Powder Blue Report

News, finance, politics, sports, and fun from the west coast

Thursday, February 28, 2008

Definition Of Inflation....

According to Websters it's:
"An increase in the amount of currency in circulation, resulting in a relatively sharp and sudden fall in its value and rise in prices: it may be caused by an increase in the volume of paper money issued or of gold mined, or a relative increase in expenditures as when the supply of goods fails to meet the demand.
It's safe to say that inflation is alive and well today. In fact, it's thriving.

We have seen this "definition" morph into "the rise in CPI and PPI". Chairman Bernanke has a PHD, doctorate or whatever in economics. He knows by heart what inflation is. He knows exactly how much money has been pumped into the system during the Greenspan years and during his term. He knows that "CPI" is not inflation. He knows the CPI #s have been massaged, distorted, and mauled to mislead the public into believing inflation is not a problem. The public knows inflation is a problem! What the public doesn't know is that money supply has exploded for several years now. All the public knows is that everything costs more today than yesterday.

For Chairman Bernanke to have had his hands on the money supply lever, crank it full blast, and tell Congress that inflation is not a problem is a crime! In fact, it is perjury in real life. Earlier this month CNBC pondered whether Roger Clemens or his trainer would be brought up on perjury charges for lying about steroid use. I ponder whether the Chairman will be brought on perjury charges for steroid use...on the economy! It is so disingenuous for Chairman Bernanke to absolutely know the correct definition of inflation, control the money supply, know that the money supply has been jammed as hard as they could, then smile while testifying to Congress and LIE! The government has exploded the money supply and hoped that no one would notice the results. Well, people have noticed!

I wrote close to a year ago about the worst of all worlds. This is now in fact happening. The things we need and use everyday are hyper inflating, while the things we have, or have borrowed against are imploding in value. I don't have a fancy name for this type of event. How about if we just call it a "TRAIN WRECK", LOL.

Lastly, President held a presser today to talk about the FISA Bill, the economy and various other things. He actually had the temerity to say that "he believes in a strong dollar policy". I had a good belly laugh over that one.

Wednesday, February 27, 2008

Quote Of The Day

"A government that is big enough to give you all you want is big enough to take it all away " … Barry Goldwater

Ron Paul Schools Ben Bernanke Again

Today the Federal Reserve Chairman Ben Bernanke went before Congress again to defend the current policies of the Fed of easing the cost of money...ergo, cutting the interest rates for those of you in Rio Linda. It's a ruinious policy that has the US Dollar in an absolute freefall right now. I on the other hand want to profusely thank our government for giving smart investors a roadmap of how to get wealthy in this coming stagflation depression. Unfortunately Joe Sixpack is not going to make out very well in this economic environment. So here's the video of Ron Paul earlier today grilling Uncle Ben about his horrible US Dollar policy.

Tuesday, February 26, 2008

Got Silver?

I do. So do a lot of my clients. It was up another 70 cents today to close around $18.80/ounce. It's within striking distance of $20 bucks an ounce and after that twenty five dollars an ounce. It's truly a joy to watch it everyday knowing that all the research I did is paying off nicely. I figure when it hits $150 an ounce later next year or in the next few years, I might look to start taking a little profit off the table. For now I get satisfaction everyday watching the incompetent managers at the Federal Reserve and other government agencies try to manipulate these markets while I watch the value of hard assets go through the roof.

