The Braindead Megaphone


Posted on 22nd October 2014 by Administrator in Economy |Politics |Social Issues

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I think Erin is going to do well in college. We will need many more Millennials like her to get us through this Fourth Turning with a positive outcome. Here is her paper for her freshman College Writing course.

Guest Post by BostonBob’s daughter Erin

George Saunders discusses the idea of a man with a megaphone drowning out all other voices in his essay “The Braindead Megaphone”. His omnipresence reaches each corner of the metaphorical party he attends. The sheer volume of his voice effects each of the party goers and their conversations due to the fact that they cannot produce any original thought over the musings of the man with the megaphone. This man is a symbol for the media that encompasses every day life. The numerous sources of information that bombard anyone who owns a television or has an internet connection can shape the discussions and opinions they have(Saunders 240). The Megaphone Man isn’t just the collective voice of the media; it is the surrounding people and environment that also contribute to the spreading of ideas.

George Saunders defines “…the Megaphone as the composite of the hundreds of voices we hear each day that come to us from people we don’t know, via high-tech sources…”(244). Saunders discussed is that the media is the equivalent of the megaphone man, however, the media is not just one man. While the man at the party is a singular being, the news is broadcasted from many outlets. Newspapers, journals, blogs, and television networks are only some of the ways people acquire news. Moreover, these media outlets are each a mass of people, news stations, reporters, along with online sources adding to these enormous information outlet. There is a hierarchy to the large news corporations that decide what will sell over what is important knowledge for the public.

The composite of voices, Saunders believes, is the collective sound of people behind the screens used by society on a daily basis. These “high tech sources” are full of people we may recognize but don’t know personally, however, information is learned by people we know as well. The ratings and approvals of news stories is more important than the relevancy or knowledge they supply. It is in the public’s sight around the clock whether they seek it out or not. One may not have an opinion on an issue, but it is almost guaranteed they have been exposed to it one way or another.

My tiny town is set half an hour from Boston. It is filled with like minded people who bond over the similarities of their views and opinions. While many kids in school find themselves unconcerned with politics they may have more opinions than they realize. They are engulfed in a media rich world which gives them insight into current affairs, as well as attending a school full of opinionated peers and living in a home with opinionated parents. Many students discussed their views in class by prefacing their ideas with “Well my parents think…” or “My mom told me…” and it was clear that this influence is huge.

The loudest megaphone that Saunders neglects to discuss is the environment each person is surrounded with. Parents lay the foundation for their children’s beliefs by molding them with ideas of their own. High schoolers often find the opinions of their friends at school matter to them and they match their own ideals. Children in my town are raised in a place where most people agree with the values of their parents. They are sent to a school full of teachers who will preach the same ideals, and are surrounded with other children who were raised the same way. These children all in turn bond over their ability to spit out what their guardians have planted in their heads, and the similarity of the roots.

Not only are the students of my hometown being born into certain opinions, they do not question what they’ve been told. Not every child is going to question the knowledge they gain from their parents because of the close relationship and trust that is built between them. Saunders extends his argument against the Megaphone Man by stating his “…responses are predicated not on his intelligence, his unique experience of the world, his powers of contemplation, or his ability with language, but on the volume and omnipresence of his voice”(240).

The people who are relaying their beliefs onto the youth may have some life experience, but they may not have any intelligence or ability to contemplate what they’ve heard themselves. Their children develop the habit of accepting information from sources that their community deems respectable. These people are a neverending sphere of influence.

The cycle that continues in small towns like mine perpetuates a common thought. Anyone who disagrees is an outsider labeled as confused or plainly wrong. In my physics class my junior year of high school there was clear tension between my liberal teacher and a conservative peer. Before every class my teacher would instigate a debate going as far as ordering a cardboard cutout of Barack Obama and placing it in front of the student’s desk. After weeks of passive aggressive comments and arguments the student was sent to the office. He had a choice to sit quietly but there is no reason a teacher should be antagonizing a member of their class.

This occurrence was met with a quiet response from other students due to the anxiety of being punished themselves. This demonstration and subsequent fear further leads to young people not expressing their beliefs or questioning those of authority. Constant information is fed into minds which doesn’t allow for original ideas to last. Saunders explains that the Megaphone Man’s voice overtakes entirety of conversation leaving nothing but his own words to discuss: “They’ll stop doing what guests are supposed to do: keep the conversation going per their own interest and concerns. They’ll become passive, stop believing in the validity of their own impressions. They may not even notice they’ve started speaking in his diction…”(240).

Not only are the conversations steered one way, but people who desire a change of subject lack the confidence and support to change the path of discussion. They also are at risk of losing the ability to discuss their own interests.

This environment is all encompassing and it leads to people who only seek out news that agrees with their views and ignore the sources saying otherwise. George Saunders would urge the people of my town to pop their surrounding bubble and question what they hear, instead of assuming that all of their favorite authors and anchors are the most intelligent providers(248).

