Electronic Benefit Transfer (EBT) Card, or Food Stamp Card

The U.S. Department of Agriculture reported that a record 47,102,780 individuals received food stamps in the month of November, or 1 out of seven Americans.  That number exceeds the combined populations of 24 states and the District of Columbia. 

From a perspective of history, the number of individuals on food stamps has skyrocketed from 31.9 million in 2009 to the current record high 47.1 million. By comparison, in 1969 just 2.8 million Americans received food stamps. 

Last year, the food stamp program (officially known as the Supplemental Nutrition Assistance Program or SNAP) cost taxpayers $72 billion, more than double the $30 billion spent four years ago.

My rhetorical question for the day is simply does anyone really believe that our economy is getting better when 1 out of 7 individuals in America are on the SNAP?  

By the way, I really like the overall design of the EBT card.  Really patriotic, isn't it? 

Mark This Date for Potential Economic/Financial Disaster

Forget about the end of the world based on the Mayan calendar (December 21, 2012); instead focus on the pending Shemitah on the sunset of September 13, 2015.

Those of you that have been following my blog postings over the past several years know that I consider the next four years (2013 to 2016) to be extremely unsettling for your financial health.  The reason, of course, is that a 7.5-year stock market cycle is pointing to a devastating "Bear Market” starting in the fourth quarter of 2012 through 2016.  Downside price objective for this 7.5-year cycles is "1,000" on the DJIA ($INDU), which is the objective based on a massive "Head and Shoulder Top" formation from 1998. 

Now, back to the Shemitah, every 7^th year, the Shemitah, on the 29^th day of the Hebrew month of Elul, occurs.  Elul is the twelfth month of the Jewish civil year, or the sixth month of the ecclesiastical year in the Jewish calendar, August and September.  The next Shemitah occurs September 13, 2015.  Also, on that date, we have Yom Teruah (Feast of the Trumpets) and ten days later we have Yom Kaphar.  (I will let you do the research on these two significant Hebrew festivals and what they mean.)  By the way, I don’t consider it a coincidence that the greatest stock market “point crash” occurred on the 29^th day of the month of Elul (September 2008).  And, let us not forget the stock crash caused by the events of “9/11.”  When did that stock market crash occur?  On the 29^th day of the month of Elul, which was the exact day of the Shemitah.

In conjunction with the Shemitah on September 13, 2015, we have an unusual astronomical phenomenon; a blood, red moon is expected on the evening of Elul 29, 2015 (September 13).  From Scriptures, you may want to read Joel 2:30-31, Acts: 2:20, and Revelation 6:12 to discern the significance of the “blood, red moon.”  While doing this research on the aforementioned verses, read Matthew 24.

Once again, you have been forewarned.  However, with all due sadness, I believe that “none of this will matter to anyone until it matters to everyone.”  But, by then, it will be too late.

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How Many Ounces of Gold or Silver Should One Own?

See the link to Casey Research to determine the number of ounces required based on your monthly expenditures.  The tables are approximately in the middle of the article, entitled, "Ounces of Gold Needed and Ounces of Silver Needed." 

Wal-Mart: Is the Top in Place?

Wal-Mart (WMT) missed its revenue expectations for the quarter of $114.9 billion when it reported revenues of $113.9 billion.  And, of course, the market did not like it. Stock is off 4%+.  WMT, also, lowered its EPS from $4.94 to a lower range of $4.88. 

My immediate assessment for WMT is another 10% correction in price to $61 from its current level of $68.  As the bear case takes hold, WMT looks like a $53 stock, or 23% from the current levels.  Eventually, over the next couple of years, WMT should take out its February 2009 low at $42, which is a decline of approximately 40% from its current price of $68.  And, it would not surprise me to see WMT trading below $35.  (See the following chart.)

Pentagon Spends $1.5 Million to Develop New Beef Jerky

Yes, our "Pentagon" spent $1,500,000 of your tax dollars to develop a special new roll-up beef jerky, which was funded by taking money out of a weapons program.  Now, I love my jerky but give me a break.  And, what does beef jerky have to do with national defense?  Answer: Absolutely nothing! The "Pentagon takes money out of a weapon's program to develop jerky that rolls-up.  Wait, this one is just a good as the jerky development, or should I say just as "sad."  The Office of Naval Research helped spawn "Caffeine Zone 2," which is an iPhone application that tells people how to schedule their coffee breaks. 

