments out of key commodities and access granted where previously it has been denied. There will be recovery eventually and it is a better future than what a hyperinflation would bring us all. And yes, the bills will be settled. Time to rejoice.

To my way of thinking, the U.S. will not, cannot, resort to regular debt monetization, printing press economics or the eventual and guaranteed destruction of their currency, economy and way of life before attempting first to harness what appear to be insurmountable debts and obligations. Particularly if European nations and England (first among them) begin taking serious steps toward fiscal discipline and bringing in measures of restraint. Many will argue against my theory. They will all be wrong. And so the English have opted to go with the devil they know. They have chosen a path that means their economy will contract, perhaps significantly. Where unemployment will surge as public sector layoffs and the elimination of programs are required to harness the debt bomb are enacted and all spending is carefully scrutinized, fleshed away, even eliminated.

Minimal Safety Net

Everything could conceivably be on the chopping block short of core government services, social service spending, basic medical services, pensions and the safety net itself. The debt is just so big that nothing less than all the efforts of Government and the cooperation of the majority of the public in accepting restraint will allow it to work. But what does this mean in the wider picture when one of the leading members of the G8 has deliberately chosen the path that signals a deflationary trend? Possibly even bringing on a global depression as an outcome of that choice?

As I said, the English have chosen the devil they know, and that is economic contraction. The last serious bout they experienced on that front was of course during the 1930's and again following the Second World War, but over the years Britain has seen many recessions. Some were deep, and folks may recall the Maggie Thatcher days of fiscal restraint, elimination of public programs and a sell-off to the private sector of everything from coal mines to railways and airlines.

Hyperinflation ‘Devil’

The devil the British does not know is hyperinflation -- not up-front, ugly and in their faces, anyway, but only anecdotally from the experience of others. No major modern economy in the West has ever hyperinflated. The exception, Germany, did so only under duress brought on by destructive and debilitating reparations following the First World War. Nobody wants a repeat of that. So this is actually a relatibrly safe move from that standpoint.

Those other nasty outcomes are already too well-known from readings of the history books out of the Weimar Republic. A complete destruction of the currency there resulted from ill-conceived “fixes” followed by a total failure of the financial, investment, banking and insurance systems. Printing press solutions led to widespread public misery and hunger. Bond and debt defaults were manifest and eventually the worst insult was when the country was saddled by an inability to borrow and rebuild following its confidence crisis. Last came radicalism and political instability as the people demanded solutions to all their problems.

Social Collapse Possible

We know too that hyperinflation can lead to chaos and social disorder. Nor is social collapse out of the question under that scenario -- particularly with so many people dependent on our existing system, and as the population ages and becomes more dependent on fewer folks of working age. No Brit wants that either. No Brit Government could survive it. The debt must be paid and the burden of that pain will be shared by all. It is the right decision. But at a high cost.

I think it is worth it. The likes of Russia, India, Brazil and China have been working in concert to develop an alternative world reserve currency, buying up gold in earnest, ostensibly to back their claim with real wealth under IMF auspices and the terms of Special Drawing Rights (SDRs). Success will give them the kind of collective bargaining power that until now has gone automatically to the U.S. because of the dollar’s status as the world’s reserve currency.

So, will we just sit back, punish our creditors through an inflationary default and thus hand them the power and influence to control a new and developing reserve currency; or will we defend our position, pay off our debts fairly (or by concessions) and retain the rights we hold dear? Let’s first ask ourselves the following question: Why must hyper-inflation be the only alternative to deflation? Answer: Because governments all over the globe have already tried stimulating their way out of the recent credit crisis and recession to little avail. They have attempted fruitlessly to generate even mild inflation despite huge stimulus efforts and pointless spending. All they have to show for it is massive additional debt and an unfolding currency time-bomb.

No Buying Our Way Out

Clearly, we cannot buy our way out our debt burden. It is that simple. It has been tried and it does not work. We cannot dig our way out of a hole either. So instead, consumption, the driver of our Western economies, remains sluggish at best, real estate is badly overpriced almost everywhere and personal indebtedness is strangling the middle classes while unemployment continues to rise and the tax burden and obligations grow by the day. It is an unsustainable exercise that will not end well. We now know it will not work, cannot work and won't likely be tried again in any significant way except by insane self-serving governments and those that have just run out of creative solutions. It is time to just pony up and pay the piper. This is simply the better (and only reasonable) solution to all the alternatives. But it will mean a long, slow and deliberate winding down until solvency is within reach. It will mean cities, states and counties will go bankrupt and not be rescued.

And it will be painful. Public spending will be cut. Consumption could decline precipitously. Unemployment numbers may skyrocket and bankruptcies will stun readers of daily blogs like this one. It will put the brakes on growth around the world. Oil prices will fall along with the prices of most other commodities. Gold could soar while food costs rise as a relative percentage of daily expenditures. The Dow will crash and there will be ripple effects across the European union and eventually the globe. Hardest hit will be major exporting nations like China and India who depend on Europe and the Americas for their bread and butter income. Aid programs to the Third world will be gutted, and I cannot yet imagine the consequences that will bring to the poorest people on earth.