Instead of following the flow of information people need to break from tradition and form their own opinions. News sources and relatives alike need to be questioned for their reputation and validity. Many people base their opinions on the man with the loudest megaphone and disagree just to disagree or agree to fit in. Whether one’s opinion coincides with the views of the majority or not, the public needs to ensure they are receiving intelligent information that is the foundation for their unique opinions.

Works Cited

Saunders, George. “The Braindead Megaphone.” Other Words. Ed. David Fleming. Dubuque: Kendall Hunt, 2009. 239-248. Print.



Posted on 16th October 2014 by Administrator in Economy |Politics |Social Issues

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I know many people have no interest in watching the boob tube because 99% of the programming is either mindless drivel or government sanctioned propaganda. It’s the 1% that reflects the deeper themes and moods engulfing our society. Television shows like Breaking Bad, Game of Thrones, and The Walking Dead reflect the darkening mood of this intensifying Fourth Turning. I wrote one of my more pessimistic articles called Welcome to Terminus in April regarding the season four finale of the Walking Dead series. I essentially argued we are approaching the end of the line and the world is going to get real nasty.


In the six short months since I wrote that depressing article, we’ve seen men beheaded on Youtube videos by terrorists no one had ever heard of at the beginning of this year. Somehow a ragtag band of 30,000 Muslim terrorists, using American military equipment supplied to fight Assad in Syria and taken from the Iraqi Army when they turned tail and ran away, have been able to defeat 600,000 Iraqi and Kurd fighters with air support from the vaunted U.S. Air Force. Syria, Iraq, Libya, and Afghanistan descend into never ending religious based warfare. We’ve even had passenger planes mysteriously disappear in Asia with no trace.

Crimea seceded from Ukraine and rejoined Russia, initiating a plan to punish Russia by the western powers. America supported and planned the overthrow of a democratically elected government in the Ukraine, with a predictable push back response by Russia, leading to a bloody civil war in the Eastern Ukraine. We’ve had a false flag shooting down of an airliner over the Ukraine by the Ukrainian government, blamed on Russia and Putin by Obama and his EU co-conspirators. The American corporate media mouthpieces have ignored the cover-up of missing controller transmissions, black box recordings, and physical evidence regarding the murder of hundreds of innocent people by western politicians. Israel and Hamas resumed their endless religious war in Gaza, with thousands of casualties and destruction.

UK fear mongering and financial threats barely averted the secession of Scotland from the UK. Cantalonia continues to push for a secession vote to leave Spain. Violent protests have broken out in Spain, Italy, France and even Sweden. Turmoil, protests and riots in Brazil, Venezuela, Argentina and Mexico have been driven by anger at political corruption, high inflation, and general economic dysfunction. Saber rattling between China and Japan has increased and young people in Hong Kong have been protesting the lack of democratic elections being permitted by China. The world economy, undergoing central bank monetary stimulus withdraw, is headed back into recession as Germany, China and the U.S. join the rest of the world in economic decline. And now the Western Africa outbreak of ebola has gone worldwide, with predictions of an epidemic potentially causing worldwide economic chaos.

What’s happening in the real world makes the dystopian zombie world of Walking Dead seem almost quaint. The writers of this show brilliant use of symbolism and imagery captures the violent, chaotic, inhumane, darkening, brutal world we inhabit as the Fourth Turning crisis period we entered in 2008 deepens on a daily basis. There is a good reason why the first episode of their fifth season drew the biggest cable TV audience in history. The show is clearly tapping into the mood of the masses. Early in the latest episode you realize Terminus has become a processing center run by cannibals. The line between victim and criminal, killer and prey, good and evil, madness and sanity, and moral and immoral is blurred. Everything is relative in the post-pandemic world of the Walking Dead.


Seeing Wall Street cannibals walk away unscathed after devouring the worldwide economic system in 2008 with their fraudulent financial schemes, corrupt politicians enriched by throwing taxpayers under the bus, militarized police forces trampling the Fourth Amendment, the NSA spying on every American, a private central bank enriching their owners by funneling trillions into their bank vaults, a president trampling on the Constitution by issuing executive orders to bypass the other branches of government, and billions of welfare and tax fraud from the urban ghettos to the penthouse suites in NYC, has convinced a large swath of Americans that everything is relative and nothing matters in our warped dystopian world. Right and wrong no longer matter. Morality is an antiquated concept. Adhering to the Constitution is an outmoded notion. Our society celebrates and condones our dog eat dog economic paradigm. Or zombie eats anything world in the case of Walking Dead.

The Terminus complex is reminiscent of the concentration camp in Schindler’s List. It is complete with railroad cars to hold the prisoners, gates with barbed wire, armed guards, and extermination facilities to “process” the prisoners. Thick black smoke belches into the air. There is a room stacked full of booty, teddy bears, watches, clothes – everything except the gold fillings.The Nazi like precision and attention to detail is reflected in the almost business-like method in which the Terminus administrators go about gutting their prey. The bone chilling efficiency and antiseptic processing facility evoke memories of the holocaust gas chambers. The opening sequence when Rick, Daryl, Glenn and Bob are among a group of men lined up to be gutted like pigs over a trough in place to collect their spilled blood, might have been the most brutal scene ever put on non-premium cable TV.