Monday, February 25, 2008

Market Recap For Last Week

Last week showed further deterioration beneath the surface. In fact, right down to the foundation. The credit crunch has gotten somewhat worse in that, Commercial paper and Asset Backed mortgages contracted a further $30 Billion for the week. We are very close to this sector going "exponential" to the downside. The auction rate municipals had 480 "failed" auctions in one day. In 24 years there have been a total of only 44 until now. California has about a month to go to remedy a $16 Billion deficit. We had several Banks admit to more "hung deals". And...... the biggest news of all that got no press, attention, reaction, nothing, was KKR. KKR [Kohlberg, Kravis, Roberts] announced that they were having problems refinancing current debt outstanding. This is HUGE! KKR has been one of, if not the premier buyout firm for the last 20 years. For them to have a problem with financing is astonishing. What does this really mean? What it means is that deals cannot be done. If KKR cannot refinance or get financing for new deals, virtually no one can. If new deals can't be financed, then what business does the stock market have being at these levels? Back in 1989, United Airlines had a deal that fell through. The stock market fell about 7% on the day of the announcement. The public has their collective heads in the sand, hoping that all of this will blow over. The PPT [Plunge Protection Team] keeps propping up the market so the public doesn't panic. This has worked to a degree because the public watches the Dow Jones and not the "guts" of the credit markets. The rub here is that the "guts" of the credit markets are what makes the world go round. NO CREDIT, NO ECONOMY! Plain and simple. The real economy is going off a cliff here and now, and the stock market has a bid under it by "The Presidents Working Group on Financial Markets". Wonderful!

Northern Rock, the British bank was nationalized, several German state owned banks are on the verge of collapse, our banking system is frozen solid, credit markets of all types in the US are in shambles, inflation is exploding while credits and the real economy are imploding. It is all perception until it is not, or until perceptions change Change they will! We also had a 200+ point rally Friday afternoon because AMBAC announced that they were close to a deal to raise $2.5 Billion. What a joke. They have a market capitalization of about $1 Billion, insure $700 Billion of munis, and Lord knows how much in Credit Default Swaps, and $2.5 Billion will solve all problems and save the world!

Two or 3 weeks ago the government said they would stop reporting a slew of economic numbers because it just cost too much to prepare these reports. Under great pressure they have relented. What gives? Are we supposed to invest our capital in the worlds' most "free" and "transparent" market while not having a clue what the money supply, inflation, unemployment, housing, etc. numbers are? Another shocker last week was the talk of no more certificates. The talk is, we will only have 2 options in the future. Either hold your securities in "street name" with a broker , or at the transfer agent on their computer books. NO MORE CERTIFICATES! They don't want certificates around because it's easier to manipulate the markets without them.

The public will keep their heads in the sand until they don't. More than likely, when they collectively lift their heads to look around it will be too late. While the public slept, they had their collective A$$E$ shot off. They will then panic, after it is too late. This is for all the marbles! All the financial marbles will will be in the "real" bag, the "paper" bags will be empty. As I see it, much if not all of the "paper" created over the last 25 years or so, will blow away. We will restart, rebuild, rethink, everything financial, starting from a solid foundation. Metals, or other real goods will back money, debt will be backed by real properties with real appraisals. When it comes to money, plain and simple trumps bells and whistles.

OC Ron Paul Activists Are Running For The GOP Central Committee

One of the best things to come out of all the Ron Paul activism in Orange County is that a bunch of us are running for the OC GOP Central Committee. We want to help the party get back to the message of smaller government. It's going to be a "get back to basics" message that we will deliver. It's not a hostile takeover attempt like the New Majority tried to do a few years back. Here is a rundown of some of the current candidates that have already pulled their papers:

67th District
1. Justine Sneddon
2. Kristine Alonzo

68th District
1. David Stokesbary
2. Eddy Karam

70th District
1. Allan Bartlett
2. Anthony Arechiga
3. Ethan Jacobs

72nd District
1. Robert Beckman
2. Alex Norby(son of Supervisor Chris Norby)

We have more people getting their papers this week. I will update the list when I can. We had a few more people willing to run as well, but the rules stipulating twelve months continuous registration as a Republican caught up some that wanted to run. The good news is that these disaffected people are now coming back to the party because of Ron Paul's run.

New Irvine Political Blog

I was just informed that there is a new Irvine political blog on the scene. The name of it is The Irvine Tattler. It is written by a former long time ally of Larry Agran, Stephen C. Smith! This is great. We need more coverage of Larry trying to anoint himself dictator for life in Irvine. Stephen will have some very cogent insight into the mind of Larry Agran since he used to be his executive assistant.