A "Bounce" in the DJIA?

Where in the United States Could You Live on Social Security?

 $1,130.33 is the average monthly Social Security Benefit that retirees receive from the government.  Assuming that you worked 40 hours per week that equates to a wage of $6.40/hour, which is less than the Federal minimum wage of $7.25.

www.GlobeLifeInsurance.com

Three Bearish Pieces are in Place for Further Market Weakness

Students Petition the Government to Refund Student Loans for Worthless Diplomas

Well, I knew this was coming to taxpayers across America.  That is, a petition to "provide university graduates the ability to trade their Diplomas back for 100% tuition refunds."  The petitions states as follows:

"Because of the inability of recent college graduates to find gainful employment in order to repay their college debt, and since this college debt cannot be eliminated in bankruptcy, and most of the recent additions to the job market have been in service related industries, the Obama administration should take up the cause of reducing college debt and hold those accountable responsible."

You may sign the petition by clicking on "We the People, Your Voice in Government."

Social-Economic Trends: Anarchy

Euro-zone youth unemployment overall has risen to 23.3%; with Greek youth unemployment at 58% and Spain at 54.2%.  Folks, this is a chart that portends to "anarchy" in Europe.  And, yes, it can and will happen in the United States.

In regard to the United States, the unemployment rate for workers under the age of 25, according to the Economic Policy Institute, is 16.4%! What about the unemployment rate for high school graduates in the United States?  Answer: 31.1%! What about unemployment rates for high school graduates by race/ethnicity?  Answer: Blacks (49.1%), Hispanics (33.8%), and Whites (25.6%). 

Once again, you have been forewarned!

Is the Top In for the S&P 500?

Re-Election of President Obama: Investment Perspective Going Forward

Today’s election was merely a choice of who was going to be the Captain of the Hindenburg or Titanic.  Both of which ended in complete disasters.  Now, let’s review my election forecast going back to June 2011, especially my comments made on September 13, 2012.

1.     On June 15, 2011 in my post entitled, “First Presidential Forecast,” I made the following comments: “In making any kind of forecast is definitely a risky business, but to forecast the 2012 Presidential election is insane.  However, I feel that I maybe on to something, insane or not.  Now, if the stock market is higher in 2012, President Obama is more than likely to win.  The strategy that I will be using is simply my S&P 500 EMA Strategy of the 15-week EMA to 40-week EMA.  If the 15-week EMA is above the 40-week EMA, Obama wins.  On the other hand, if the 15-EMA is less than the 40-week EMA, he loses.  Currently, President Obama wins, because the 15-week EMA > 40-week EMA.  However, the key is what will the EMA strategy be saying in 2012.  Stay tuned.”  Well, the 15-week EMA has stayed above the 40-week EMA.  Enough said.  President Obama is re-elected.

2.     On February 18, 2012 in my post entitled, “And, the 2012 Presidential Winner is … ,” I made the following comments: “Since my post of June 15, 2011, I came across an interesting study that reinforces my aforementioned hypothesis, entitled “Social Mood, Stock Market Performance and U.S. Presidential Elections: A Socionomic Perspective on Voting Results” by Robert Prechter, Deepak Goel, Wayne Parker, and Matthew Lampert, contends that citizens vote in accordance with trends in social mood, and that stock market indexes appear to be the best available indicator to measure social mood.  According to their study, voters really don’t care about jobs numbers, GDP growth, European debt crisis, and the decline in home prices.  Instead, they respond to fluctuations in the stock market.  That is, the value of their stock portfolios and 401K plans.  Therefore, if the Republicans want to capture the White House in November, they better hope that the S&P 500 crashes!”  Well, the stock market did not crash and President Obama was re-elected.

3.     On September 13, 2012 in my post entitled, “And, the Winner of the 2012 Presidential Election is?  President Obama,” I made the following comments: “President Obama is likely to win in his re-election bid based on the performance of the stock market over the past three years.  Therefore, the probability of President Obama being re-elected is high! So, how can one use the above information against the backdrop that the next four years will usher in the largest economic/financial disaster known to man with the DJIA selling for 1,000?  (Yes, the coming economic downturn will be greater than the Great Depression of the 1930s.)  Given the scenario, I don’t consider whomever occupies the White House will win any popular contests.  Remember that over the next four years the expected social mood of this country will change from positive to very “bleak.”  Therefore, the man that occupies the Presidency will undoubtedly be highly despised.  In other words, the proverbial bottom-line is to vote for the candidate you like the least.” 

