Author Archives: Lila

Financial Follies: Dollar dithering….

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“One of the big differences between the current situation and the situation in early October of 2005 is that in October of 2005 the US$ had been trending upward for 9 months and was close to an intermediate-term peak, whereas the US$ is currently (in our opinion) at the tail-end of an intermediate-term decline. Putting it another way, the US$ has considerably more upside potential now than it had in October of 2005. In fact, we think the US dollar can currently be likened to a beach-ball that is getting pushed further and further underwater. The pressure being applied by speculative selling may continue to force it lower in the very short-term, but at some point in the not-too-distant future it will catapult upward. We therefore continue to perceive significant downside risk for gold and substantial downside risk for gold stocks associated with a US$ recovery.

The downside risk for gold stocks is much greater than the downside risk for gold bullion, for two reasons. First, the gold-stock indices recently became extremely ‘overbought’ relative to gold bullion. Second, US$ weakness has been one of the propellants of the global stock market rally, so the initial phase of the US dollar’s next upward trend will probably be associated with parallel declines in the gold market and the broad stock market. This could result in gold stocks being simultaneously hit from two directions.

Outlook

Gold bullion ended last week at a new multi-decade high while the HUI finished the week about 2% below its 11th May-2006 and 21st September-2007 peaks. This is a bearish divergence because the stocks typically lead the metal at important turning points, although it clearly wouldn’t take much additional strength from here in the gold-stock indices to eliminate the divergence.

Regardless of whether the HUI is in the process of completing a major double top or is immersed in an intermediate-term upward trend that will take it much higher over the coming months, a sizeable pullback is likely to occur over the next few weeks. As previously advised, history tells us to expect the HUI/gold ratio to trade at least a few percent below its 40-day moving average prior to the next short-term bottom. If this happens over the next few weeks and gold concurrently pulls back by around 5% then the HUI will drop to the 340s.

The sort of pullback described above is the most likely short-term outcome even if the overall upward trend is going to remain intact.

The risk is that a top of longer-term significance is currently being put in place. This possibility doesn’t mesh with the current fundamental backdrop and is therefore not the most likely intermediate-term outcome, but the fundamentals could change and therefore need to be continually re-assessed. Just to quickly recap, the main fundamental drivers of the gold price are credit/yield spreads, nominal interest rates, inflation expectations (the expected rate of purchasing-power loss), and currency exchange rates….”

Says Steve Saville at Speculative Investor.

Comment:

Well, this has been my thinking too (I think the Fed Reserve’s future rate cuts this year have been priced into the dollar already), but the sharpness of the decline following September’s cut took me by surprise. So much so that I am no longer sure of my dollar reversal theory.

I worry that should the credit problem unravel further and show signs of hitting the banks even more, there will be a run on the dollar.

What to do? When in doubt, do nothing — especially nothing that is too fast or too drastic. Think incremental. Take metal/foreign currency profits in increments on dollar strengthening but be prepared to do a 180 degree pirouette and buy back when the dollar moves against you.

This makes you, of course, a speculator and a trader.

Neither activities terribly good for the economy or the social fabric.

But you are absolved from guilt. When the big fish trade, the little fish have to as well. For several years now, buy and hold has been a bad strategy except for the sharp of wit and the deep of pocket. For the rest of us, guessing the short term movement for buying opportunities, and knowing the long term trend for knowing what to buy has been the best strategy.

The trend for the dollar is down. But right now, we might be at the end of a midterm decline.

On the other hand, there is a  wild card —  the credit crunch…..

Nothing like stumbling  on the rairoad tracks with your belongings in a bundle and trying to second guess the speed of the train bearing down on you.

Holocaust Denial….. in Iraq

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“A bottom-line measure of the consequences of human actions is provided by excess deaths (avoidable deaths, deaths that should not have happened, excess mortality, avoidable mortality). Excess deaths can be VIOLENCE-related (from bombs and bullets) or NON-VIOLENT (due to deprivation). For a detailed analysis of excess deaths from violence and deprivation see “Global avoidable mortality”: http://globalavoidablemortality.blogspot.com/and “Body Count. Global avoidable mortality since 1950”: http://globalbodycount.blogspot.com/ and http://mwcnews.net/content/view/1375/247/ ).