Announcement ‘No Coincidence’

The significance of the decisions announced Tuesday will impact every nation on earth. And this is not happening in a vacuum, nor is the timing of the announcement just weeks prior to the G8 and G20 meetings coincidental. The statements made today are designed to lead and they will. The EU is also attempting to bring spending and fiscal controls to its member states. Greece is only the first to face the specter of a declining standard of living, much higher taxes and interest rates, controls imposed from outside its borders, and seriously reduced government spending. But the idea proposed now by the Cameron Government has real traction and will gain momentum. Britain is signing on voluntarily and has done so before, its back is to the wall and no good options other than strategic default. I applaud them.

And the idea will spread. But with a twist this time: Instead of protectionist stances between governments, there will be more free-trade arrangements implemented. Access to markets will open, not close. Canada itself is undertaking to establish a major trade agreement now with the European Union that would include among other things greater labor mobility and freedom from past employment barriers between the partners. Structural change is in the air too. It will also be in the interests of all nations to cooperate and not enter into conflicts or trade wars.

This Is the Big One

Anyone who thinks that the massive debts piled up by governments can be discharged easily while we go through a mild recession is flat-out wrong. This is the big one. Markets may respond positively at first, but then that sinking feeling will bring on some very bearish sentiments. This could well occur over the next few weeks. A major global economic contraction will without a doubt take the steam off almost all stocks as reality begins to set in. This is the expected outcome. It will come as a big surprise, though, to all who were certain that uncontrolled spending, stimulus and debt monetization would be the solution chosen by governments to satisfy the electorate. While spoiled and self absorbed, the electorate is not stupid. They will get on board with a solid plan if it is presented in a way that assures them their core interests are protected and offers hope and a better future.

A major reckoning is now a foregone conclusion. The word reset comes to mind -- and then a long, slow grind from the depths of debt insanity, followed perhaps by an agonizing return to prosperity and economic health. A decade may well be too optimistic a time frame to bring balance back to the old world and economies of the West. Let's get used to it. We are all in this one together.

So deflation it is. It will come to Canada eventually, too, so let’s start having a real debate about what that will look like and get familiar with the idea. We have already experienced stark restraint in this country in a program that was masterfully crafted by Jean Chretien and Paul Martin in the 1990's. Sanity was brought back to this country after three hard years of belt tightening. But this next phase will be a much more bitter pill to swallow. We need to look to our leadership to guide us through the crisis as it unfolds. The inflationist's camp can now leave the room because none of us can stand to hear their anguished cries, angry foot-stomping and teary, selfish objections. So pathetic.

What to Expect

Here is a very short list of what can be expected -- and trust me, this is a much more palatable list than the ones I have analyzed involving an unthinkable and devastating hyperinflation. So put away the placards and protest signs. We all need to get on board with paying down debt like any responsible citizen debtor would do. We owe big-time and this is but a taste of how it may cost us:

*Major employment reductions amongst those working in the public service
*Health care services that are rationed. Fewer nurses, health practitioners and support staff
*Larger class sizes in schools and large reductions in the number of teaching positions
*Reduced public pensions and benefits, including social service payments
*Interest rates that will gradually rise and eventually settle at around six percent
*Strikes, labor unrest and supply chain breakdowns
*Widespread unemployment affecting virtually every sector of the economy. None will be spared
*An expansion of public works programs, green initiatives
*Civil disobedience, arrests, targeting of threatening movements by security agencies and government
*Increasing taxation, particularly on the wealthy and buoyant businesses
*Shortages of all kinds and the loss of variety on store shelves
*An erosion in standards of living for most but particularly for those who are indebted
*Cutbacks in military spending, defense, coastal patrols and overseas engagements
*Cherished programs that Government usually support being completely eliminated
*Larger police forces, prison expansions and a judiciary that is strained to the breaking point
*Cities, states and counties denied bailouts, forcing them to bankrupt
*A reduction in services that protect the environment, animal rights and special interests
*Closures of universities
*The list could stretch on and on, but you get the picture.

It will be a very difficult and long-lasting correction that will purge waste and inefficiency from the system. Few will be happy, but the alternative is just too distressing to consider. The only thing that will give you true immunity in the mean time is a fat blanket of cash. Be sure to have some.


Be liquid. Pay off debts. Rejoice in your good decisions. And live free...

http://news.goldseek.com/RickAckerman/1276063200.php

The Biggest Shock of All:

http://day-trading-the-stock-market.blogspot.com/biggest-shock-of-all.html

Weiss Research Group - Martin D. Weiss, Ph.D. - June 07, 2010

Why did the specter of collapse in far-away Hungary help sink the Dow by 323 points on Friday ?

And why did similar scenarios in Greece, Spain, and Portugal trigger the Dow’s 1,000-point Flash Crash one month earlier ?

Is it because those countries are so important to the future of America’s blue-chip corporations ?

Not quite!...



http://www.cnbc.com/id/15840232?play=1&video=1511573004

It’s because investors around the world are finally waking up to some shocking realities:

Shock #1 is that these countries are canaries in the coal mine — the first of many that could suffer the wrath of investors fed up with runaway deficits.

Shock #2 is that, in the UK and the US, federal deficits and total debts, as a percent of GDP, are similar to — or even larger than —those of Greece, Spain, Portugal, or Hungary.

Shock #3 is the recurring revelations of official deceptions. Investors suddenly discover that unemployed were counted as employed … that government debts were disguised as capital … that far bigger federal deficits were camouflaged. And it is these revelations that trigger the biggest selling panics, that are the final nail in the coffin for companies and entire countries.

