Jul 07, 2014
It’s an incredibly special time in the US and niche-specific parts of the globe.
That is, IF you are among the 1% that is closely connected to major money center banks, investment houses, and/or governments around the world. The “money cartels” control literally 90% of all paper money in circulation, and unfortunately, carry that “Master of the Universe” over-sized, unchecked ego’s to go with it. They also have full access to top leaders in government, illegall inside information, high speed trading tech, and some of the most toxic derivatives ever invented, which then allows these corrupted 1% moneymen to make money off of US on a daily...nearly 100% of the time effective basis as well.
What’s that old saying? “Power corrupts; absolute power corrupts absolutely”….yep.
Stock markets are at or approaching all time highs, the job market is supposedly getting better (as long as you enjoy part time/minimum wage incomes), and speed of light increases in new technology…in order to make our lives easier and more efficient…keep coming at breakneck pace. Advancements in technology…especially the kinds that we are witnessing right before our eyes… are the stuff right out of science fiction movies from just a decade ago. Crazy. And this has to be good, right?
Well, “probably so”. To play devils advocate on one of the most important conversations of our lifetime, consider the following (and I believe incredibly insightful) quote from a most infamous person.
“It is not possible to make a LASTING compromise between technology and freedom, because technology is by far the more powerful social force and continually encroaches on freedom through REPEATED compromises. Another reason why technology is such a powerful social force is that, within the context ofgiven society, technological progress marches in only one direction; it can never be reversed. Once a technical innovation has been introduced, people usually become dependent on it, unless it is replaced by some still more advanced innovation. Not only do people become dependent as individuals on a new item of technology, but, even more, the system as a whole becomes dependent on it.
When a new item of technology is introduced as an option that an individual can accept or not as he chooses, it does not necessarily REMAIN optional. In many cases the new technology changes society in such a way that people eventually find themselves FORCED to use it.”
Regardless of your personal position on advancements in technology, I doubt anyone can seriously disagree with the above quote…maybe not even when you find out who wrote it….none other than Ted Kaczynski. You know, the mad-man that came to be known as the “Unabomber”, having forced the NY Times to publish his "Manifesto", along with his promise that he would stop bombing people if they would publish (he bombed and killed 3 and injured 23 from the late 70’s to mid 90’s).
Long story short….the FBI tracked this mental case down through Kaczynski’s own brother, who recognized his writings, following the Times decision to publish.
Sorry folks….not to go all Ted Kaczynski on you today, but he makes a compelling case about the future of global cultures, personality “adjustments”, and the future of mankind’s freedoms and prosperity….most all due to technological innovation.
Final point before we leave this discussion behind. Even if you disagree with every single thing that this insane murderer had to say, maybe remember this as well;
If you work in traditional retail and your company is similar to a Radio Shack, JC Penney….or pretty much ANY local mall type business….how have the advances in technology helped you and your job security? Your income? Your safety net? Your retirement?
And of course, as time goes on, the dislocations from tech advancements will only increase; One robot doing the work of 50 men/women…driverless cars/trucks that make the driver “optional”….or consider the wisdom of what Larry Page (Google CEO) had to say just this weekend on the subject of advances in technology and the resulting job destruction;
"You just reduce work time," Page said. "Most people, if I ask them, 'Would you like an extra week of vacation?' They raise their hands, 100% of the people. 'Two weeks vacation, or a four-day work week?' Everyone will raise their hand.”
Yep….my hand is up Larry. I would also like for my children’s colleges to accept in payment my eternal gratitude and best wishes, in lieu of actual money.
“Most people like working, but they'd also like to have more time with their family or to pursue their own interests. So that would be one way to deal with the problem, is if you had a coordinated way to just reduce the workweek. And then, if you add slightly less employment, you can adjust and people will still have (part-time) jobs."
Brilliant stuff here Google CEO….must be nice to be worth $100 billion. Heck, I might even say stupid sh*t like this if I had that kind of bank roll. The truly interesting part of all of this is that other "next level thinkers” seem to agree with Page. Folks….here’s the reality….Page and other major leaders in tech are well aware of the job losses coming from technology displacement. They’re just giving us fair warning… now.
But hey, that’s long term stuff right? All is well now….it’s back to business as usual….time to forget those ugly last 7-8 years.
However, since I enjoy being a fair and balanced reporter, let’s take a quick look at the flip side.
Jobs and the Economy
Great “headline” unemployment number out this past Friday. Turns out we are down to a 6.1% unemployment as the US added well over 280k jobs in June. Let’s freakin’ celebrate, right? Hmmm…..as it turns out, the US actually LOST 500k FULL TIME jobs….while adding about 800k PART TIME jobs…..you know, those benefit-less 20-30 hour work week jobs that “may” pay you $10/hour. Have fun paying your ever increasing gas, electricity, rent and food bills (thank you currency inflation) with these awesome new jobs….which our fine Prez will no doubt be bragging about all over the country as he tries to save his bacon as the LOWEST rated President in the last 70 years. Kudo’s BHO…you’ve been a true unifier of the country…without question, you absolutely represent all of us.