Authoritative estimates of violent and non-violent Iraqi excess deaths now show that the post-invasion excess deaths in Occupied Iraq total 2.0 million (see: http://open.newmatilda.com/crosswire/ ), the 1990-1990 Gulf War violent deaths totalled 0.2 million (see: http://wiki.answers.com/Q/How_many_Iraqis_died_in_the_Gulf_War ), and the 1990-2003 Sanctions War was associated with 1.7 million excess deaths. The total 1990-2007 excess deaths in Iraq now (September 2007) total 3.9 MILLION (see: http://mwcnews.net/content/view/17066/42/ ).

The post-invasion NON-VIOLENT deaths in Iraq (now 0.7-0.8 million) are being caused by grievous deprivation by the US Coalition Occupiers in gross violation of the Geneva Convention (see: http://www.unhchr.ch/html/menu3/b/92.htm ). The post-invasion VIOLENT deaths (0.8-1.2 million) are being caused by violence from Occupiers, failure of Occupier security, Indigenous fighters and their confrères, from directly or indirectly US-funded sectarian militias, Government militias and death squads and by US mercenaries….”

Gideon Polya at Countercurrents.

MindBody: Father of genetics or mother of invention?

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“Francis Crick, the Nobel Prize-winning father of modern genetics, was under the influence of LSD when he first deduced the double-helix structure of DNA nearly 50 years ago. “The abrasive and unorthodox Crick and his brilliant American co-researcher James Watson famously celebrated their eureka moment in March 1953 by running from the now legendary Cavendish Laboratory in Cambridge to the nearby Eagle pub, where they announced over pints of bitter that they had discovered the secret of life….”

More by Alun Rees

Comment:

Yeah, yeah, yeah…

The genius Crick on crack — what a crock.

There’s another story there that’s more interesting and much darker…

The greater part of the credit for the discovery should actually go to the brilliant Rosalind Franklin, at the time about 30-31. Franklin died at only 37, cutting short a highly productive career. At least, Crick had the grace to eventually concede that she was two steps away from the double helix (can we trust that concession, I wonder). Watson actually trashed her in a vainglorious account of his own genius.

I first saw the film, The Double Helix, when I was booted out of Heathrow – for having forgotten my green card – at the interesting hour of 1 PM in London. Sent to a rather curious establishment run by the younger son of a Marathi businessman – who confided in me that he could sneak me into the London population, undetected, for the right sum, if I wished. Having neither the sum nor the wish, I managed to invite myself to friends of a friend whom I vaguely recalled lived somewhere near Kensington. The friends of the friend were as kind as they were bright – she, a psychiatrist, he a researcher at the Cavendish lab.

“Oh, Cavendish – Watson and Crick! Double helix!” I said with the gush that the not-faintly-scientific reserve for the annointed ones of modern society. That’s when I learned about Rosalind Franklin and the theft of her work.

“In [The Double Helix by James Watson] he tells about how happy they were, he and Crick, that my husband was not allowed to come because had he come, he would no doubt have seen these excellent photographs that Rosalind Franklin made and had and which, when they saw them, with their other data, they were able to work out the structure of DNA…[If] ever there was a woman who was mistreated, it was Rosalind Franklin, and she didn’t get the notice that she should have gotten for her work on DNA.”

– Ava Helen Pauling, interview with Lee Herzenberg, Sept. 1977

We think of intellectual elites as somehow purer than financial or political elites. We see them as untouched by the same temptations. Above the usual vices. It may be time to become more realistic. And to question the people and the practices in the temple of science.

Idols of the cave?

MindBody: beyond good and evil..

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“He who seeth me in all things and all things in me looseneth not his hold on me and I forsake him not…… He who by the similitude found in himself seeth but one essence in all things, whether they be evil or good, is considered to be the most excellent devotee…”

Bhagvad Gita VI

Comment:

The “me” is the Self — which is consciousness, minus the subject-object dichotomy involved when we perceive…..and categorize. The passage is an exhortation, in the traditional manner of Eastern religion, to loosen the grip of the ego and see everything as different aspects of one.