I was talking to some Irvine political people last week. Did you know that over the course of time since Larry's team has been back in the majority, not once has the council majority differed on any votes. I found that astonishing. I mean I knew that Sukhee and Beth didn't think for themselves, but this is like a smoking gun. Are you gonna tell me that out of hundreds of votes taken, not once has Sukhee or Beth voted against Larry. Nice independence there guys. You're supposed to represent all of Irvine.

This brings me to my next thought about about the upcoming Council meeting Tuesday. Larry, errr I mean Beth, (sarcasm on)has come up with a brilliant plan to cherry pick part of the recently enacted ethics ordinance dealing with lobbyists and place it on the June ballot.(sarcasm off). Come on guys, we've been down this road before. You tried to smear Christina Shea during the last election cycle and it didn't work. This is some really brilliant political work there Larry, how original. Try to weaken Christina before the November election by passing more ethics stuff when you're the one who should be targeted by an ethics ordinance. If this is so important that it needs to be put on the June ballot, why not have the entire ordinance on the ballot? I can answer my own question...because November is fast approaching and Larry needs some good lies for his Hometown Voter guides. I encourage Irvine residents to show up at the Council meeting Tuesday and let their voices be heard on this issue.

Monday, February 18, 2008

This Past Weeks News In The Markets

This past week saw less visible volatility to the public eye. The stock indices which "Joe and Jane public" watch saw less volatility. However there was tremendous volatility in commodities, such as the grains and energy complex. The big story was the credit complex. The ARM [auction rate municipal] market saw some rates go as high as 20 %. This because of the uncertainty with MBIA, AMBAC, and the other insurers, plus the big brokers backed away and did not support this market once the bids dried up. These brokers in the past would step up to smooth out any poor or failed auctions. They are afraid to/and don't have the capital to lend the support now needed. Imagine 20% rates on tax free municipal bonds! I thought the Fed just cut rates! The bond insurers have until next Friday to come up with a plan, or face ratings downgrades. What is happening in the credit markets now is "our collective worst nightmare" and "mathematically expected and assured". Virtually all foms of debt have been impacted by this credit crunch. Once a credit based economy experiences a "lack of faith" the end is near since more credit is needed just to sustain life. We have seen the entire debt complex from commercial paper and ARM munis, to credit card and auto loan securities, to home equity and all forms of mortgage loan securities, to AAA Munis, all the way to the most exotic forms of derivatives, freeze up/blow up/implode.

What we have not seen yet to any large degree is a major convulsion in the US Treasury markets. THIS IS NEXT! The federal deficit is set to explode with receipts cratering, and expenditures exploding because business is contracting. This fiscal trainwreck will happen while the Fed lowers and lowers rates, and pumps and pumps more money into the system which further debases the Dollar. We are watching desperate measures being used to buy time, and obscure bankruptcies from public view.

Since the Fed cut rate 1.25% ALL Treasuries with a maturity longer than 3 years have risen in rate and fallen in price. Not drastically yet, but rates have risen. We are watching the last haven of US debt start to bend. So far this has been in somewhat slow motion. We could be very close to Treasuries convulsing. Foreigners have funded US deficits since 1980. If foreign capital decides that either the Dollar is too risky of a currency, or that the US Treasury is not the "AAA" credit that it once was, we go directly into implosion mode without passing go or collecting $200. I assure you, things will speed up! Our entire system is predicated on credit. Bad things are already beginning to happen across the the whole economic spectrum. Can you imagine what things will be like if Uncle Sam gets shut out of the credit markets? EVERYTHING will change!