But Shock #4 is the biggest and most dangerous of all — not just random deceptions by a few companies or a few countries, but a global deception in the credit ratings that investors rely on for nearly ALL companies and countries!

With gathering momentum right now, investors are beginning to realize they can’t trust the ratings issued by established agencies like Moody’s, Standard and Poor’s, and Fitch.

But this is not merely bad news for the agencies themselves. It’s also a powerful force that can drive global stock and bond markets into a nosedive.

When companies are downgraded, their share and bond prices automatically fall.

So think about what it means when the grading system itself, encompassing thousands of ratings on trillions of dollars in securities, crumbles!

It implies, in effect, a collective downgrade of nearly ALL the securities in the world — every rated corporate bond, municipal bond, and even government bond in existence!

Needless to say, this transformation is too massive to happen overnight; it will progress in three phases...

Phase 1: Widespread Loss of Confidence in The Leading Rating Agencies...

In the first phase, regulators, analysts, and investors begin to raise serious questions about the validity of ratings:

Is a bond really triple-A? Or is the rating agency just maintaining the high grade because it wants to protect a good client that’s paying fat fees for its ratings?

Beyond triple-As, what about the hundreds of thousands of corporate, municipal, and sovereign bonds that currently boast other “investment grade” ratings? How many are really speculative grade — junk — in disguise?

Right now, Congress is asking these questions daily, attacking the rating agencies and getting ready to take action against them as part of the upcoming regulatory reform.

And the assaults on the rating agencies by independent commentators are even more strident …

In “Answers on Credit Ratings Long Overdue,” Andrew Sorkin of the New York Times puts it this way:

“Raise your hand if you can explain why anyone still believes in credit ratings. … How could century-old institutions like Moody’s Investor Service give their triple-A blessings to subprime junk? … How can we prevent these institutions and their sometimes cockamamie judgments from endangering our financial system again?”



http://www.cnbc.com/id/15840232?play=1&video=1511573004

In his testimony before Congress on Wednesday, Warren Buffett (a major shareholder in Moody’s) said the agencies ought to be forgiven for their sins — particularly for giving junk mortgages triple-A ratings.

But that same evening, on a Kudlow Report segment, “The Future of the Credit Rating ‘Cartel‘,” both the CNBC host and commentator said flatly that …

The ratings issued by Moody’s and S&P are “garbage.”

CNBC commentator Don Luskin added:

“Shame, shame, shame on Warren Buffett for saying the rating agencies are to be forgiven. … We’ve got the Obama administration talking about bringing criminal charges against BP. Why don’t we bring criminal charges against the rating agencies …?”

On the same CNBC segment, I was asked for my solution, which I’ll get to in a moment. But first, let me tell you my forecast regarding the next phase …

Phase 2: Massive Investor Selling...

Here’s what I see happening …

* Until and unless the rating agencies abandon their conflicted business model, extreme doubts about credit ratings will spread like wild fire.

* Investors will scramble to reassess the risk in the trillions of dollars of rated securities they own.

* They will decide, independently, what the true ratings should be, effectively issuing their own downgrades on thousands of securities.

* And, they will SELL.

This forecast takes no particular foresight. As illustrated by the recent barrage of attacks on the rating agencies, the global risk reassessment has already begun. And as illustrated by recent sharp price declines — in sovereign bonds, corporate bonds, derivatives, and common stocks — the selling has also already begun.

Phase 3: Capitulation by the Rating Agencies...

My next forecast, however, does require looking further ahead:

The day will come when, due to overwhelming pressure from regulators, investors, and even some debt issuers themselves, the leading rating agencies will have no choice but to cave in.

Moody’s, S&P and Fitch will announce downgrades for hundreds of major debt issuers in one fell swoop. Or they will seek to wipe the slate clean by revamping their rating scales, effectively downgrading nearly ALL of the bonds they rate.

I have no doubt this will happen. The only major uncertainty is: when?

* Will it be before millions of investors each make up their own minds about what every rating should be?

* Or will it be after investors make up their own minds — when there is such a sorry state of confusion and panic that the rating agencies are FORCED to act to restore a semblance of credibility for themselves and the companies they rate?

Either way, we can now see the makings of an all-out selling panic — first in corporate bonds, then in the most vulnerable common stocks. It is the natural outcome of the global downgrading of ratings and rating agencies themselves. It’s coming very soon. And it’s going to hit hard.

Too Late for Easy Solutions...

At Weiss Ratings we don’t take a dime from the companies we rate. We’re not even beholden to the companies for the supplemental data we request. If they choose not to give us the information, we rate them based exclusively on publicly available data.

However, we also believe that no one should tell our competitors what business model to use. Rather, as we proposed to the SEC more than seven years ago — and as we proposed again to Congress last week — the U.S. government must cease blessing these conflicted rating agencies and stop requiring investors to rely on them.

If this solution had been implemented years ago, the rating agencies might have had time to adjust, the mortgage ratings fiasco might never have happened, and the market debacle I am forecasting would be far less likely.

Today, however, it’s too late for moderate or easy solutions. If the government does not act as proposed, the markets will. There really is no choice.