 4.     On October 29, 2012 in my post entitled, “It’s Still Obama’s Election to Lose,” I made the following comments: “The Elliott Wave Theorist has done extensive research on those factors that influence re-election outcomes of presidential races. Its research revealed that the stock market is an “excellent indicator” of re-election outcomes.  In addition, GDP had a moderately positive relationship to re-election results; and inflation and unemployment rates had “no” significant predictive value.  It tested stock-market performance 1, 2, 3, and 4 years prior to elections and found all of them to be significant.  However, the 3-year time horizon leading up to the re-election was the most significant.  So, where do stand based on the 3-year time horizon?  Given the 3-year time frame, the DJIA has gained approximately 36%.  Even though the economy remains weak, GDP growth between 1% to 2%, the 3-year positive trend is how people feel, as measured by the performance of the DJIA, continues to give the edge to President Obama in his re-election bid.”

America, Is This the Kind of Regulation That You Want?

Buckingham Slate, a Virginia business that dates back to the Civil War, was recently fined by federal regulators with a $4,000 fine over a trash can “lid.”  Yes, that is correct.  According to the Mine Safety and Health Administration's official citation, “the offending can, or more correctly a waste receptacle in the words of the official citation, was not covered.  What's more, the receptacle was full.  It could be smelled. There were flies in and around the receptacle.  And, to crown all, management engaged in aggravated conduct constituting more than ordinary negligence by allowing this "condition to exist."  Therefore, my "tip-of-the-week," don't forget to put the lid on your trash can, because the Mine Safety and Health Administration has just been spotted in your neighborhood. 

Don't Forget!

171,000 (?) Jobs Added In October, Unemployment Rate 7.9%

On Wednesday, October 31, I made the following statement: "The current consensus for the NFP number is approximately +123,000.  However, given the revisions by ADP, my estimate is +85,000 (+/- 30,000)."  

The BLS reported this morning that 171,000 jobs were added in October with the unemployment rate rising to 7.9% from 7.8%.  So, my estimate of 85,000 was way off by 86,000 jobs.  Not so fast! Why?  Because that infamous Birth/Death adjustment came in at adding 90,000 statistical jobs, which by the way these phantom jobs have added 568,000 year to date to the total.  Therefore, if one subtracts off the phantom jobs of 90,000 form the so-called 171,000 jobs added, you arrive at 81,000 jobs added, which is darn close to my forecast of 85,000.

Republicans Have Won Every November 6th Presidential Election Since 1860

BreitBart reports that the date November 6th has always been a good one for Republicans:

1. 1860 - Abraham Lincoln over Stephen Douglas
2. 1888 - Benjamin Harrison over incumbent Grover Cleveland
3. 1900 - William McKinley over William Jennings Bryan
4. 1928 - Herbert Hoover over Al Smith
5. 1956 - Dwight Eisenhower over Adlai Stevenson
6. 1984 - Ronald Reagan over Walter Mondale.

Will the trend continue?  We will find out in less than one week!

Deflation or Inflation? Make the Call Based on the 10-Year TSY Note

ADP's Adjustment: "Cancels" 365,000 Private Jobs Created in 2012

If I had been paying ADP for this research report on private sector jobs throughout 2012, I would today be on the phone demanding a complete refund for my subscription fee.  Businesses pay good money for this type of research in which they base capital budgeting decisions on going forward.  Bottom line to these ADP's private sector job revisions is that if you thought America created jobs in 2012, it didn't. ADP made that happen through statistics.  I guess the old adage, caveat emptor, is still valid.

New ADP Count Slashes Job Creation for September 2012

"Revisions to the way payroll data firm ADP counts private sector job creation have resulted in a sharp drop in the September employment count.  ADP's new calculations put the monthly job creation at just 88,2000, which is down from the 162,000 the firm originally reported earlier this month."  Wow!  In other words, ADP's private sector job report has been drastically overstated since it stated providing the statistic.  ADP will report on October's private sector job creation tomorrow, which the market already doesn't like wants coming.  Then, on Friday, the Department of Labor will report on the non-farm payroll for October.  The current consensus for the NFP number is approximately +123,000.  However, given the revisions by ADP, my estimate is +85,000 (+/- 30,000).