This is a powerful passage, but psychologically, deeply problematic for me. Is equanimity the highest of all goals? Indifference to outcomes. Eastern religions tend to say so.

To what degree do the emotions cloud the mind? Do they always cloud it? To what degree do they enhance it? Different times and places have given us different answers.
And there is a paradox in the passage. Supposedly, the emotions arise  from attachment to the ego. Attachment to the ego prevents you  from experiencing the indivisibility of consciousness. But, at the same time,  how do you detach from your emotions without experiencing some degree of that indivisibility in the first place.

The role of the emotions in moral judgment in the west and east might seem like a strange place to go for a blog on politics. But surely, the way we think about things has an influence on how we react to them and shape them by action. Our emotions allow us to be manipulated in specific ways.
Bush’s Manichean perception of the world as locked in a struggle between good and evil might seem to be an obvious example, at first. But I’m not certain if we are not just making easy generalizations there. There are probably plenty of people who do not see the world in such black and white terms, and yet have also been guilty of the same bellicosity. It seems to me it isn’t duality so much as conviction of rightness (despite all evidence to the contrary) that is dangerous.

But then again, if you peer into that idea a bit more, you realize that you can only be that convinced about the rightness of anything because you refuse to accept that every thing carries its opposite within it.

So, more than dualism, it’s a kind of absoluteness of perception, an overzealousness in action that seems to be the problem.

“The best lack all of conviction,

The worst are full of a passionate intensity.”

Iraq war mongering: Exhaustive report concludes Blackwater is not Catholic Charities…

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Naturally, it takes a government committee to discover that rain is wet stuff – and Blackwater doesn’t care a  rat’s derriere about civilian deaths in Iraq. The high priced hitmen are taking home chunky checks (bigger than yours, I’ll bet) for mixing it up with the locals….

“The report, prepared by the majority staff of the committee, also says Blackwater has been involved in 195 shooting incidents since 2005, or roughly 1.4 per week.”

In more than 80 percent of the incidents, called “escalation of force,” Blackwater’s guards fired the first shots even though the company’s contract with the State Department calls for it to use defensive force only, it said.”In the vast majority of instances in which Blackwater fired shots, Blackwater is firing from a moving vehicle and does not remain at the scene to determine if the shots resulted in casualties,” according to the report……

Comment:

Drive-by is what we call that here in the US. And they lock you up should you chance to try your hand at it. Little did you know, gentle reader, that a mere hop and a skip across the ocean and you get to be paid like a minor potentate for rubbing out the natives.

“The staff report says Blackwater has made huge sums of money despite its questionable performance in Iraq, where Blackwater guards provide protective services for U.S. diplomatic personnel.

Blackwater has earned more than $1 billion from federal contracts since 2001, when it had less than $1 million in government work. Overall, the State Department paid Blackwater more than $832 million between 2004 and 2006 for security work, according to the report.

Blackwater bills the U.S. government $1,222 per day for a single “protective security specialist,” the report says. That works out to $445,891 on an annual basis, far higher than it would cost the military to provide the same service….”

More about our costly little capos here.

Econ-job: Should Big Ben strike….and strike…and strike again?

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Pimco’s Bill Gross takes the minority position that Bernanke is right to side with US home-gambling and risk a run on the dollar:

“PIMCO’s view is that a U.S. Fed easing cycle historically has required a destination of 1% real short rates or lower. Under a conservative assumption of 2½% inflation, that implies Fed Funds at 3¾% or so over the next 6-12 months. Actually that’s only two, 50 basis point reductions, something that could, but probably won’t, be accomplished by year-end. Don Kohn’s asymmetric elevator will likely be interrupted by false hopes of a housing bottom, fears of a dollar crisis, or misinterpreted one month’s signs of employment gains and faux economic strength. The downward path of home prices, however, will dominate Fed policy over the next several years as will the lingering unwind of related financial structures and derivatives that have yet to be discovered by the public, and marked to market by their conduit holders.Know nothing? Perhaps they now know more than I or Jim Cramer gave them credit for on that raucous day in August. If they do, however, their options are limited by Republican political orthodoxy, the receding willingness of the private sector to extend credit, and a still exuberant global economy. What do they know? I suspect at the very least they know they’re in a pickle, and a sour one at that.