The Next Big Question…

If even a company’s supposedly “investment grade” bonds are suspect, how can anyone trust their shares?

The answer to this question is about to come very soon. So if you haven’t done so already, be sure to batten down the hatches.

Heed “Our Sixth Warning: Dow in Danger!” Move swiftly. Do not procrastinate.

http://www.moneyandmarkets.com/the-biggest-shock-of-all-39316?FIELD9

Chaos of the Bilderbergers?:

http://www.thedailybell.com/1106/Chaos-of-the-Bilderbergers.html

The Daily Bell - Friday, June 04, 2010 – by Staff Reporter

The Bilderberg group will convene in Sitges, Spain, a resort community 30 km from Barcelona, on June 4-7. ... Intending to prolong the global economic downturn for at least another year, the Bilderberg group hopes to take advantage of the situation to set up a "global ministry of finance" as a part of the UN. ... The debt crisis in Greece that currently puts in jeopardy the entire European financial system provides a pretext for drastic measures, and both the crisis and the measures are vivid illustrations of the strategy that employs chaos to reorder the existing arrangements. The deliberately generated chaos is tightly controlled by financial institutions, major banks, and hedge funds and serves as an efficient mechanism of governance and social restructuring. – Global Research

Dominant Social Theme: All is being decided, so calm down.

Free-Market Analysis: The Bilderberg group is meeting in Spain and unlike other years there has been relatively speaking a good deal of coverage of the meeting. We have already speculated that the reason has to do with the alternative 'Net press's relentless scrutiny. Thus, for the first time, the power elite has responded by placing some articles in the mainstream press as well.

The article, excerpted above, is certainly not "mainstream" but it is written by Olga Chetverikova and has a certain academic flair. The brief author bio at the end of the article describes Chetverikova as having a "Ph.D. in History," and explains she is "Assistant Professor at Moscow State Institute of Intentional Relations of the Foreign Ministry of the Russian Federation." Here's some more from the article:

EU mitigation measures are paving the way for the supranational institutions ... On May 21, the EU finance ministers adopted at a meeting chaired by European Central Bank president Jean-Claude Trichet and European Council President H. Van Rompuy the German plan of much greater budgetary coordination including penalties for states that break the EU budgetary rules. The sanctions will include suspending the voting rights of repeat offenders, withholding the funding for infrastructural development, etc. It was also proposed to subject national budgets to EU screening prior to their being debated in national legislatures. A report will be prepared by June 17 – notably, the date of the EU summit – outlining a common Eurozone policy. Other, yet more ambitious projects like full control over Eurozone national budgets by a triumvirate comprising the European Commission, the European central bank, and the Euro Group are also discussed.

The downsides of the rescue packages are the worst part of the problem. Invoking the threat of financial collapse, the EU countries serially introduced extremely unpopular austerity regimes with salary and pension freezes for state employees, welfare cuts, increased retirement ages, etc. Greece was the first but not the only country affected. The German government plans to cut spending by Euro 10b annually in 2011-2016. France abolished the annual pension for low-income families. Under the IMF pressure, Spain is launching a comprehensive reform including pension indexing freeze, pay reductions and employment cuts in the state sector, the abolition of payments to support families with recently born children, etc. Great Britain, Italy, and others are following the lead.

The consequences of the measures are hard to gauge considering that Europe is already facing serious poverty and unemployment problems (the unemployment has reached 10% of the economically active population and continues to grow, and at least 80 mln people are currently below the poverty line). Most likely, the shadow world government – the Bilderberg group – will administer to the public the dose of social problems carefully calculated to enable the elites "to offload troubled assets", retain control over the situation, and divert protests from the actual sources of problems that trigger them.

We've been grappling ourselves with these suppositions. Hamlet-like we have considered and reconsidered whether the EU crisis was in a sense planned or if it was an inevitable evolution. These things are never clear cut from the outside; perhaps it doesn't matter in terms of our analysis. We are aware that the EU elite did eventually expect the EU to travel to this parlous point. However, we maintain, as we have in the past, that the current downturn and the scrutiny of the internet itself has made it a good deal harder for the elite – the real elite (not merely the political one) – to implement further centralizing measures without a good deal of pushback.

From out point of view the anger is intense and will build over time along with "austerity" measures. Interestingly, Chetverikova seems to agree with us somewhat. She writes, above: "The consequences of the measures are hard to gauge considering that Europe is already facing serious poverty and unemployment problems (the unemployment has reached 10% of the economically active population and continues to grow, and at least 80 mln people are currently below the poverty line)."

This is a crux point. Ordinarily, the economic downturn would be attributed to the failure of capitalism and the usual leftist/populist claptrap would be rolled out. But this time the power elite is making its bid for expanded world governance when awareness of the REAL mechanisms of control is at an all time high. We have not been able to understand the haste with which the elite has acted of late.

The best reasoning we can come up with is that the elite realizes what is obvious – that its control is slipping generally as insight into its manipulations rises. It's still strange. Ramming through centralizing measures at a time of such heightened sensitivity is only going to aggravate the situation in our opinion.

When one looks back on the 20th century these days, one is astonished to find – if one is an active reader of alternative Internet sites – that the history of the 20th century is increasingly to be seen as one of falsehoods and disguises. It was, after all, money power that perhaps created the Soviet Union, generated two world wars and a slew of minor ones and generally inflicted upon the globe waves of socialism, environmentalism and fiat-money disasters.