The Reality of the Stock Market & The Madness of Crowds
First, what we are witnessing is not real. What I mean is this; yes….stocks are in fact going higher, no one could question that. Here’s what’s not “real” about it.
The propellant of higher equity prices had it’s origin in something we all know well….the Federal Reserve/Central Bank fiat currency printing press. But we’ve known this for years. This grossly manipulated, financial Frankenstein, cannot and will not last. Folks….its always “different this time”….until its not.
Here’s what’s driving prices higher NOW….there’s a massive merger and acquisition boom spreading across the planet….of course all due to cheap and easy central bank money. Fortune 500 co’s (and more) are now issuing debt at all-time low interest rates, then using the proceeds for either share-repurchase programs, or much more commonly now, to simply buy out their weaker (but important) competition. Sounds great right….like smart business…and maybe it is. But there’s a larger and much more important question to ponder.
What’s the first thing to take place following a merger/buyout?? You guessed it….corporate downsizing! Or, what my boss at my Wal-Mart told me at the age of 17 (when I requested time off for a senior graduation trip); “Son….if you do this, we will have to let you go”. So yes, I went on the trip….and yes, he corporate downsized me.
And this is the harsh reality of the M&A binge now….FAR more full time employees losing their jobs. And yes, this is one of the increasingly important reasons why the Labor Force Participation Rate will continue to climb to new highs, which very sadly stands at a 35 year high, with more than 92 million adults out of work here in the good ole USA. Come on BHO….let’s hear you tell this truth just ONCE. I think we all know the odds of this happening. About the same as the odds of finding a single person that knew BHO or ever saw him on the campus of Columbia U. Don’t believe me? Think I’m being a right-wing hater?
Just ask our good friend Wayne Allyn Root…..BHO’s classmate at Columbia for the same 4 year period (as in exact). I don’t want to steal too much of Wayne’s thunder, so let me encourage you to BUY Wayne’s new book….out July 14th…”The Murder of the Middle Class”…on Amazon or Wayne’s site (pre-order til next week). The primary title sounds a bit depressing, I know, but the bi-line makes it a must read; “How to Save Yourself and Your Family From the Criminal Conspiracy of the Century”. I’m halfway done with my advance copy now and Wayne really delivers with this focused and spot-on, in your face effort. Of course, I would have been blown away surprised if he hadn’t. W.A.R. is the single most consistent, common sense and passionate conservative that I have ever had the great pleasure of knowing. He’s also become a close personal friend, and someone that’s always under-promised and over-delivered for us. Let’s support our good friend and invest $25 or so into a great book …you can thank me later.
Final Thoughts and Actions to Take
First, shorting this market takes big brass ones….which is probably exactly why we should be short this over-heated bull right now….except for this old-time market adage; “the market can stay irrational much longer than we can stay solvent”. Talk about words of wisdom.
Folks, at this point EVERYONE is bullish. At least all the regulars you’ll see in print and on TV. Probably a good time for anyone serious about money management to read “Extraordinary Popular Delusions and the Madness of Crowds” by Charles McKay (1841). This book allowed me to get out of the dot-com crazed stock market mania in late 1999….just months before that HUGE top was in place….which saved my Wall Street clients a ton of money (and ultimately led me to start the VRA, in 2003).
What is it that Buffet says? “We should be greedy when others are fearful and fearful when others are greedy…”. My educated guess is that Mr. B is taking profits right now on many of his holdings….which we won’t find out about of course until the end of the quarter (when Berkshire Hathaway files).
VRA Recommendation? By my count, there are more than 10 black swan probabilities, and literally anyone of them could take place tonight. And, if just one does, the Dow Jones opens down 1000 points. So….I’m gonna pass on any long reco’s, others than those in the VRA Portfolio of course. I’ve seen this movie before….it doesn’t end too well for most of the sheeple, which love to invest right at the top.
By the way, did you notice the VIX index today? It rose by 10% on a fairly quiet day….something I find quiet interesting. The VIX looks ready to pop higher - big time.
Also, continue to buy gold and silver with every chance you get. Inflation is coming….of this there can be no doubt. How do I know this with absolute certainty? One, the very definition of inflation is an increase in money supply/printing….check. Two, I can see currency inflation end-results everywhere I go. Sure, IPhones and IPAD’s may be dropping in price, but amazingly, it’s still tough to eat these (where’s Job’s when you really need him).
And, with inflationary prices, bond prices will be destroyed from current levels…meaning that bond yields must head higher. Folks, before long, we will begin to see skyrocketing rates.
Until next time….thanks again for reading. Stay Frosty.