This is another way of saying foreigners won't accept $s. Not buying Treasuries, or even selling Treasuries would be a function of not wanting Dollars. The results will be disastrous. We will be forced for the first time in x number of years to actually live within our means. This poses a big problem because the US no longer produces much in the way of real goods. Less than 1 in 10 jobs now are in the manufacturing sector. In the last 10 to 15 years the US has spent nearly all of its accumulated capital ie[fat], sent more than half of its manufacturing overseas ie[muscle], ruined the world's reserve currency ie[blood], and bankrupted the greatest empire of all time. None of us made this situation what it is, everyone of us needs to do what is necessary to protect ourselves and loved ones.

Quote of the Day

"Paper money eventually returns to its intrinsic value ... zero."


Wednesday, February 13, 2008

The Derivatives Disaster Is Upon Us

I don't know the full name of the guy that wrote this, but I believe every word of it because I see it happening right now. I saw it today over on Lemetropole Cafe.
Today, Warren Buffet disclosed bids he made to Ambac, and MBIA. These bids were solely for the muni bond insurance, not credit default swaps, not CDO's, nothing to do with mortgages. He wants the profitable crown jewels. He doesn't want the toxic waste that will ultimately bankrupt these companies, not to mention the entire "fiat" system. Wall Street applauded the deal because they may not have to sell Billions $ of munis because they are no longer AAA rated. Buffet is not a stupid man. He is getting in line to scoop up this portion of the business when the insurers get/go downgraded or bankrupt. Both stocks were beaten like redheaded stepchildren in today's market. In some cases, uninsured bonds are trading higher in price than insured bonds. The bottom line here is; a recession is going to blow out the federal deficit, state and municipal deficits, over-leveraged corporations, homeowners, and consumers. Even if Mr. Buffet succeeds in getting the "muni bonds contract" it's all a joke anyway. Either these bonds can stand on their own or they cannot. No company, Central bank, or combination of the two can stop what is coming down the tracks. We are talking TRILLIONS! There are $750 Trillion of derivatives outstanding. 3/4 of a QUADRILLION DOLLARS! A Quadrillion. I can't believe we are using the "quadrillion" number. This monster just got too big.

We currently are experiencing 2 different markets in mortgages. Jumbo rates are about a point higher than conventional rates. Advertised rates are different from available rates. Many applications are turned down for poor credit, others because the appraisals don't stand up, re-fi's for too little or negative equity. We have 2 different sets of interest rates. One being the government declared rates, the other being market rates. Guess which rate is more important? That's right, the EFFECTIVE rates used in the real world. Real world rates have not come down anywhere near as much as "Fed" rates. Also there is a total lack of liquidity where it is needed. If you need money, you can't get it. If you don't need it, it is plentiful.

I wrote back in June and July about the prospective credit crunch. I also wrote that "if you don't know what derivatives are, you will within 6-12 months". Well, derivatives have bankrupted the system. No ifs, ands, or buts. The situation is systemic. I do not profess to know the exact outcome, but I do know the world will look and feel completely different a year from now. The last six months we have seen denial, we have heard it was "contained", we heard "ok, now that the banks and brokers have taken writedowns the decks have been cleared". That was after the first round of writedowns, we heard it again after the second round. We are now in the third round of writedowns, and I submit the surface has not even been scratched. Nothing is being marked to market yet in the credit markets. All it would take is to have JUST ONE sector marked to market and we will witness panic. We have credit default swaps, CDO's, SIV's, interest rate derivatives, ARM corporates and municipals. And on and on. If just one sector were truly marked to market, the banking system will not survive 10 days. Possibly not 10 hours, meaning they won't open the next day. That is how serious this is. This will end in a panic that will put 1929 to shame. I say this because the system will change dramatically, whereas after 1929 it was all about getting back to the way it was before the crash. This time we cannot go back to the past, the currencies must change. They must be backed by something. I am not smart enough to know exactly what the aftermath will look like. I am smart enough to know that precious metals will serve as the foundation to money in some way shape or form. They have for some 5000 years. The opportunity to become a "charter" member of the next banking system is now. Either have wealth in real money or lose your wealth in today's' paper currencies! Regards, Bill H.