Hopelessness: Eurozone Crisis

Unemployment in the Eurozone has risen to a new high at 11.6%, with Spain recording the highest jobless rate with more than one in four out of work.  And, it is only going to get worse over the next four years, inclusive of the United States of America.  Sandy was a national disaster in which my prayers and thoughts go out to everyone impacted.  However, the financial disaster coming to America and the Eurozone over the next four years will be the real "perfect storm."  I know, I know that none of this financial stuff matters to anyone until it matters to everyone; and therein lies the problem.

It's Still Obama's Election to Lose

From my post of September 13, 2012, I made the following comments: “The Elliott Wave Theorist has done extensive research on those factors that influence re-election outcomes of presidential races. Its research revealed that the stock market is an “excellent indicator” of re-election outcomes.  In addition, GDP had a moderately positive relationship to re-election results; and inflation and unemployment rates had “no” significant predictive value.  It tested stock-market performance 1, 2, 3, and 4 years prior to elections and found all of them to be significant.  However, the 3-year time horizon leading up to the re-election was the most significant."

 So, where do stand based on the 3-year time horizon?  Given the 3-year time frame, the DJIA has gained approximately 36%.  Even though the economy remains weak, GDP growth between 1% to 2%,  the 3-year positive trend is how people feel, as measured by the performance of the DJIA, continues to give the edge to President Obama in his re-election bid.

Bye, Bye, Miss American Jeep

Jeep, the rugged brand President Obama once said symbolized American freedom, is considering giving up on the United States and shifting production to China.  Such a move to China would crash the Toledo, Ohio economy where Jeeps are made and supplied.

In a Bloomberg interview, Jeep's president said the automaker plans to restore Jeep production in China, suspended in 2009, and is considering making all Jeeps in China. 

Well, it appears that the American taxpayer, who bailed-out Chrysler and Jeeep, is once again being fleeced.  And, then again, something things never change.

One Reason Why I am Still in the Deflationist Camp

Would anyone in their right mind purchase a 30-year TSY security to earn 2.93% if one believes in the current inflationary aphorism?  In other words, the above chart depicts one reason why I am still in the deflationist camp.  Since 2009, the Fed's balance sheet has increased reserves (liquidity) to the banking system by close to $3 trillion. if you take into account QE1, QE2, Operation Twist, and QE Eternity. In spite of this excessive injection of liquidity into the economy, long rates have plummeted, which is indicative of a deflationary environment.    

Welcome First-year Student!

The University of North Carolina has removed the word “freshman” from official university documents, citing as their reason an attempt to adopt more “gender inclusive language.”  In its place, gender inclusive terms (first year student and upper-level student) will be used on University Documents, Policies, and Websites.   Oh, boy person!  No, from my perspective, a student who has under thirty credit hours will still be called a "Freshmen."  Sorry, University of North Carolina, but I believe you have gone overboard on this one. 

40% of Americans Have $500 or Less In Saving

Staggering statistic, isn't it?  According to survey done by "Credit Donkey," not all respondents were poor.  Some of those individuals had big houses, big mortgages, or 401(k)s but still no more than five hundred dollars to rub together right now.  In addition, the survey found that 54% of respondents don’t have a savings plan in place, and 45% are afraid they’ll never be able to save.  

I am definitely appalled at those 40% of Americans who never developed the financial life skills to have $500 in an emergency fund.  Every student in high school and college should be required to take a "Personal Finance" course to develop a financial life skill of how to save for that proverbial rainy day.  But, then again, the way our educational system is today that might be asking for too much!

Green Energy Failures

The failures (bankruptcies) keep mounting for the "Green Movement."  So far, eighteen companies that received $3.3 billion taxpayer dollars have failed.  Another 12 green companies, who have received $6 billion of your tax dollars, are on the verge of bankruptcy.  Therefore, we, as American taxpayers, can kiss $9.3 billion goodbye.  One thing that this administration has done extremely well is to pick the "losers" at your expense.  And, once again, it is not the role of government to try to pick "winners or losers."  That is the function for a market economy! 

Patient Bear

Every bear has its time.  This "bear" is getting really hungry, since I have not eaten in three years and counting.