The callous and dispassionate way in which the prisoners (cattle) are lined up in front of a stainless steel trough is disconcerting and bone chilling. The victims are hit with a baseball bat and then their throats are slit over the trough by men in protective suits. They have become nothing but cattle to be butchered and consumed by the Terminus cannibals. You see another part of the processing plant where human remains are hanging from hooks like sides of beef. Gareth, the leader of Terminus, supervises the operation like a CEO, berating the butchers for not meeting quotas and following standard operating procedures. Not much different than how our mega-corporations are run today.


The other fascinating similarity between the dystopian “nightmare of want” setting of Terminus and our modern day dystopian “empire of excess” is the use of false advertising and propaganda to lure “customers” into their web. Their version of billboard advertising was plywood with the hand written messages of “Sanctuary for All”, “Community for All”, and “Those Who Arrive Survive”. The Terminus cannibals would have fit in well on Madison Avenue with the highly paid spin artists, propagandists, and whores for the corporate oligarchs.

The signs along train tracks and radio transmissions from a call center like facility showed the calculated business-like efficiency of the cannibals in systematically and methodically luring victims to their slaughterhouse. It is the same techniques used by the apostles of Edward Bernays to consciously and intelligently manipulate the habits, opinions, tastes, ideas and actions of the masses, in order to control and influence their buying habits, voting decisions, and support of their rulers. The unseen men who constitute the “invisible government” use these techniques to keep the cattle docile, fed, and ignorant, as they are led to slaughter.

The government and lack thereof is always lurking in the murky background of how and why the United States has devolved into an infected world of the walking dead. This episode provided some clues about government labs producing viruses as weapons to be used against some unexplained enemy. The insinuation is that the government somehow lost control of the virus and the ensuing pandemic destroyed our modern world and left the survivors to battle the biters and each other for the remaining scraps. The Federal government caused the societal collapse and is nowhere to be found in rebuilding the nation.

It is unclear how the apocalypse went down, but you can assume it began with fear, which led to panic, chaos, economic collapse, violent upheaval, war, and total breakdown of governmental authority and control. It is ironic that today fear of a worldwide ebola pandemic is coinciding with an inevitable economic implosion, wars raging in the Middle East, violent protests raging around the globe, and trust in governmental authority plunging to all-time lows. The Walking Dead has wittingly or unwittingly captured the ambiance of our turbulent times.

When you are faced with desperate circumstances you can either do whatever you need to survive or you can submissively accept your fate and die. Gareth and his cannibalistic cohorts had been in the same situation as Rick and his posse, but they had somehow turned the tables on their captors. Gareth’s survival of the fittest creed was “either you’re the butcher or you’re the cattle”. Human beings react to intense pressure and life threatening situations in different ways. Some people snap and turn into monsters, like Gareth. Some people snap and lose their minds. Others, like Rick and Carol, summon an inner strength to do whatever it takes to survive while barely maintaining their humanity. Others turn into blind followers of a strong forceful leader, not questioning the morality, legality or humanity of what they are ordered to do. The line between right and wrong, necessary versus unnecessary, vengeance versus justice, and butcher versus cattle is blurred in a world without rules, government or accepted norms.

I believe the “butcher or cattle” analogy is sadly a valid meme for the world we currently inhabit. In the Walking Dead world, individuals must choose to be butcher or cattle. It’s a Darwinian world of kill or be killed. Like minded individuals with common values and goals form communities to protect themselves, provide for themselves, and attempt to bring a semblance of order in a chaotic world. The community of Westbury, led by the governor and the community of Terminus, led by Gareth, are founded upon a foundation of evil and ultimately destroyed. Rick’s community of liberty minded freedom fighters do whatever is necessary to survive, but retain their humanity, decency and desire to create a better world.

Our present day world may not be as brutish as the Walking Dead world, though the line between reality and fiction is often indistinguishable when you turn on the news, but the distinction between butchers and cattle is clear. The elected and non-elected rulers of the deep state are the butchers, sending young men off to die for oil companies and arms dealers, impoverishing the masses through inflation and their control of the currency, and enriching themselves through their complete control of the political, financial, judicial, and economic systems. This establishment, or invisible government as Bernays described, is committed to its own enrichment and perpetuation. Its scope, financial resources, and global reach put it in a predator class all by itself.

The common people are the cattle being led to slaughter. We are kept docile with incessant propaganda from the mainstream media; marketing messages to consume from Madison Avenue; filtered, adjusted, manipulated economic data fed to us by government agencies; an endless supply of iGadgets and other electronic distractions; government education designed to keep us ignorant; 24/7 reality TV on six hundred stations to keep us entertained; corporate toxic processed food to keep us obese and tame; and an endless supply of Wall Street supplied debt to keep us caged in our pens with no hope of escape. The butchers of the deep state have maintained control for decades, but we’re entering a new era.

