Obama: US would go bankrupt without health changes

Remake the health care system to prevent bankruptcy? Consumption, both private and public, in excess of production and savings is bankrupting the country. Public health care, right or wrong, is just another spending program that adds to that excess. Additional spending programs will be paid for via debt issuance and devaluation.

President Barack Obama says he did a full court press for a health care system remake because "this country was going to go bankrupt."

Source: finance.yahoo.com

CHART OF THE DAY: Today's ISM Manufacturing Report Screams Inflation

It never ceases to amaze me how history - cycles and official responses continue to repeat with little public recognition. That is why devaluation has been part of the "unofficial" economic solution for centuries. While prosperity will never be achieved by devaluation of the currency, it takes a long time for the public to recognize it.

Today's ISM Manufacturing index result blew away expectations, hitting 59.6 vs. an expected 57. March ISM data shows the fastest U.S. manufacturing expansion since July 2004.

Yet hidden underneath the powerful headline ISM number is an even more powerful break-out by the ISM Prices sub-index, which is a component of the total ISM.

ISM Prices Paid Index (PP) to National Purchasing Manager's Index (PMI) Ratio:


Source: sfgate.com

Next Meltdown Will Be Driven by "Big Collapses in Emerging Markets," Johnson Says

Welcome to the world of quantitative easing during a depressionary box. This liquidity driven recovery, similar to 2007, will eventually collapse under the weight of the liquidity injection. The foundation of excessive debt (sand) is simply not strong enough to support a secular recovery yet. The process of hemorrhage and inject is not unique. Similarities can be drawn between today policies and those of 1929-1951, and to a lesser degree 1871-1895.

The next crisis, whatever the assigned name - "Emerging market" or "Asian Contagion", are nothing more than symptoms of an excessive debt burden in Western world.

Hint: Markets that are getting too hot now. "The next crisis, the next meltdown I think will be driven by some big collapses in emerging markets including China," Johnson says.

Source: finance.yahoo.com

Pretend, Extend, and REVISE

Show them a big upward revision while quietly downwardly revising previous data. I have observed this practice across the spectrum of government released economic data since 2001. It's all part of the pretend, extend, and revise strategy.

Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft:


Source: census.gov

Stock futures rise, point to higher opening

From the movie The Outlaw Josey Wales, 1976

Senator: There's a saying, Fletcher: To the victor belongs the spoils.
Fletcher: There's another saying, Senator, don't piss down my back and tell me it's raining.

Spin is relentless. It will break down your convictions, discipline, and will convince your rationale mind that its rain rolling down your back.

I've seen comments today that suggested that jobless claims at the current level indicate that the recession is over. Apparently, nothing can stop the both the market and economic recovery now.

The basis of the illusion, let's call it the price tag of "save me" policies, is up stocks and gold. Spin will always focus on sizzle (stocks) - look at the big gains, as long as the steak (gold) - even bigger gains, blows their cover.

A government report showing initial claims for unemployment benefits fell last week added to the market's enthusiasm following upbeat manufacturing reports overseas.

The first casualty of liquidity driven markets is objectivity.

Average Weekly Initial Claims State Unemployment (AWIC) And YOY Change:


Average Continuing Claims State Unemployment (CC) And YOY Change:


Challenger, Grey, and Christmas Announced Layoffs (ALO) And YOY Change:


Source: finance.yahoo.com

States shed government jobs as revenue plummets

As States exercise fiscal discipline, call it facing reality, the federal government attempts to fill the void by supporting and supplanting the far more efficient private sector in employment, spending, and investment. "Save me" policies carry a steep price tag in terms of devaluation of USA, Inc (gold) and future borrowing costs (bond market). Be certain, however, that the price tag will be ignored until realization of these consequences by the public creates another, far more dire in terms of standard of living cry of "save me".

Pennsylvania, Michigan and Washington shed government jobs last month, a result of shrinking state tax revenue that economists fear could weaken the recovery.

Source: news.yahoo.com

Wall Street cabal seen derailing serious swap reform

No kidding. Derivatives are the key to the illusion.

A major crisis is building in the derivatives market yet a cabal on Wall Street is blocking the formation of a clearing house that could stop the next financial meltdown, a senior official with the Kauffman Foundation said on Tuesday.

Source: reuters.com