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Monday Market Movement – Equities Rising on “Rivers of Blood”

"Libya is at a crossroads. If we do not agree today on reforms …. rivers of blood will run through Libya.

We will take up arms… we will fight to the last bullet.

We will destroy seditious elements.

If everybody is armed, it is civil war, we will kill each other.

Libya is not Egypt, it is not Tunisia"

- Saif al-Islam Kadhafi, 38 (Moamer's son)

Hey – happy Monday to you!

The picture on the left is not Moamer Kadhafi (he wishes he still looked that good) or Saif – it's Vigo the Carpathian, who also promised "rivers of blood" but only actually managed to produce rivers of slime before the Ghostbusters put him back in the painting.  Did Kadhafi steal his speech from the 1989 Ivan Reitman film or, perhaps, did he lift it from arch-conservative Enoch Powell's speech?   Powell warned that if the UK were to allow immigrants to have ordinary rights, that the streets of London would look like the set of Ghostbusters (I am paraphrasing slightly).

While the foundation Powell laid in England became the rallying cry for Conservatives in Arizona recently, when we see OTHER countries oppressing the rights of people we go nuts, right?  About 250 protesters have already been killed by Kadhafi's storm troopers but we're not worried about the rivers of blood – we're worried about the rivers of oil that are controlled by Libya, which pumps 2Mb a day out of their estimated 42Bn barrel reserves.  

Libya, boarders Egypt,Tunisia and Algeria – 3 more of the biggest African oil producers and all with rioting citizens who are offended that they are beginning to starve while the top 1% of their country continue to live lives of wealth and splendor.  What the people do not realize is that, even if their leaders wanted to help them – they really can't.  

The inflation that Ben Bernanke is shoving down the throats of the World (in place of food) is more than any government that can't print money can handle.  Take poor Hosni Mubarack, for example.  It is reported he stole $70Bn from the Egyptian people over 30 years – that's $2.3Bn per year or what Lloyd Blankfein would call "Mid-year bonuses" but, rather than getting invited to the White House to set economic policy, poor Mubarack is shown the door by his people.  

Even if Mubarack wanted to stay in power and even if he wanted to give back all $70Bn to Egypt's 80 Million people, that would only work out to $875 per person or 13% of their $6,347 per capita GDP.  That does not really help much when food inflation is running close to 40% – does it?  That would make it irrational for Hosni to do anything but take the money and run because what's broken in Egypt can't be fixed – even if he wanted to.  

Libya is in the same predicament, as is Sudan, Algeria, Nigeria, Angola…  What happens when people are starving while they see their leaders living lives of luxury?  They get pissed!  They demand CHANGE.   So Global leaders have the choice of step down or fix the problem.   There are really only two choices available to leaders who want to stay in power and address the situation where there is less money for food than there are citizens and that is A) Increase the amount of money the citizens have to buy food or B) Decrease the amount of citizens.  

When A is impossible (we can't even do it in this country) then why do we vilify Kadhafi for choosing B?  

This is what we've been saying the Fed's policies would lead up to so, please, let's not pretend to be all shocked and disgusted that one of Bernanke's lab rats finally reacts to the stimulus as his survival instinct kicks in.  John Boehner gave his own "river of blood" speech this weekend – saying "If some of those jobs (created by the Obama Administration) are lost in this – SO BE IT!  We're broke – it's time for us to get serious about how we're spending this nation's money."  Plan B wins again!  

Of course, Boehner's Republican House isn't the only group of top 1%'ers who are turning their backs on the poor and taking their money and running – but they are the only ones who are doing it in an actual Democracy (in theory — the Democracy, that is, not the way they are screwing over the bottom 90% to benefit the top 1% – that's more like a fact).  As the Times points out this weekend in "Empire at the End of Decadence":

Republicans have even submitted a draconian budget that would make deep cuts into the tiny vein that is nonsecurity discretionary spending, cuts that would prove devastating to the poor and working class.  At the very time that many Americans — and the very country itself — are struggling to emerge from a very deep hole, the Republican proposal would simply throw the dirt in on top of us.

This cannot be. Financing for education and social services isn’t simply about handouts to the hardscrabble, it is about building an infrastructure that can produce healthy, engaged and well-educated citizens who can compete in an increasingly cutthroat global economy. One of President Obama’s new catchphrases is “win the future,” but we can’t win the future by ceding the present and romanticizing the past.

What does the Times mean by this?  Well, that can best be illustrated by the accompanying chart, which very clearly documents America's rapid and ongoing plunge from first to worst in a host of categories including, amazingly, our own level of Democracy – which has fallen, according to our own CIA, down to 8.18 out of 10 – just behind the Czhech Republic (8.19) and slightly ahead of Slovenia (7.69):

One thing America does excel at producing though, is prisoners!  This country already creates more prisoners per capita than any two other countries on that list and, without France and their recidivist ways (still half of ours), we would be bigger than the next three on the list!  Why does America have 7.2M citizens in prison or on probation while China, with 1Bn more citizens than we have, has only 1.5M?  India has just 313,000 prisoners in a nation of 1.1Bn and Pakistan (population 169M) has just 87,000 inmates?  In case you think it's "an Asian thing," consider that Germany (81M) has 75,000 prisoners, England (61M) has 78,000 prisoners and the Netherlands, where drugs are legal, have one of the lowest rates of incarceration, with just 16,930 of their 16,531,294 citizens in jail.  