Fourth Turnings result in the tables being turned on the butchers. Some cattle are awakening from their stupor. They can see the bloody writing on the slaughterhouse wall. Anyone who isn’t sensing a dramatic mood change in this country is either a mindless zombie or a functionary of the deep state. The financial shenanigans of the ruling class are again being revealed as nothing but a Ponzi scheme built on a foundation of debt and propped up by delusions and ignorance. When the house of cards collapses in the near future, the tables will turn. When people have nothing left to lose, they will lose it. The butchers will become the cattle. There will be no sanctuary for these evil men. Their reign of terror will be swept away in a whirlwind of retribution, death and destruction. It might even make the Walking Dead look like a walk in the park.






Posted on 22nd October 2014 by Administrator in Economy |Politics |Social Issues


Via William Banzai



Posted on 22nd October 2014 by Administrator in Economy |Politics |Social Issues

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I’m sure my senior citizen mother is doing backflips today like the old guy in this video.

The government, out of the kindness of their hearts, and using the bastardized, manipulated and understated CPI, is giving all 64 million retired Americans a 1.7% raise in their Social Security checks in 2015. That amounts to about $22 per month for the average retiree. That’s $5 per week. I bet 64 million cranky old farts are headed out for the early bird special tonight to celebrate.

Think about the ridiculousness of the government telling a senior citizen their cost of living has only gone up 1.7% in the last year. Beef prices are up 20%. I do the grocery shopping and I can say for sure that my entire bill is up 20% over last year. Obamacare has pushed healthcare costs up by double digits in the last three years. Deductibles are twice as high and premiums are up 5% to 15%. Utility bills have been soaring by over 10% in the last year. Seniors are getting 0% on their savings due to the morally bankrupt Federal Reserve. That extra $22 per month will be gone in an instant.

Just when I think the MSM can’t sink any lower, the faux journalist mouthpieces for the oligarchs at Marketwatch put out the most outlandish piece of shit I’ve ever had to read without gagging.

These pitiful excuses for journalists actually had the balls to write an article recommending what seniors should do with this “extra” $20 per month. These blithering idiots actually are willing to perpetuate the lie that this miniscule pittance can be used for something other than keeping these seniors from freezing to death this winter because they can’t pay their heating bill.

Some of the brilliant ideas include:

  • Acting like a good muppet and investing it in the market. Brilliant. My mom can buy 1/20 of a share of Amazon per month with her windfall.
  • Buying a nice bottle of wine to go with their can of Friskies for dinner.
  • Paying down the debt they’ve accumulated over a lifetime. At $20 per month, they should have it paid off by the time they reach the age of 265.
  • Paying those utility bills so the big corporation doesn’t turn off their gas in January.
  • Hire an illegal alien housekeeper to clean up your cardboard box a couple times per month.
  • Treat yourself to a steak once per month as a change of pace from that Kibble and Ramen noodles.
  • Live it up and go to the movies once per month. You should go see Idiocracy so you will understand how the writers of this article got their University of Phoenix college degrees in journalism.

You think I’m joking, but these are the actual recommendations made by “journalists” working for Rupert Murdoch’s Marketwatch. There are just some things that push my buttons and make me lose my cool. This is one of them. Senior citizens have been thrown under the bus by Ben Bernanke, Janet Yellen, Obama, and the rest of this corrupt cabal of oligarchs. Let them eat cake has been replace by let them eat cat food.


Ben Bernanke now gets $250,000 for an hour long speech where he takes credit for keeping bankers from experiencing a 2nd Great Depression. Too bad tens of millions of non-bankers are experiencing a 2nd Great Depression. If there is justice in this world, Bennie will swing from a lamppost before this episode in history concludes.

Via Christian Science Monitor

Social Security payments will increase 1.7 percent for retirees in 2015

Social Security payments for 64 million retired American workers will increase 1.7 percent in 2015. That means the typical retiree will get an extra $22 per month, receiving a $1,328 average monthly Social Security payment and $15,936 annually.

By Schuyler Velasco, Staff writer

  • Elaine Thompson/AP/File

Social Security isn’t going anywhere. Not yet, anyway.

Monthly payments for 64 million retired American workers will increase 1.7 percent in 2015, the Social Security Administration announced Wednesday. That means the typical retiree will get an extra $22 per month, receiving a $1,328 average monthly payment and $15,936 annually.

“The 1.7 percent cost-of-living adjustment (COLA) will begin with benefits that more than 58 million Social Security beneficiaries receive in January 2015,” The Social Security Administration said in the announcement. “Increased payments to more than 8 million SSI [Supplemental Security Income] beneficiaries will begin on December 31, 2014. The Social Security Act ties the annual COLA to the increase in the Consumer Price Index as determined by the Department of Labor’s Bureau of Labor Statistics.”

Recommended: Retirement planning: Six myths, busted

The increase coincides with the Labor Department’s monthly Consumer Price Index release for September. Thanks largely to falling energy costs, CPI increased just 0.1 percent last month and (you guessed it) 1.7 percent from last year. Food costs, however, jumped 3 percent, meaning the overall increase may be more acutely felt by seniors who don’t commute to work every day (thus getting less relief from the drop in gas prices).