Because we have been reading Dr. John Coleman lately, we would tend to place a good deal of these events directly at the feet of the Rothschilds who evidently and obviously dominated the 20th century and much of the 19th as well. Even the Bilderberger meeting, itself, strikes us as a conference, to a degree for high-level functionaries. These may be asked for advice but are probably being told what is in store for them in the upcoming 12 months.

Certainly, the elite is an admixture of the specific families and individuals plus a few institutional (religious) power centers. But the Rothschild's money-power has likely grown precipitously to unbelievable of amounts as a result of the fiat-money mechanism. The result is that the real decisions are taken by a tiny handful with their own agenda and motives.

Being human, even the elite can miscalculate. Did the power elite move too fast in the teeth of a great communication revolution? We tend to believe the current downturns in the West are stronger and more intractable than was anticipated – and that the elite will have a harder time controlling them. We think various elite dominant social themes are misfiring and that keeping them running smoothly may be difficult.

Conclusion: Historian Chetverikova writes, "Most likely, the shadow world government – the Bilderberg group – will administer to the public the dose of social problems carefully calculated to enable the elites ... retain control over the situation, and divert protests from the actual sources of problems that trigger them." We are not so sure. We will continue to scrutinize the memes of the elite to see how they are being received and whether any of them are eroding further. By their conversations ye shall know them.

US Economic Recovery of Lies:

http://thedailybell.com/1096/US-Economic-Recovery-of-Lies.html

Slow-motion recovery keeps unemployment high...

High unemployment isn't going away. The slow pace of economic growth shows the recovery is too weak to generate enough jobs for 15.3 million unemployed people. Layoffs are contributing to the problem. That's evident from an elevated number of weekly claims for jobless aid. Two government reports Thursday offered new evidence on all of those fronts. For many Americans, it doesn't feel much like a recovery. The unemployed face fierce competition for job openings. Those with jobs are watching their paychecks shrink. A growing number of people are at risk of falling into foreclosure. And only people with the most stellar credit are likely to get a new loan. "We're out of recession, but the recovery is not going to bring a whole lot of smiles," said Joel Naroff, of Naroff Economic Advisors. – AP

Dominant Social Theme: Growth is hard to come by and patience wins the day.

Free-Market Analysis: The trouble with economic reporting in the West is that it simply does not tell the truth. This AP story is a good example. Its main point is that the American "recovery" is not going to be strong enough to provide enough jobs for the 15.3 million unemployed. Now this supposition has two problems. First of all there is no "recovery" as it is commonly understood, and second we assume that the 15 million out-of-work figure is based on a 10 percent unemployment rate. In fact, that figure is very much in dispute because of the way American federal government analysts count – and then don't count – the unemployed. Many savvy observers believe that the unemployment rate is twice as high, at 20 percent, and we believe it to be even higher than that.

Anyway, as far as the US recovery itself goes, this is a most misleading conversation within the mainstream press. Even during less severe downturns, Western economies have continually degraded and this is no ordinary downturn as we have pointed out many times. This time around the fiat money system basically collapsed. The entire system has been on life-support for about two years now. What kind of extrication can be expected from such a quandary?

We figured that to save the system, central banks would have to pump an aggregate US$100 trillion into Western economies over a period of time. We're not sure how far along they are, or if they'll reach that figure but the amounts of debt-based money that has been created and loaned out or stuffed into commercial bank coffers is staggering. It hasn't all circulated but watch out (for hyper-inflation) if it does. Of course, that was before this latest sovereign debt crisis. Since central banks do all sorts of things they don't report – engaging in various kinds of swaps and derivatives trading, who knows what the final number may be. Here's some more from the AP article:

The economy grew at a 3 percent annual rate from January to March, according to a new estimate released by the Commerce Department Thursday. The new reading, based on more complete information, was slightly weaker than an initial estimate of 3.2 percent a month ago. Consumers spent less than first estimated. Same goes for business spending on equipment and software. And the nation's trade deficit was a bigger drag on economic activity. Those factors led to slower growth last quarter than first estimated.

In a separate report, the Labor Department said the number of newly laid off workers filings claims for unemployment benefits fell to 460,000 last week. But the latest level of claims is actually higher than it was at the start of the year. By this point in the recovery, economists had hoped claims would be in the 400,000 to 425,000 range. That would signal more robust job growth was on the way.

Sounds grim? It gets worse. This article was written just as first quarter American growth was revised DOWN – adjusted from an annual rate of 3.2 percent to just 3 percent, according to the Commerce Department. The expected growth rate was to have been about 3.4 percent. It certainly didn't get there.

In fact, there are plenty of statistics that could be marshaled to put this current recovery into focus. But when one starts to do that a trend emerges, and it isn't a pretty one. We recently came across an article in the socialist Monthly Review. The article, "Capitalism, the Absurd System – A View from the United States," was co-written by Robert W. McChesney, whom left-wing Utne Reader in 2008 listed as one of their "50 visionaries who are changing the world".

