Situation Awareness

There is a metaphor in there some where. #economy #bubble bursting


30 Year Mortgage Rates

If homes were affordable, the vast majority of the populations wouldn’t need 30 year loans to get one.


1960 – median income ~$6600
1960 – median home price ~$12000

Leverage and financialization of everything in this country is whats destroying it. 4% schmorepercent. It’s still to expensive!

Oh Shit Checklist #oh shit

From a Zerohedge comment here is your checklist for Oh SHIT the financial world is coming to an end!  Too Funny, unfortunately its pretty much all true.

Checklist of ‘Oh Shit’ –

Near Record or Record Margin
Near Record or Record Leverage
An Unregulated and Private Derivatives Market With a Notional Value Approximated at 600 Trillion USD, Which Will Ultimately Necessitate More Bailouts of ‘TBTF’ Entities Under Threat of “Martial Law” & “Tanks in the Streets” When Certain, Special Entities Lose Their Wagers:
Excessive Governmental Meddling That Distorts Supply/Demand Curve
Excessive Central Bankster Meddling Via Monetary Policy Distorting Supply/Demand Curve
Complete Lack of Transparency As To How, What, When & Where Central Banksters Are Doing Things
An Accumulated Debt Overhang Built Over 40 Years That Puts Interest Component On National Debt, Alone, At Several Multitudes of What The Entire National Debt Was Just 20 Years Prior
An Accumulated Debt Carried By the Federal Government So Large That Nearly 30 Cents of Every Dollar Borrowed by Federal Government in Form of Annual Deficit Spending Goes Toward Interest on the Debt
A Structural Change in Employment Base Whereby a True 20% of the Workforce (18 to 60 Year Olds – Not Disabled) Can Not Find Permanent Work
A Structural Change in Employment Base Whereby a True 30% of the Workforce Can Only Find Work that Puts Them In ‘Working Poor’ Status
A Structural Change in the Economy & Society Whereby a True 50% of the Population is Dependent on Direct Government Aid & Subsidization In Order to Meet the Basic Expenses of their Day-To-Day Subsistence
Having The ‘Financial Services’ Industry Constitute 40%+ of the U.S. Gross Domestic Product, While The ‘Manufacturing’ Sector Consitutes Roughly 16% (Exact Inverse of Where Things Stood in 1968)
The U.S. Government Spending 1.41 for Each Dollar of Revenue it Receives On An Annual Basis.
Having Property Taxes at the Local Level of Government Grow 480x Over In 80 Years in Real Dollar Terms
Having The Government Move From A Model Whereby It Is Able to Balance Its Budget Taking a Mere 6% of the Average Annual Income of Americans in 1913 to One Whereby It Is Running An Annual Deficit Equal to 16% of GDP and Has A Debt of 108% of GDP (It’s Actually Much Higher Than That) While Taking Nearly 20% of Average American’s Incomes (This Nearly 20% Doesn’t Include Sales Tax, Property Taxes, Use Taxes, Permit or License Taxes/Fees, License or Registration Taxes/Fees, State Income Taxes, Death Taxes, Personal Property Taxes, or a Myriad of other Taxes).
Having 3 Segment of the National Annual Budget Consume 80% of Spending: Medicare, Social Security & Defense
Having a Congress, Executive & Judicial Branch of Government in ‘Deep Capture,’ That Works For the Best Interests of the Military-Industrial-Financial Complex, Always
Having Sacrosanct Provisions of the Constitution Gutted, Shredded & Vaporized So Completely That The Constitution Becomes A Mere Reference Point & “Sometimes Persuasive,” Rather Than A Mandatory Roadmap


…One day this will all come tumbling down on us. Until then, protect yourself  now and keep laughing.


Oh You Thought I Was Kidding?

Depression 2.0 its here

Quoting Zerohedge:

“Another big leg down into the recognition that i) the recession was really a depression all along and ii) we are smack back in it. The ISM Manufacturing index came at 56.2 on expectations of 59, previous was 59.7. And the stunner – the prices paid index came in at 57 on expectations of 70, with a previous read of 77.5. The crash in margins will be surreal and companies will have no choice but to raise prices. And just so there are no mistakes that the Great Depression 2.0 is here, pending homes sales plunged a massive 30% on expectations of -14.2, and a previous read of 6%. This was the biggest MoM drop on record. Deflation is here, as is a full blown economic contraction, coupled with the complete pull out of the US consumer, who, absent government subsidies, will contain purchases solely to the iPad. Ben Bernanke has no choice but to print money now, or it is game over.”

Of course we all know the effects of printing money and how successful its been for us for, oh, say, THE LAST 20 YEARS!

 As for that leg down, well that leg down is confirming a head-and-shoulders pattern. A pattern used by market technicians to signal a reversal pattern on an index.  Well we were going up before, and if we reverse that means.  Down Down Down Down.  Have a look at the figure below.

I should recreate this picture myself using my own terminal, but I’m lazy and there for going to steal Tickerguy’s.  Looking at the pattern there are 3 humps. 2 shoulders and 1 head, the shoulders are the intermediate humps and the head the larger one. The pink line connecting all of them is called the “neck line”.  It is this line that confirms this pattern, a break below the neckline and one should expect the market trend to reverse, ideally this is done on a rather big day. I don’t know, this past Monday seemed like that day for me, followed by Tuesdays late sell off.  Now for the scary part, the price target on a confirmed head and shoulders pattern is the distance from the top of the head to the neckline, identified here by the vertical pink line. Take that number and subtract it from the neckline break.  Which puts the S&P at ~875, basically expect another %15 drop.

Head and Shoulders

 If you have long term investments in this market you should take the time to consult a financial advisor.  In fact let me help you, if you got in during the March 2009 lows you are still up roughly 53%, if you wait until 875 to get out  it will be 31%.  The market is now -10% for the year.  Care for some more main stream advice?

“Housing has officially bottomed”.

– Jim Cramer, June 16, 2009

Not even close.

By the way Moody’s is now rumored to downgrade Spain.  Have a good day.