For a "freedom-loving" people, we sure do seem to lock a lot of people up, don't we?  Fortunately, prisoners are not included in American Quality of Life surveys and they are not considered unemployed.  In fact, we kind of employ them in the $37Bn US prison industry – and that's not counting hundreds of Billions of Dollars spent each year in the legal system by citizens who are trying to stay out of jail facing off against the hundreds of Billions of Dollars the state spends to try to put them there.

Aside from deciding who goes to jail and who doesn't becoming one of our nation's biggest "free" enterprises, prison labor itself is a huge business as all sorts of jobs are done by prisoners, who earn about 50 cents an hour for their labor.  Who says we can't compete with Vietnam?  

The Pew Center's findings in March 2009 report that 1 in every 31 adults in America is under some form of correctional control (about 32 per 1000). Bureau of Justice statistics in their "Key Facts at a Glance" of correctional populations, estimates the total number of all persons on probation, parole, in prison and jail in 2008 to be at 7,308,200, or about 20 per 1000. By contrast, in 1980 when the Drug War was starting to get off the ground, the same figure was 1,842,100, or about 6 per 1000 – the same as most "civilized" countries.  For comparison, at the height of slavery in America there were less than 4M slaves.     

With over 5M additional Americans "just saying no" to freedom since Nixon first declared a "War on Drugs" in 1971 to keep those dollars flowing at the same time our War on (whatever it was we were supposed to be doing in Vietnam) was winding down – it's a little surprising that the $15Bn a year we spend keeping our citizens in jail and the who the Hell knows how much we spent arresting 1.7M people on drug charges last year (as well as the court costs) – is not even a topic of discussion in the budget talks.  

What is a topic of discussion in the Republicans "Spending Reduction Act of 2011" is cutting $420M of funding to Legal Services Corporation, who are the guys who help provide you with an attorney, if you cannot afford one – one of those pesky little Constitutional Amendments, that come after the 2nd, that most Conservatives would rather ignore.  As LSC points out in their soon to be unfunded Web Site:  

Nearly three out of four clients are women — many of whom are struggling to keep their children safe and their families together. Overall, the clients are the most vulnerable among us and are as diverse as our nation, encompassing all races, ethnic groups and ages, including the working poor, veterans, homeowners and renters facing foreclosure or evictions, families with children, farmers, people with disabilities, victims of domestic violence, the elderly and victims of natural disasters. 

Isn't it funny how the story always comes the Sheriff of Nottingham (Boehner) vowing that he will protect the people by stopping that awful Robin Hood (the budgeted agencies) who dare oppose his will by attempting to bring justice to the oppressed and redistribute the wealth of the top 1%?  

What else is falling under the Republican axe?

  • Public Broadcasting attempts to give a voice to the people – $445M cut
  • National Endowment for the Arts (what kind of Liberal BS is that?) – $167.5M cut
  • National Endowment for the Humanities (even worse Liberal BS !) – $167.5M cut
  • Hope IV Programs, which is a HUD program that develops public housing – $250M cut
  • Amtrak, which attempts to allow poor people to make trips while saving oil imports and cutting down pollution – $1.56Bn cut
  • Intercity and High Speed Rail Grants (why do Republicans hate trains, they used to love trains) – $2.5Bn cut
  • US Trade Agency, who are helping the wrong kind of Businesses (small) develop trade – $55M cut
  • Woodrow Wilson International Center for Scholars combines three things Republicans hate:  Democrats, Foreigners and Education – $20M cut
  • Community Economic Development Fund provide loans to small businesses (wrong kind)  - $4.5Bn cut
  • Federal Travel and Vehicle Budget cut (in half!) will keep the President from campaigning around the country – $8.1Bn cut
  • Essential Air Service aims (aimed) to make sure smaller communities were not ignored by airlines in favor of more profitable hubs – $150M cut
  • Technology Innovation Program was established to upports, promotes, and accelerates innovation in the United States through high-risk, high-reward research in areas of critical national need.  Unfortunately, the money often ended up in the hands of small businesspeople who threatened the established market shares of big business – $70M cut
  • Manufacturing Extension Partnership (MEP) Program delivers a high return on investment to taxpayers. No other program provides as much bang for the buck. For every one dollar of federal investment, the MEP generates $32 in new sales growth. This translates into $3.6 billion in new sales annually. For every $1,570 of federal investment, MEP creates or retains one manufacturing job. - $125M cut (80,000 jobs).  
  • Department of Energy Grants to States for Weatherization (because who needs to save energy or money?) – $530M cut

It goes on and on and it is entirely sickening to see how the Republicans plan to "save" money without cutting a penny of our $1.1Tn military budget and without collecting one dime of additional taxes in our $15Tn economy or any of the other hundreds of Billions of dollars of waste that could be cut instead of these "Liberal" or "Progressive" programs (both of which are terms that are spat out by by their media lap-dogs with great regularity).  None of this is surprising – it's the way I've told you we were hearing ever since my 1997 article: "The Dooh Nibor Economy (Thats "Robin Hood" Backwards).