The article has some fascinating charts, including one that shows GDP growth shrinking from four percent in the 1940s to a little over one percent in the 2000s. The chart is attributed to the Bureau of Economic analysis and we're not sure if it adjusted for inflation. There is another telling chart in the article, showing how wages have fallen. The article describes the trend this way: "Worker productivity is much greater than it was back in 1975, but very little of this increased wealth actually goes to workers themselves. ... The wages of U.S. manufacturing workers have fallen rapidly during the last three and a half decades as a share of value added in U.S. manufacturing. The median wage of all nonagricultural workers has stagnated over the same period."

Given this context, it is interesting to see how the article explains the non-performance of Western capitalism – specifically in the United States – by turning to Marx for enlightenment as follows: "Marx's work provides searing insights on how to understand a society that, at the surface, appears to be one thing but, at its deeper productive foundations, is something else. Marx argued that a core contradiction built into capitalism was between its ever-increasing socialization and enhancement of productivity, and its ongoing system of private appropriation of profit."

Of course Marx never did seem to explain adequately how workers were deprived of their share of a growing pie of profits, and when it comes to explaining how current capitalist trends mighty be countered, the authors are similarly fuzzy: "Mere state ownership of key productive forces is not enough to create a socialist society; the people must exercise a sovereign rule over these productive forces and society as a whole, and the society must be organized to promote collective needs."

As usual, we wonder who exactly will "exercise a sovereign rule over these productive forces." Additionally, we would ask, when it comes to the organization of society "to promote collective needs," exactly who will be doing the organizing. This is always where collectivist solutions tend to fall down. They get hazy about who is going to provide the leadership that will lead the people to the promised land.

We think we can explain all this a little more succinctly using some free-market thinking. The problem with Western economies for at least the past 100 is central banking. It is central banks, by overprinting money that cause first booms and then busts. The power elite, rarely if ever mentioned in Marxian analysis, stands behind the central banking system – which began as an Anglo-American invention but has now spread around the world. As US Congressman Ron Paul has pointed out, the central bank is an engine of centralization. After every boom cometh a bust and after every bust more businesses go bankrupt and more of the middle class is washed away.

That's why the AP's statement about the American recovery certainly stretches the truth. (Of course it's not fair to pick on AP – the recovery meme is a promotion of the power elite and is virtually everywhere these days throughout mainstream US media.) The point is that Western recoveries under a central banking regime are inevitably fainter and fainter. Each recovery is weaker than the last while crises grow stronger and deeper.

As we recall Bell feedbacker F. Beard recently pointing out, the system is set up so that people "buy at the top" – take out loans and generally expand portfolios during the good times and then are faced with certain consequences when the economy turns sour. The problem is always the same: Loans are suddenly under water as debtors discover that the equity of their investments is worth less than what they owe. Bank lenders know the inevitability of this. Many borrowers do not.

Is the current economic crisis is some sort of turning point? In the past the power elite has shoveled money at commercial banks and securities firms – and then proclaimed a recovery when the stock market began to move up. Even when the recovery was weak and limited the elite could rely on the mainstream media to forcefully proclaim victory over recession, inflation, deflation, etc.

But with stock markets rising and the media crowing, it was never really possible to examine the extent of the damage in a prolonged or realistic way. That's changed now. The Internet has allowed real discussions of the economic fraud of the so-called modern capitalist system. And the system itself has so badly failed in the past few years that it is probably much more difficult to cover-up the damage this time.

Conclusion: For those apt to defend the system, the next few years likely shall prove both difficult and unforgiving. We anticipate continued conversations about alternative forms of money and different ways of approaching the economy. The elite of course shall suggest further centralization and central banking control. But we have a feeling that this will be a hard argument to make. The mainstream press has lost credibility as regards these matters. Articles such as this one published by the AP will be an increasingly hard sell to an increasingly informed public.

Waddell is the Mystery Trader in Last Thursday's Market Plunge:

http://www.reuters.com/article/idUSTRE64D42W20100514

(Reuters) - A big mystery seller of futures contracts during the market meltdown last week was not a hedge fund or a high frequency trader as many have suspected, but money manager Waddell & Reed Financial Inc, according to a document obtained by Reuters.

Waddell sold on May 6 a large order of e-mini contracts during a 20-minute span in which U.S. equity markets plunged, briefly wiping out nearly $1 trillion in market capital, the internal document from CME Group Inc said.

The e-minis are one of the most liquid futures contracts in the world, providing holders exposure to the benchmark Standard & Poors 500 Index. The contracts can act as a directional indicator for the underlying stock index.

Regulators and exchange officials quickly focused on Waddell's sale of 75,000 e-mini contracts, which the document said "superficially appeared to be anomalous activity."

Gary Gensler, chairman of the Commodity Futures Trading Commission, said in congressional testimony on Tuesday that it had found one sale was responsible for about 9 percent of the volume in e-minis during the sell-off in the U.S. markets.

Gensler said there was no suggestion that the trader, who he did not identify, did anything wrong in only entering orders to sell. Gensler said data shows that the trades appeared to be a bona fide hedging strategy.

The CME document shows that during the sell-off and subsequent rally, other active traders in e-minis included Jump Trading, Goldman Sachs, Interactive Brokers, JPMorgan Chase and Citadel Group.

During the 20-minute period, 842,514 contracts in e-minis were traded while Waddell from 2 p.m. to 3 p.m. traded its contracts, CME said. The CME document did not provide a break-out of Waddell's trading during the crucial 20 minutes.