Rules of Engagement (ROE), or the Reason Why We Don't Win Wars

" On August 6, 2011, while on their way to assist an ongoing mission in Wardak Province, Afghanistan, the CH-47D Chinook helicopter that they were riding in was shot down by an RPG fired by a Taliban fire team approaching their landing zone in Tangi Valley. All 38 American and Afghan service members who were aboard perished, including 17 Navy SEALS, 5 Navy Special Operations support personnel, 3 Air Force Special Tactics Airmen and the five-man Chinook crew, marking the largest loss of life in America’s 11 years of military operations in Afghanistan. Twenty of the twenty-two SEALs and SEAL support were from SEAL Team VI (DEVGRU).

The parents of one of the SEALs killed in the Chinook attack, Special Operations Chief Aaron Vaughn, are raising questions about how the Obama administration has pushed the limits of the military’s Special Operations Forces as part of its war policy (e.g. the Feb. 20th Newsweek story, “Obama’s Secret Army”), and how constrictive “rules of engagement” intended to win the “hearts and minds” of the Afghan people directly contributed to the deaths of all those aboard the helicopter."


Specifically, the allegation in this case is that the shooter with an rocket-propelled grenade (RPG) was seen before he fired, permission to take him out was requested but denied, he fired and missed, and permission was still denied to shoot back until after he had fired a second time and struck the chopper, killing all those on board.

Ok, enough is enough.  If our "rules of engagement" are resulting in American lives being lost, it is time to bring our solders home immediately; or change the way we fight the enemy, so we limit the lost of our American solders.  I don't believe that is asking too much of our Commander in Chief.

Electric Car Battery Maker "A123 Systems" Files Bankruptcy

A123, which received a $249.1 million federal grant in 2009 to build a U.S. factory, needed a financial lifeline after struggling with costs from a recall of batteries supplied to Fisker Automotive, which is the auto maker along with the Chevy Volt whose batteries catch on fire and explode.

In September 2010, President Barack Obama called "A123" Chief Executive Officer David Vieau and then-Michigan Governor Jennifer Granholm during an event celebrating the opening of the plant in Livonia, Michigan, which the company received the U.S. grant to help build.  In that telephone conversation, according to a transcript provided by the White House, he said, “This is about the birth of an entire new industry in America -- an industry that’s going to be central to the next generation of cars.  When folks lift up their hoods on the cars of the future, I want them to see engines and batteries that are stamped: Made in America.” 

Well, what I can say, except that the government continues its excellent track record at picking losers.  Then again, it's only taxpayers money.  Therefore, another $249 million down the proverbial rat hole.

Hard to Make a Living in This Employment Environment!

No Correction Needed

In yesterday's post entitled, "Get of the Market," some thought that my downside price objective of 1,000 by 2016 was a misprint because I left off a "zero."  No, I did not forget a "zero."  My downside is not 10,000 but 1,000. 

The Nightmare of Our Current Educational System in America

According to the OECD's Program for International Student Assessment (PISA), based on comparisons with 30 nations around the world, 15-year-old American students are in the bottom half of reading literacy, the bottom third of scientific literacy, and the bottom fifth of mathematics and problem-solving literacy.

As an educator, I am appalled at the aforementioned statistics and what has happen within our educational system.  We, as Americans, have spent billions of dollars on efforts such as No Child Left Behind and Race to the Top, which have proven to be anything but successful.  We have experienced several decades of virtually no improvement or decline in student performance as measured by SAT scores.  The U.S. Department of Education has focused on the "inputs" of  education, such as better schools, better curriculum, and better teachers.  Overall, this focus on educational inputs have not accomplished the goal of raising student achievement, or providing them with the necessary skill-sets to compete in a global economy. 

What needs to been done to reform our educational system?  We need to change our focus from educational inputs to educational outcomes.  That is, student success.  No, I am not recommending that we adopt programs that ensure our students have a high self-esteem of themselves and everyone is given an "A."  No, we need to teach our students the specific study skills that they will need to succeed in life.  In other words, let's get back to teaching the basics, reading, writing, and arithmetic. 

Source: "Greatest Challenge Facing the United States in the Future"

Get Out of the Market

Yes, IMHO!  However, you have to make your own investment decision. But, keep-in-mind the 7 1/2 year cycle is pointing "hard" down starting in the fourth quarter through 2016.  Downside objective is "1,000" on the DJIA ($INDU), which is the price objective based on a massive "Head and Shoulder Top" formation from 1998.