This is the third straight COLA increase for Social Security recipients. This year’s cost of living increase was 1.5 percent; in 2012, it was a comparatively giant 3.2 percent. There were no benefits increases during the two previous years because consumer prices fell during the recession.

The SSA announced other changes as well. Based on wage increases, the maximum amount of earnings subjected to the Social Security taxes will increase to $118,500 from $117,000. The SSA estimates that out of 168 million workers who pay Social Security taxes, around 10 million will pay higher taxes because of the hike in the taxable minimum.

As in other years, this year’s increase comes amid worries about the long-term future of Social Security and Americans’ financial readiness for their retirement years. The Social Security Trust fund is projected to run out by 2033, according to an SSA Trustee report released this year, and the oncoming rush of retiring and aging Baby Boomers are expected to create steep budgetary problems in the coming years. Some 80 percent of Millennials and Gen-Xers don’t expect to receive anything from Social Security after their working years, according to a study released by the TransAmerica Center for Retirement Studies over the summer.

There are concerns in the short term as well. By at least one measure, retirees in 49 of 50 states aren’t replacing enough of their pre-retirement income. Social Security makes up about 38 percent of total income for the elderly, according to the SSA, and 52 percent of married couples and 74 percent of unmarried persons receive over half their income from Social Security.

For 1 in 3 retirees, it is their only income source. Basic costs of living, especially food prices, continue to balloon, and nearly 10 percent of retirees live in poverty, according to the Census Bureau.

Still, there is some cause for optimism. Perhaps because of their doubts, younger workers (at least the ones with access to employee-sponsored accounts) are shaping up to be excellent savers, and not all is lost with Social Security in general. Despite the trust fund depletion and funding shortfalls,  the SSA still anticipates being able to pay 75 percent of scheduled benefits between 2033 and 2088. 

What Could You Buy With $100 Worth of Silver or Gold if You Invested 40 Years Ago?


Posted on 22nd October 2014 by Administrator in Economy |Politics |Social Issues


As the purchasing power of the U.S. dollar decreases by the year, investors are turning to precious metals. The public has not yet figured out that the dollar’s devaluation is ongoing and that holding physical precious metals rather than cash is an effective way of protecting their purchasing power over time. Grasping the concept of dollar devaluation is difficult for many. One of the most effective methods used to illuminate this concept is through illustrations. We at Money Metals Exchange decided to use a $100 gold/silver investment from 1971 and convert the value into its worth today.

Presented by: Money Metals Exchange

Connecting the Dots: 5 Warning Signs Point to Real Estate Market Downturn


Posted on 22nd October 2014 by Administrator in Economy |Politics |Social Issues

Connecting the Dots: 5 Warning Signs Point to Real Estate Market Downturn

By Tony Sagami

Investing is about piecing together different bits of information into an illustrative picture—sort of a Wall Street version of the connect-the-dots game we played in kindergarten.

That’s why the headline below from Bloomberg made my investment antennae stand up and motivated me to look for either confirmation that the real estate market was indeed slowing down or contrary evidence to explain if the weak summer sales numbers were just a temporary aberration.

What that Bloomberg article showed was that home prices in 20 US cities increased at the slowest pace in almost two years ending in July, rising at an uninspiring annualized pace of 0.5%. Those are, by the way, the worst numbers since November 2011.

That’s a change from the healthy real estate gains that we’ve seen for two years, and there are lots of other reasons to think that real estate is headed for a rough patch, if not downright trouble.

Warning Sign #1: Worrywart Homebuilders

You know who knows more about real estate than the Gucci-wearing loafers on Wall Street? The people swinging the hammers and putting their own capital on the line with every real estate project they start.

The National Association of Home Builders index of builder confidence dropped by five points from 59 in September to 54 in October.

Each of the index’s three components were sharply lower in October: the current sales conditions index fell 6 points to 57, expectations for future sales fell 3 points to 64, and traffic of prospective buyers dropped 6 points to 41.

Warning Sign #2: Widespread Use of Sales Carrots

Surveys are useful but far from perfect. A better gauge of builder sentiment is how many incentives—such as upgraded cabinets, wood floors, and high-end appliances—they’ll include to close a deal.

Make no mistake: builders don’t give away incentives unless they have to and builders are giving away tens of thousands of dollars in incentives to goose slumping sales.

“Incentives have increased because builders aren’t selling as well as they would like. … Rather than reducing prices (outright), they use incentives,” said John Burns of real estate research firm John Burns Real Estate Consulting Inc.

A Wells Fargo survey of 150 homebuilders reported that that percentage of builders using incentives rose to 26% from 17% in August of 2013 and 21% in July of 2014.

Homebuilder Lennar admitted that it gave away incentives worth $20,400 per house last quarter. Moreover, that $20,400 amounted to 5.8% of the sales price. That’s a heavy hit on profits!