Your betting we get below 3.75% analyst,

 

Police State Chronicles: Dumbo and Eeyore are out to get us…

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“The two branches of the Establishment party are joined in a totalitarian entente, one of them promoting militarism abroad and police state coercion at home, the other pushing wealth redistribution and social engineering everywhere. Granted, the dichotomy isn’t absolute, and each branch dabbles in the other’s metier — something about which I’ll have more to say anon. But as a matter of “branding,” the division of labor described above is pretty reliable.

And the dialectical synthesis of these two varieties of statism is a bigger, bloodier, costlier and more invasive welfare/warfare/social engineering state that is literally at war with the American people.

Recall Kennedy’s words about the federal hate crimes law: “`We are going to fight terrorism, hatred, and bigotry here at home.'”

William Grigg at Pro Libertate.

Financial Follies: UBS hit by credit crunch

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(CNNMoney) — UBS, the Swiss bank, is expected to announce Monday a third-quarter loss of 600 million to 700 million Swiss francs ($510 million to $600 million) from its fixed-income unit, according to a published report.

The fixed-income loss would be announced before UBS’s overall third-quarter results, which are due October 30, according to the Wall Street Journal, citing people familiar with the situation.

The loss is based on a writedown of 3 billion to 4 billion Swiss francs for fixed-income assets, the Journal reported on its website Sunday.

Partly the fixed-income losses stem from continuing costs associated with writing off bad bets by its in-house hedge fund, Dillon Read Capital Management, in the subprime mortgage market, according to the Journal. But other securities held by the fixed-income division contibuted to the loss too, it said.”

More here at CNN Money

Ron Paul Revolution: Ron raised a million in seven days…

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“In one comment, written as a response to a post at the quintessential neoconservative and freedom-hating blog, Red State, a reader unsupportive of Paul points out the obvious for most neoconservatives, that Ron Paul’s ability to raise a million dollars in seven days is “[expletive deleted] scary.”
And:

“Ron Paul refuses to convert disagreements into personal arguments which create animosity. His tactic is to merely present his side of the argument while acknowledging that this is part of his core belief system and not an indication that those who disagree are stupid or evil. This has trickled down to his supporters who, for the most part, avoid political arguments and instead implore the uninitiated to simply discover for themselves what Ron Paul is saying. This tactic has worked brilliantly. Ron Paul’s message is genuinely compelling and his defense of these views has been consistent and dogged over the past 30 years; no matter what obstacles are thrown before him. That is the basis for his supporter’s enthusiasm. He truly means what he is saying. Unlike his counterparts, he does not have to waste any words explaining why his votes do not match his rhetoric. His supporters do not have to suffer the nagging feeling that something different would occur if they were to elect him. He has always voted in a manner that matches his speech.

The neocons have no candidate in the race remotely showing the same level of integrity though they appear to be certain that nobody will notice this. They prove by their actions that any talk of truth, honesty or values is just empty, pandering, rhetoric. The number of Paul supporters is increasing because, contrary to neoconservative belief, Americans are not stupid. They just haven’t had a decent alternative in 30 years. Well….now they do”

More by. Robert Fisk at Lew Rockwell on why we love the new Ron.

Support Kucinich’s Cheney Impeachment petition…

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Recognizing the gravity of the increasingly loud drumbeats for more war coming from the Vice President’s office, this week Dennis Kucinich [MP3 Audio Clip] said he was seriously considering forcing the House of Representatives to take up the issue of impeachment by bringing it as a privileged resolution.Each and every member of the House must be called to account at this moment in American political history, by the demands of you, their constituents, whether they will stand up for the Constitution and stop Dick Cheney’s delusional march to Iran . . . or not. The one click form below will send your personal message to all your government representatives selected below, with the subject “Support H. Res 333 To Impeach Cheney” At the same time you can send your personal comments only as a letter to the editor of your nearest local daily newspaper if you like.