One-Third of Adults Under 30 Have no Religious Affiliation

The number of Americans who do not identify with any religion continues to grow at a fast pace. One-fifth of the U.S. public – and a third of adults under 30 – are religiously unaffiliated today, the highest percentages ever in Pew Research Center polling.  Further, the study states, "This large and growing group of Americans is less religious than the public at large on many conventional measures, including frequency of attendance at religious services and the degree of importance they attach to religion in their lives."  What is this study really indicating?  Simple, we, as a nation, are becoming a nation of "non-belief."  We are substituting the belief of is taught in the "Scriptures" for "Humanism," which generally places more importance on rational thought of man than on faith of Elohim (God).  Paul warned of the consequences of such non-belief in his writings to the Thessalonians, especially in 2 Thessalonians 2:11 that states, "And for this reason Elohim (God) sends on them a deluding influence so that they will believe what is false."  (I don't believe an interpretation is needed for this verse.)  You may just want to read the entire chapter of 2 Thessalonians 2.  Next, read what Yahusha (Jesus) stated in Matthew 13:24-30; and finally, read Matthew 24:29-31.  Why am I writing about this subject?  Answer: Eschaton.

Reason for Today's Unemployment Rate Decline from 8.1% to 7.8%

The reason is simply that the number of "PART-TIME" people employed for economic reasons (That is, can not find a full-time job.) increased by 582,000, which represents about two-thirds of the increase in employment for September.  This increase in part-time employment is the most since October 2011, and the largest one month jump since February 2009.  Wow!  You know those jobs that pay minimum wage with no benefits, such as health and retirement.  But, in this election year cycle, a job is a job to those politicians.  Oh, speaking of politicians, do you know what the unemployment rate is for government workers?  Would you believe 4.3%?  So, the next unemployment report for October 2012 will be given just prior to the November election.  Now, my guess is that we will see further improvement, of course manipulated by the BLS, in the unemployment rate for October 2012.  Maybe, just maybe the BLS can get that rate under 7%.  I know the BLS will definitely give it its best to do so.

Unemployment Rate at 7.8%!

What a complete farce by the Bureau of Lies and Scams (BLS).  Does anyone really believe these numbers are valid?  I will have more later on this unbelievable farce put forth by the BLS.  But, in the meantime, look at the following chart on the "Employment Participation Rate," and you tell me if you are confident .  Now, why is this chart so relevant?  First, the "Participation Rate" indicates the ratio of people actually employed to the civilian labor force.  Second, if you don't have a job, you don't have income to spend; and, of course, you don't pay taxes into the government coffers.  Third, the participation rate for September 2012 stood at 63.6%, which was lower than a year ago when the ratio was 64.2%. 

Uncle Sam's FICO Score

If the U.S. Government were applying for a loan, what would its credit score be?  ConvergEx's Nick Colas estimates it at 655, which is not too bad or too good.  By the way, the average person’s credit score is 655 to 690, according to Credit Karma.  Therefore, our government has a score that is better than 42% of Americans if we assume a normal distribution to all those credit scores.  (See the following Bar Chart.)  Unfortunately, the average credit score you will need to get a mortgage is between 764 or 770 if you want to refinance, which of course leaves the U.S. Government out from refinancing the "White House."  However, all is not lost, because Uncle Sam still qualifies to buy that new GM car, or better yet, buy the Volt and get the $7,500 tax credit.  Go for it, Uncle Sam!

Channel Stuffing Continues at Government Motors (GM)

GM month-end dealer inventory for September 2012 came in at 689,334 vehicles, which is up from September 2011 figure of 558,157.  Expect this number to increase as head into the winter months.

GM has to inflate those sales somehow, and it might as well be at the expense of its dealers.  For those of you that have forgotten what is "channel stuffing," it simply means that GM records a "sale of a vehicle" when it leaves the factory but not yet sold.  In other words, GM dealers take these unsold vehicles into inventory at a cost to their bottom line.

What Does Bab el-Mandeb Have in Common with Strait of Hormuz?