So...do you have/own some real money...i.e gold & silver? If not, you'd better call me and I'll go over with you some of the ways to position yourself for this environment.

Tuesday, February 12, 2008

Ron Paul Will Not Support John McCain

I saw this article this morning and let out a big cheer. Ron Paul will not be supporting John McCain for President. This is some of what he had to say...
Republican Rep. Ron Paul told the Tribune this morning he will not back Sen. John McCain as his party's nominee unless the Arizona senator "has a lot of change of heart."

"I can not support anybody with the foreign policy he advocates, you know, perpetual war. That is just so disturbing to me," Paul said.
"I think it's un-American, un-Constitutional, immoral, and not Republican."
Amen. John McCain has said that he wants America to be in Iraq for at least the next hundred years...and some people say that Ron Paul is nuts, LOL. This is a crazy idea.

I also know that this non-support of McCain, if he turns out to be the nominee, will not sit well with most of the GOP party bosses. They expect party loyalty until death do us part. Most people submit to these demands, but Ron Paul will not, it sounds like.

I can't support mcCain for other reasons. The war is a good reason, but for me it's our border policy and economic/montetary policy that are the deal killers for me with McCain.

Friday, February 08, 2008

Federal Prosecutors Release Some Mike Carona Tapes

This post is dedicated to all the Carona defenders out there in the OC GOP heirarchy. Today federal prosecutors released some transcripts of former Carona confidant Don Haidl speaking with Mike Carona about how they were going to obstruct justice and lie on the stand about all the cash gifts and bribes Haidl gave to Carona over the years. The word "damning" comes to my mind. Carona lawyers are going to work overtime to try and get this evidence suppressed you can bet. Without further ado, here's some of the conversations our former top law enforcement official has with Don Haidl...
On the tapes, prosecutors say, when discussing the cash payments, Carona tells Haidl that "unless there was a pinhole in your ceiling that evening" that he would falsely claim that he never got money from Haidl. "Pinhole," prosecutors say, referred to a hidden camera.
They didn't have a video pinhole Mike, but an audio pinhole that Haidl was wearing you jackass...let's continue our journey here...

"I'm OK getting up on the stand and saying that," Haidl tells Carona, according to the transcripts.

"It could be either one of us getting up on the stand and saying that," Carona responds.

Later in the conversation, prosecutors say, Haidl and Carona are discussing whether the government would be able to trace the cash payments. At that point, according to the transcripts, Haidl tells Carona that "as long as our stories are straight, I'm OK, as long as I know there's no trail anywhere."

"No trail anywhere," Carona responds.

"OK," Haidl says.

"Period," Carona responds.

"OK," Haidl repeats.

"Period. Period," Carona says. "In fact, not even close to being a trail."

These are just a few of the choice quotes from the filed brief. Read the whole thing here. Carona has quite the foul mouth when it comes to the English language.

Thursday, February 07, 2008

Mitt Romney Taps Out

How appropriate that on a day when Mitt Romney drops out of the Presidential race, it's the first day of the Chinese New Year....the Year of the Rat! That fits John McCain to a tee. I expected Mitt to reassess his campaign after Super Tuesday, but I didn't expect him to surrender to John McCain so quick. I was knee deep trading the S&P when I got a call that Mitt had dropped out. I didn't believe it at first, but then I saw Mitt's mug on our piped in CNBC broadcast in the office and I knew it had to be for real. One of my first thoughts was that I'm bummed for my buddy Todd Cranney who works on the Romney campaign. He's out of a job now. He's a talented guy so I'm sure he'll hook up with another campaign or something political in nature.