Overland Park, Kansas-based Waddell did not comment. CFTC also declined to comment.

A CME spokesman, who declined to comment on the document, said the Chicago-based futures exchange operator never discusses customer activity.

"We found no evidence of improper trading activity or erroneous trades by CME Globex customers," said CME spokesman Allan Schoenberg.

Waddell's contracts were executed at Barclays Capital and later given up to Morgan Stanley, according to the document.

CME said it spoke to representatives from both banks on May 6 and planned to speak to Waddell representatives the following day. The firm oversaw $74.2 billion in assets as of March 31.

Morgan Stanley told CME that it "did not have concerns regarding the activity," the document said, because Waddell "would typically use equity index futures to hedge macro market risk associated with the substantial long exposure of its clients."

'QUITE A SHOCK TO THE MARKET'

Gensler said the contracts were sold between 2:32 p.m. and 2:51 p.m., the height of the meltdown.

The market for e-minis on May 6 fell more than 5 percent in a little more than 5 minutes starting at 2:40 p.m. -- the height of the crash, the document said. The e-minis began to recover before stock prices turned higher.

An order the size of the Waddell contract would be a big trade to execute on a normal day, said a trader whose firm is active in S&P 500 futures market. About 50,000 contracts are typically traded in an hour, the trader said.

"To get rid of 75,000 contracts, that's a lot of trading even if the market is healthy," the trader said. "But when suddenly the market changes and there's not as many bids there to trade with, 75,000 is going to cause quite a shock to the market."

"That's an enormous position for anybody, whether it's a hedge or whether it's a trade. It's a big position, no doubt about it," the trader said.

(Additional reporting Matthew Goldstein)

(Reporting by Herbert Lash and Jonathan Spicer. Editing by Robert MacMillan)

Buffett defends Goldman, joins greed Conspiracy:

By Paul B. Farrell, MarketWatch

http://www.marketwatch.com/story/buffett-defends-goldman-joins-greed-conspiracy-2010-05-11

May 11, 2010, 3:33 a.m. EDT

ARROYO GRANDE, Calif. (MarketWatch) -- Warning: Bears taking over. Time to short Buffett's new "Baby Berkshires," short Goldman, short Moody's and other favorites of Uncle Warren.

Why? Behind the façade, the lovable, good ol' Uncle Warren strumming his cute little ukulele, ostensibly supporting reform, there's a dark force that's part of the toxic Goldman Conspiracy fighting to keep alive everything that's wrong with Wall Street, everything that got us into this mess, everything that will trigger another meltdown that even Uncle Warren says: "I can guarantee it."

Buffett belongs to the past while the news screams of a new world order ... Riots in Greece, more coming when the other PIIGS demand EU bailouts ... conservatives regain Britain ... unregulated BP's greed is spilling millions of gallons of oil destroying Gulf states, confirming Foreign Policy magazine warning of the "End of the Age of Oil" ... the Dow's techno-fear-driven irrational 1,000-point plunge as technicians turn bearish, ending the year-long bull rally ... even Hank Paulson's changing his tune, warning the Financial Crisis Commission that we need stronger reforms than Dobb's Senate bill.

Meanwhile, out there, seemingly oblivious of the gathering storm is an aging Woodstock hippy, good Ol' Uncle Warren strumming away on his ukulele, an over-the-hill rock star basking in the adulation of 40,000 adoring shareholders at their annual meeting in Omaha's Qwest Center ... a scene reminding us of Nero fiddling as Rome burns ... of the string quartet playing on the deck of the sinking Titanic ... of a Shakespearean tragedy with a raging, blind King Lear trapped, in denial of his role in America's collapsing empire.

Yes, folks, Uncle Warren has a bad case of denial. Remember, not too long ago Buffett was calling derivatives "weapons of financial mass destruction." And yet, there he was on stage at his love fest last week defending Wall Street's most toxic companies, trapped in denial, defending the greedy culture that got America into its current mess:

Praising Moody's "business mode," and by inference all rating agencies that blindly rubberstamped Wall Street's toxic debt, setting up the last meltdown

Defending Goldman Sachs bad behavior despite the fraud suit and a possible criminal indictment (while hiding his own conflicts of interest as a big investor in both Moody's and Goldman)

Praising Goldman's CEO Lloyd Blankfein ... by far Wall Street's greediest fat-cat banker who paid himself $68 million of his stockholders profits last year

Defending Goldman with a bizarre argument that Goldman is no more guilty than the other Wall Street banks, a tacit approval of the bad behavior of all Wall Street banks in the Goldman Conspiracy

Worse, ol' Uncle Warren also tried deflecting attention from Wall Street's corrupt business model by blaming government regulators for the meltdown, another example of Uncle Warren's blind denial, ignoring the fact that in the past year Wall Street spent over $400 million on lobbyists and campaign cash to make absolutely certain regulators, Congress and the Obama team all played along with Buffett's songs that guarantee Wall Street controls Washington regulators

Ironically, all this comes from a man who once lectured Congress on "Moral Integrity: I want employees to ask themselves whether they are willing to have any contemplated act appear on the front page of their local paper the next day, read by their spouses, children, and friends ... Lose money for my firm and I will be understanding; lose a shred of reputation for the firm, and I will be ruthless"

Yes, Buffett's in denial ... just like his banker buddies ... so short Buffett, short Baby Berkshire, short Goldman, short Moody's. Why? They are all "shorting America," piling on debt that's pushed our debt-to-GDP ratio to 92%, past the IMF's 90% danger zone.