Warning Sign #3: Sales Slowdown

In a recent report, Toll Brothers warned Wall Street that its sales are slowing. Its sales contracts dropped by 4% in the last quarter and it now expects to sell 5,300 to 5,500 homes this year, down from its previous high-end forecast of 5,850 homes.

Moreover, as the above chart shows, home appreciation is now nonexistent and is threatening to turn negative.

Warning Sign #4: Profit Plunge Next?

Slumping sales and stagnant real estate prices are the precursor to profit disappointment. “Construction of single-family homes has been weak,” said CBRE Global Chief Economist Richard Barkham.

The first homebuilder profit warning was just delivered by KB Home, who is selling fewer and fewer homes. KB Home delivered 1,793 homes last quarter, down from 1,825 delivered in the same period a year ago.

That translated into weaker profits. KB Home reported earnings per share (EPS) of $0.28 on $589.2 million of revenue; however, Wall Street was expecting $0.40 EPS and $646.76 million of sales.

Warning Sign #5: Watch the Real Estate Food Chain

There is a lot more to the real estate industry than just homebuilders—the furniture industry, for example.

Stanley Furniture just reported its quarterly results and delivered a loss of $2.3 million and 5.0% drop in sales.

“The demand for upscale wood residential furniture in the industry’s traditional channels of distribution remains relatively weak,” warned CEO Glenn Prillaman.

My vegetable farmer father was one of those people that thought real estate prices would never go down. The 2008 financial crisis and accompanying real estate crash proved that wasn’t the case and the growing number of worrisome data points are warning me that stocks in all the parts of the real estate food chain could be headed for trouble.

Tony Sagami
Tony Sagami



Posted on 22nd October 2014 by Administrator in Economy |Politics |Social Issues


Wall Street Is One Sick Puppy – Thanks To Even Sicker Central Banks

1 comment

Posted on 22nd October 2014 by Administrator in Economy |Politics |Social Issues

Submitted by David Stockman via Contra Corner blog,

Last Wednesday the markets plunged on a vague recognition that the central bank promoted recovery story might not be on the level. But that tremor didn’t last long.

Right on cue the next day, one of the very dimmest Fed heads—James Dullard of St Louis—-mumbled incoherently about a possible QE extension, causing the robo-traders to erupt with buy orders. By the end of the day Friday, with the market off just 5% from its all-time highs, the buy-the-dips crowd was back, proclaiming that the “bottom is in”. This week the market has been energetically retracing what remains of the October correction.

And its no different anywhere else in the central bank besotted financial markets around the world. Everywhere state action, not business enterprise, is believed to be the source of wealth creation—at least the stock market’s paper wealth version and even if for just a few more hours or days.

Thus, several nights ago Japan’s stock market ripped 4% higher in the blink of an eye after the robo-traders scanned a headline suggesting that Japan’s already bankrupt government would start buying even more equities for its pension plan. And that comes on top of the massive ETF and equity purchases already being made by the BOJ.

Likewise, yesterday morning the European bourses soared on a self-evident trial balloon enabled by Reuters that the ECB might start buying corporate bonds—in addition to asset-backed commercial paper, covered mortgage bonds and targeted loan advances to commercial banks. Moreover, all this prospective asset buying with freshly minted ECB credit was supposedly a prelude to outright QE—-that is, adding sovereign debt to the ECB’s already bloated balance sheet.

The thing is, however, the last injection is never enough in today’s stimulus addicted casinos. In the case of the ECB, the market’s pandering for more monetary stimulus is especially disingenuous. The pot-bangers claim, of course, that the ECB’s current balance sheet inflation plan is just retracing old ground;  and that it simply needs to fill a $1.2 trillion “hole” to get its balance sheet back to where it was in mid-2012 when Draghi’s “whatever it takes” ukase was delivered to Europe’s roiled bond and equity markets.

Let’s see. In just the eight year period leading up the crisis of 2012, the ECB’s balance sheet had exploded by 4X. And the the truth of the matter is that the subsequent shrinkage shown below is a dangerous  pro forma illusion. The ECB’s bloated portfolio of discount loans to member banks which were collateralized by sovereign debt was not really liquidated; it has just slithered to an off-balance sheet parking lot for the interim.

What Draghi’s undeliverable pledge actually did was to incite the fast money crowd into frenetic peripheral bond buying on the usual front-running presumption that smart guys buy now what the central banks announce they will be buying later. Soon the prices of these sovereign junk credits were ripping higher, and the rest of the market piled on—- especially the very same Spanish and Italian banks which had previously retreated to the ECB discount window to fund their stranded books of own country bonds.

Stated differently, in return for three cheap words Mario Draghi was able to access  a  vast financial parking lot, which was quickly filled with the previously shunned peripheral nation bonds. Accordingly, European banks, especially in Italy and Spain, began to liquidate their LTRO borrowings and, presto, the ECB’s reported balance sheet shrunk drastically.

quick view chart

In truth, however, Draghi’s parking lot is inhabited by an assemblage of day traders who can make a bee-line for the exits as fast as they piled-on to the original “whatever it takes” trade. In fact, Draghi’s desperate jawboning and serial announcements about balance sheet expansion ploys are proof positive that the parking lot has a tenuous hold on its tenants.