The pundits want this race to be over, but Mike Huckabee and Ron Paul are both staying in as of this moment. The voters in the rest of the states should get their opportunity to have their say before any corronations begin. As I said the other day, I will almost certainly not be supporting John McCain in the fall. There's really nothing he can say or anyone else can say to me that will convince me otherwise. This is a decision about policy for me and the direction of our country. Sometimes in politics, you have to accept half a loaf. With John McCain, Republicans are getting a crumb...and a bad tasting one at that. Sure many people who supported Romney will hold their nose and vote for McCain, but a lot of others will not by all the message boards I read this morning. As conservatives, we can't keep feeding the bears in the park(to coin a phase) and expect them to stay away from the campground. By voting for McCain, you're just sending the signal that all of his horrible policiy positions will be tolerated. I didn't vote for Arnold in 2006 and it proved to be one of the best decisions I've made. McCain will be a DC version of Arnold. If you want that, than go ahead and vote for him, but I'm not going to reinforce bad behavior.

Wednesday, February 06, 2008

Election Thoughts From Yesterday

Super Tuesday is over. It looks like the GOP is hell bent on nominating John McCain. If that is the road they want to go down, then they can knock themselves out because McCain won't be getting my support EVER. For the Dems, it appears that a steel cage match between Barack Obama and the Hildabeast is developing. My money is on the Clinton machine to pull out the nomination.

Ron Paul didn't do very well in California and in most states, although he did take second place finishes in States like Montana, Nevada, Louisiana, North Dakota, Minnesaota, and won three delegates in West Virginia with a deal struck with Huckabee. All these states were caucus or state convention states. What that tells me is we are better at getting our activists to show up at these places than getting the masses to vote for Ron Paul in primary states. This stems from the fact that there has been a near total media blackout on Ron Paul. It is what it is.

Our OC Ron Paul contingent met at the Classic Q last night to watch election returns and talk about how we are going to move forward. There is a lot of excitement with our supporters to stay active locally and have an effect on local races. We are going to start building the OC Ron Paul Republican farm team.

Derek Olson from the OC Weekly was at our event and filed this report.

Tuesday, February 05, 2008

OC Ron Paul Election Party

After working all day getting out the vote, the Ron Paul nation in OC will be meeting at the Classic Q Bar & Billiard Hall in Newport Beach tonight to watch the election returns. if you can, please RSVP over at the Irvine Ron Paul meetup site so we can get an idea of how many people will be attending. Please go vote today and when you do, vote for freedom & the Constitution, vote for Ron Paul.

Monday, February 04, 2008

Ramos & Compean Appeal Decision Due Anyday

One of the first things I do in the morning is check the website of the 5th Circuit Court of Appeal in New Orleans. I was told by Nacho Ramos's father in law Joe Loya a while back that they will just post the opinion on the website when it is out. Nothing more, nothing less. I thought it would have been decided by now, but the wheels of justice are slow on this. It will be a great day when this outrageous miscarriage of justice is overturned.

Ron Paul In Simi Valley Last Week

This video is a little flavor of the post debate rally at the Grand Vista Hotel in Simi Valley last week after the GOP Presidential debate at the Reagan Library.

OC Register's "Non-Endorsement" Endorsement of Ron Paul

There was a great editorial in the Register this morning tacitly endorsing Ron Paul for President. They realize that he probably is not going to win, but they want the next President to use some of the ideas Ron Paul has been expressing and incorporate them into their Presidency. I know the Register doesn't endorse candidates, but they pretty much are saying to vote for Ron Paul without actually saying it, LOL. As far as predictions go...I think Ron will get at least 10% of the vote tomorrow.

Bartlett House Politics

It's been an interesting last few months in the Bartlett Casa, politically speaking. As everyone knows, I'm a huge supporter of Rep. Ron Paul for President. Lynn was undecided until about a month ago, but she has since taken up for Gov. Mitt Romney. The reason I'm posting this is because I saw in the news that Maria Shriver has endorsed Barack Obama for President and her husband and our governor has endorsed John McCain. I have to say it definately has made for stimulating conversations around the house, especially when we're watching the debates. I'm guessing we're not the only households with divided loyalties for Presidential candidates.