The answer, of course, is the shipping lane for oil.  In strategic terms, you control Bab el-Mandeb; and you are will on you way to controlling the Red Sea.  Who would benefit the most by such control of this major shipping lane?  Think no further than Iran.  Iran has been promoting the Islamification of Egypt, which is now controlled by the Muslim Brotherhood, Ethiopia, and Yemen.  Iran already for all practical purposes controls the Persian Gulf and the Strait of Hormuz.  It is startling to see how just in the past eighteen months that Iran has put a straggle hold on this entire region.  And, what is the United States doing about all of this?  We are simply trying a diplomacy of "appeasement." Such a policy has major negative global ramifications.  You just might want to get out your world atlas and check out the location of Bab el-Mandeb and the Strait of Hormutz.

The Student Loan Bubble in "19" Simple Charts

College and university administrators better be aware of these charts.  The following chart indicates the lack of growth in median inflation-adjusted income for college graduates.

To see all the charts, click this link.

Do You Suffer from Nomophobia?

Nomophobia is a condition that means the fear of being out of cell phone contact.  Yes, this really is a real mental condition, which was coined by a British researcher in 2008.  A 2012 study has found that since 2008 the amount of individuals who fear being without a cell phone has grown from 53% to 66%.  And, guess what?  Since this is a mental condition, the next natural progression for those individuals who suffer from this disorder is to seek permanent disability from Uncle Sam. 

Federal Deficits: Spending is the Problem!

Sources of Federal Revenues

Who Really Pays Federal Income Taxes and How Much?

Entitlement Programs: 62% of Federal Spending

Mantra of the Preponderance of Americans

Why?  Because individuals really believe that what they don't know, they can not be held accountable nor responsible for not knowing whatever it is.  Sad but so very profound.  

United States Credit Rating Cut, Again!

Rating agency firm Egan-Jones cut its credit rating on the U.S. government, citing its opinion that quantitative easing from the Federal Reserve would hurt the U.S. economy and the country's credit quality.  Further, in its downgrade announcement, the firm said that issuing more currency and depressing interest rates through purchasing mortgage-backed securities does little to raise the U.S.'s real GDP but reduces the value of the dollar.  It also stated that such action by the FED increases the cost of commodities, which will pressure the profitability of businesses and increase the costs of consumers thereby reducing consumer purchasing power.  Further, it stated that from 2006 to present, the US's debt to GDP rose from 66% to 104% and will probably rise to 110% a year from today under current circumstances; the annual budget deficit is 8% of GDP.  In comparison, Spain has a debt to GDP of 68.5% and an annual budget deficit of 8.5% of GDP.

Folks, we are fast becoming a "Banana Republic."  Our national debt exceeds $16 trillion, which is more than our GDP.  Our federal deficits have exceed $1 trillion for each of past several years.  We have a Federal Reserve System that purchases 77% of all newly issued Treasury securities.  This same FED, which by the way is not an agency of the federal government but actually owned by commercial banks, continues to expand its balance sheet in order to support those mal-investements made by those "Too Big To Fail" banks. 

QE Until Further Notice

Yesterday, Ben Bernanke announced the Fed's latest monetary plan to stimulate job growth, housing demand, and overall economic growth.  What's the plan?  Oh, more of the same failed monetary policies since 2008.  But, this time he assures us that it will definitely work.  He is simply asking us to trust him, since he has a Ph.D in Economics and is omnibenevolence.

Going forth into perpetuity, the Fed will commence with following actions:

1. Purchase $40 billion in mortgage-backed securities per month, which are nothing more than toxic assets.
2. Purchase $45 billion in long-term Treasury securities. (As a side-bar issue, the Fed has bought 77% of all newly issued Treasury debt over the past year.  That is, it simply purchased those securities by creating the dollars [reserves] out of thin air.)
3. Continuation of its zero interest rate policy (ZIRP) on short term debt through 2015.  

So, with this newly, revised QE going forward, the Fed's balance sheet will increase from $2.8 trillion to $4 trillion by the end of 2013.  That is, the Fed will pump an additional $1.2 trillion dollars of liquidity into the financial system.  Why?  Well, I firmly believe that the Fed is operating in a panic mode and simply has decided to "double-down" on its previous failed QE monetary policies of trying to revive the economy.  In other words, these QEs are bound to work eventually.  Right? 

When financial asset prices are no longer driven by fundamentals, such as positive cash flows, but by QEs, you should know that we are in "deep doo-doo."  That is why it is alright to use that four letter word, "Exit," as in getting out of all financial markets right now!