That means that virtually any unexpected catalyst could start a run on the  trillions of Greek, Italian, Spanish, Portuguese and Irish debt that is now insanely over-valued.  Accordingly, the European bond market is a massive conflagration waiting for an ignition. Worse still, Germany now has all the matches, and it is becoming more evident by the day that its politicians and financial statesman have finally drawn a line in the sand. There will be no outright QE, and, therefore, there is no way to keep Mario’s parking lot from experiencing an eventual stampede for the exist gates.

In that context, today Reuter’s leak was just a probe—-an attempt by the ECB apparatchiks to see whether the German resolve against “state financing” extends to corporate debt as well as outright government bonds. That this desperate ploy elicited an excited equity rally is just a measure of how sick stock markets all around the world have become.

Yet today’s headline was probably worth no more than a one-day rip, and that’s all the casino cares about. It does not discount the future of the real world economy; it only chases the concurrent emissions of central banks liquidity and word clouds.

Indeed, if the European bourse were actually discounting the real world future they would have panicked long ago. And not just because Europe is heading for a triple dip or because the German export machine is faltering owing to the swoon in its heretofore bloated and unsustainable export markets in Russian and China.

In fact, Europe is stuck in a deep rut of socialist tax and debt burdens, economic dirigisme and excessive financialization, and has been so for most of this century. Here is what has happened to the euro area economy while the ECB printing presses were running red hot.  As shown in the first panel below, total industrial production (less construction) in mid-2014 is no higher than it was 14 years ago.

quick view chart

Likewise, the euro area has had no net employment gains since 2006. Accordingly, the unemployment rate for the EU-18 as a whole had soared, notwithstanding sharp improvement in Germany and northern Europe.


At the same time that the private  sector has been stagnant, the public debt has continued to soar, and is now 50% higher than the already bloated levels of 2008. Moreover, with a triple dip all but certain, and virtually no growth in nominal GDP in any event, there is virtually no chance that the aggregate debt of the euro-zone nations will not soon catapult past 100% of GDP. In that context, it is plainly evident that the real agenda of the Brussels  bureaucrats and the Draghi gang in Frankfurt is to monetize the public debt, not ignite a miracle of private economic growth and rising corporate profits.

quick view chart


On this side of the pond, the equity market puppy is just a sick. Consider the actual gibberish uttered by Bullard last Thursday:

I also think that inflation expectations are dropping in the US. And that is something that a central bank cannot abide. We have to make sure that inflation and inflation expectations remain near our target.


And for that reason I think a reasonable response of the Fed in this situation would be to invoke the clause on the taper that said that the taper was data dependent. And we could go on pause on the taper at this juncture and wait until we see how the data shakes out into December…..So… continue with QE at a very low level as we have it right now. And then assess our options going forward.”

The underscored sentence says it all. Bullard has been drinking the central bank cool-aid so long that he does not even recognize that the “inflation expectations” which he cites as reason for more Fed money printing are actually authored by the FOMC itself. The chart below represents the so-called 5-year breakeven—-which is the subtraction of the inflation protected TIPS bond yield for that period from the regular treasury note. That is, its represents nothing more than trading noise—- the random differences between treasury securities being massive impacted and manipulated by the central banks and the carry trade gamblers that they enable.

So Bullard espied a wiggle in the graph below, and declared it an intolerable breach of the central banks plan for just the right amount of inflation—-that is, 2%, no more and no less. Accordingly, more bond buying was warranted.  Never mind that the Fed has pinned the money market rate at zero for 71 months and unleashed the greatest carry trade gambling spree in recorded history; or that $3.5 trillion of debt monetization during that period has deeply deformed yields and pricing in the entire fixed income market.

chart-I-5-year inflation breakevens


No, the job of the monetary politburo is apparently to sift noise out of the in-coming data noise—-even when it is a feedback loop from the Fed’s own manipulation and interventions. So the stock market rallies strenuously because an incoherent central banker starts randomly gumming about self-evident financial noise.

Thoughts from the Frontline: The Flat Debt Society


Posted on 22nd October 2014 by Administrator in Economy |Politics |Social Issues

Thoughts from the Frontline: The Flat Debt Society

By John Mauldin


International Monetary Fund chief Christine Lagarde says the global economy is facing “the risk of a new mediocre, where growth is low and uneven.”…  Lagarde said Europe’s 18-nation bloc that uses the euro currency – collectively the world’s biggest economy – is facing the “not insignificant” risk of falling back into a recession. (VOA News)

Since at least the beginning of 2006, the most asked question I get after a speech is “Do you think we will have inflation or deflation?” In an attempt at humor, my answer has been “Yes.” I go on to try to explain that we are in a deflationary environment, but eventually we will see inflation. When QE1 was announced, there were many pundits (none of the Keynesian variety) who immediately said the risk was for significant inflation, and there were even those (like Peter Schiff) who talked of hyperinflation and the demise of the dollar. Interest rates would rise, and US government bonds would collapse.