Main Street's also in denial ... forget hedger John Paulson's crooked subprime deals that made him and Goldman billions ... forget the hedgers in Michael Lewis' new "The Big Short" ... it's not the hedgers shorting America, it's the bosses inside Wall Street banks, their greedy co-conspirators inside Washington and now Uncle Warren, a nice guy who once thought derivatives were evil "weapons of financial mass destruction," but who's now defending every weapon Wall Street will use to stay in "business as usual," beating Main Street's 95 million investors, a corrupt business model destroying from within.

Wall Street's denial is blinding: Buffett and his merry band can no longer see how blind they are. They just keep strumming the same ol' tunes. Well folks, until they stop shorting America, we'll just keep reminding you of the debt their business model is creating.

So here are my best estimates, mostly from reported resources, of the huge debts Wall Street is dumping on America, the big bubble they're already blowing, driving the global economy headlong into another meltdown that will trigger the Great Depression II. And likely, with all this debt, soon you can bet taxpayers will stage a revolution making Main Street American streets far worse than Athens:

1. Federal government debt ... $14.3 trillion

Federal debt limit doubled since 2005 to $14.3 trillion limit. Bush/Cheney wars pushed U.S. deep into a debt hole. Military kills 54% of budget. Expect 4% deficits through 2020.

2. Treasury and Fed cheap-money policies ... $23.7 trillion

The Fed's shadowy printing presses have created an estimated but unaudited $23.7 trillion in credits, grants, loans and guarantees, backed by taxpayers. Pure profit.

3. Social Security's rising debt ... $40 trillion

Soon we must either cut benefits or raise taxes 40%. Delays worsen solutions. By 2035 Social Security and Medicare will eat up the entire federal budget, other than defense.

4. Medicare's unfunded debt ... $60 trillion

Going broke faster than Social Security. Prescription-drug benefit added an unfunded $8.1 trillion. In 5 years estimates rose from about $35 trillion to over $60 trillion now.

5. Annual health-care costs ... $2.5 trillion

Costs rising faster than inflation. Burden increasingly shifted to employees. Recent Obamacare plan would have cost $90 billion annually, paid to Big Pharma and insurers.

6. Secretive global derivatives trading ... $604 trillion

Wall Street resists all regulation of their gambling casino that leverages the combined $50 trillion GDP of all nations by a 12:1 ratio. Warning: Less than 2% of Wall Street's derivative bets triggered the last meltdown. Buffett "guarantees" it will happen again.

7. Population growth of 50% vs. Peak Oil demands ... $30 trillion

United Nations says global population is increasing from 6 billion to 9 billion by 2050. China and India need 500 new cities each. Billions more humans want autos, using up limited resources, shifting more costs to America, as commodity price increases and new resource wars.

8. U.S. dollar losing as reserve currency ... $20 trillion

As China's economy rockets past America's, the dollar will be replaced as the chief foreign reserves. The shift will devalue the relative worth of all America's assets.

9. Global real estate losses ... $15 trillion

Commercial real estate is bloating 25% of U.S. bank balance sheets. Dubai Tower, world's tallest, is empty. China collapse will upstage, further depress America's market.

10. Foreign trade and ownership ... $5 trillion

Foreigners own more than $2.5 trillion of America. China holds over $1 trillion Treasury debt. $40 billion new deficits added monthly. Total climbing at $400 billion annually.

11. State and local budget and pension shortfalls ... $3.5 trillion

Shortfalls of $110 billion in 2010, $178 billion in 2011. On top of more than $450 billion in annual shortfalls in local government employee pension funds. L.A.'s near bankruptcy.

12. Corporate pensions plus 401(k) plans ... $3.2 trillion

Only 30% of Americans have enough to retire. There's $2.7 trillion in 401(k) plans. And 92% of corporate pension plans are underfunded, with defaults guaranteed by taxpayers.

13. Consumer card debt ... $2.5 trillion

Americans are still living beyond their means. Even with a downturn, consumer debt rose from about $2.3 trillion to $2.5 trillion. Fat Cat Bankers love it, yes, love making matters worse by gouging cardholders and mortgagees, blocking help in foreclosures and bankruptcies.

14. Lobbyists annual costs ... $1.4 trillion

Wall Street bankers, Corporate CEOs and Forbes 400 Richest spend billions to influence elected officials, regulators and bureaucrats with lobbyists and campaign donations to exercise power over government. Voters are easily manipulated, but it takes lots of cash.

The total of all 14 categories of debt is a mind-blowing $825 trillion that includes "apples and oranges," jet fighters, derivatives and insurance fees, credit cards, autos and mortgages. There are more, and of course these are just estimates. Given the lack of transparency on Wall Street and in Washington, our debt is likely over $1,000 trillion.

What must you do? Wake up, drop your denial, get active, demand guys like Uncle Warren, his fat-cat buddies and Obama's team snap out of their denial, fight a return to the old greedy, toxic, destructive culture ... demand that your elected reps in Washington pass 1930's-style financial reforms ... or America will soon trigger a bigger meltdown, a new Great Depression II and no longer be the world's leading superpower.