My response at the time was that the Federal Reserve would print more money than any of us could possibly imagine (and who imagined $3+ trillion?), and we would not see any inflation. My reasoning was that we were in a deleveraging world where the velocity of money was clearly falling. I explained – once again – the relationship between inflation and the velocity of money.

Beginning with last week’s letter, “Sea Change,” my answer to that question for the foreseeable future will be simply, “Deflation.” In Endgame Jonathan Tepper and I described the economic environment of a deleveraging world, especially that of Europe. In Code Red we described the coming world of currency wars, with Japan having fired the first shot. Sadly, we continue to see the themes of those books play out in the real world.

Over the coming months we are going to explore the implications of a rising dollar for equity markets, global trade, commodity prices (especially oil), interest rates, and Federal Reserve policy, just to mention a few of the areas that will be impacted as global currency flows shift and protectionism is on the rise. Not all markets and governments will be affected in the same way, and there will be any number of opportunities for investors who are willing to think outside of the status quo.

In this week’s letter we’re going to explore some of the implications of deflation. We will start with an internal client letter from my friend Charles Gave that deserves to be shared. Then we’ll explore a few thoughts on the velocity of money. I should note that I am deeply indebted to Dr. Lacy Hunt for my understanding of the velocity of money. To the extent I get things right it is because of his frequent and long-suffering help, and if I get something wrong it’s because I didn’t understand the things he said correctly or couldn’t communicate them properly. These two men, both of whom I think of as mentors and statesmen, have had a huge impact on my thinking. The fact that they both talk with deeply resonating basso profundo voices that remind me of the voice of God in a movie soundtrack may have something to do with that impact! In any case, it lends an air of authority to their musings. Charles even has the long flowing white hair. (Thanks to David Hay for sending me the following note from Charles.)

The Return of the XIX Century Panic?

The readers may have noticed that for the last few months, I have almost never written on economic activity, monetary policy or inflation. Most of my writings and presentations have been on one topic and only one, how to construct an “antifragile” portfolio to use the terminology coined by Nassim Taleb. For me, the monetary policy followed by the central banks had to lead to a collapse in the velocity of money, and from there to deflation.

My recommendation was thus to hedge any equity positions with a long-dated US zero. So far so good.

Let me hazard for the first time in quite a while a prognosis on the future of ‘economic activity’ in the US. In the 19th century, which was deflationary most of the time, we did not move from a recession to a bear market, but from a bear market, called a “panic” at the time, to a recession. Let me explain.

When there is no inflation [see my notes below – John], the choices are between a deflationary boom and a deflationary bust. And the sober reality is that we move from one to the other only when the stock market crashes. What create the recession are not excess inventories or capital spending as in an inflationary period but the collapse in asset prices which had been pumped up by the general mood of optimism.

[Reread that paragraph at least a few times. We’re going to explore this concept further.]

Since we had plenty of debts attached to the prices of those assets, margin calls came in, and from there we moved to a true collapse in the velocity of money, accompanied more often than not by banks going belly up (see Barings with Argentina for a good example).

I have absolutely no doubt that trillions of dollars must have been borrowed one way or the other to play the rise in asset prices engineered by the central banks. Similarly, I have no doubt that huge amounts must have been borrowed to develop new sources of energy and that the break-even price for these new sources is probably being reached as I write. [Emphasis mine.]

To use my usual Wicksellian analysis, it is probable that the market rate is moving very quickly ABOVE the natural rate. If it were not, bonds would have no reason to outperform equities as they have for the last 12 months….

If I am right, it implies that a recession may be arriving and this recession should be preceded by a genuine collapse in bank shares, where most of the bad debt is probably parked and the bank shares are underperforming big time. The good news [is] of course that we are arriving at the end of one of the stupidest periods in economic history; the bad news is that asset prices will have to adjust to the new reality.

I maintain what I have said for a long time: No negative cash flows. No big debts. Hedge with government bonds.

The Velocity Trap

Hold those thoughts for a moment, as we need to explore the velocity of money a little further before looking at the implications of what Charles is telling us.

The St. Louis Fed defines the velocity of money as “the frequency at which one unit of currency is used to purchase domestically produced goods and services within a given time period. In other words, it is the number of times one dollar is spent to buy goods and services per unit of time.”

Irving Fisher gave us the famous Fisher Equation of Exchange. Reduced to its most simple form, it comes out as P=MV, where P is the nominal gross domestic product (not inflation-adjusted here), M is the money supply, and V is the velocity of money. You can solve for V by dividing P by M. By the way, this is known as an identity equation. It is true at all times and all places, whether in Greece or the US.

To continue reading this article from Thoughts from the Frontline – a free weekly publication by John Mauldin, renowned financial expert, best-selling author, and Chairman of Mauldin Economics – please click here.

Important Disclosures