Last year, my 2010 outlook predicted "A Tale of Two Economies" and there was no point in changing that outlook for 2011 because, clearly, we are just getting more of the same as the polarization of rich vs. poor becomes even more extreme.  I did believe, in December of 2009, that the Democratic Party would recover from their slow start and get on with doing that which they were elected to do – which was balance the budget by repealing tax cuts we can't afford and investing in Infrastructure, R&D and Education which would put this country back on the road to prosperity. 

Boy was I wrong about that!  Instead we got the clearest indication since Boss Tweed that the Democrats are every bit as much a tool of Big Business interests as the Republicans.  US citizens are now being ground into poverty and repressed to such a level that ONLY Singapore and Hong Kong have a greater wealth disparity than the United States – AND THE PROGRAMS THAT ATTEMPT TO REDRESS THIS ISSUE ARE THE ONES THEY WANT TO CUT!  

43% of the people in our country are not "thriving" – which means they do not have enough money to meet their basic needs of food, clothing and shelter without going further into debt.  9% of our people are "officially" unemployed but, if we counted our unemployed the way Spain does, we would have the same World-leading 20% level that Spain does.  We are THE WORST country in the World – tied with Korea in the level of "food insecurity," with 16% of the people in this country not having had enough money to buy food in the past 12 months.  

Don't forget – we're not even counting the prisoners!  

So do not fool yourself into thinking "it can't happen here."  That goes for my European Readers as well – as Angela Merkel's party found out this weekend in their crushing defeat.  We will be exploring some additional highly leveraged Disaster Hedges today in Member Chat (we already have two key hedges and our $25,000 Virtual Portfolio is STILL bearish as it's short-term.  As I noted in the weekend post, which charted and reviewed our current situation and as summarized excellently in Stock World Weekly, which also gives us a nice Global perspective on the markets – it's a very unstable situation and, as I said to Members over the weekend in Chat as we discussed the issues in greater detail – even China is now having protests – it doesn't make sense not to hedge our risks of staying in the markets at this point.  

If 2011 is still a tale of two economies – we'd better play for both of them.  I'll give the final word to the great Glenn Beck, who explains how the United States can completely fall apart in just 15 days – enjoy!  


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  1. Phil,
      I’m sure you’re tired of all the NFLX questions but I need some help. Unfortunately I did not get a chance to put your last suggestion into play and I’ve been out of the country for the last week. I have the March 200 Calls at $17 and the June 250 Calls at $11.5. I’d like to roll them out until Jan 2012. Thinking about an even roll of the March 200 to the Jan 250s for $38 and to leave the June 250 alone for now. What do you think? Never again will I trade a MoMo. I’m just hoping to get out alive. Thanks.

  2. Sometimes I wonder how some of these politicians sleep at night! I guess all that money from the top 1% and corporations buys some pretty good mattresses and sleeping pills… 

  3. For those interested, I have published the results from my main screen:
    The list from 3 weeks ago is up 5.37% (beating the S&P500) but the top 10 (ranked by Price-to-Sales) on that list are up  9.44% in 3 weeks, beating the market by over 4%. The list from 2 weeks ago (I track only the top 10 for these new list) beats the market as well (last week and overall) and the list from last week was up over 2.6% last week. Some decent results overall.
    My list of stocks to short proves that a rising tide lifts all boat as it was up 0.5% last week. That’s 0.5% less than the market so there is some hope in case we start a correction. However, there are some big winners in that list proving again that it’s dangerous to short anything in this market!
    The new list from the main screen for this week is at:
    The top 10 (ranked again by Price-to-Sales) are highlighted in yellow. More results next week….

  4.  Phil,
    I’m looking for ways to make short term profits while managing risk  from high volatility stocks like PCLN reporting in four days.  To my sorrow I learned the hard way in recent weeks that even a very loose strangle can "tear your face off" as when NFLX went from $170 to $250 in a matter of days.

    What do you think of the following structure using an Iron Condor with PCLN
    Buy PCLN Feb-25 $500 Call @ $5.30    -     Sell PCLN Feb-25 $495 Call @ $6.00         –        Cash in = $0.70
    Buy PCLN Feb-25 $410 Put @ $6.10     –     Sell PCLN Feb-25 $415 Put @ $7.20         –        Cash in = $1.10
    Maximum gain = $1.80 provided PCLN doesn’t move more than 10% in either direction from the current $450 (est) & max loss = $3.20 with an opportunity to roll the losing Caller or Putter into a somewhat more benign strike range after the earnings hoopla.

    Your thoughts?

  5.  StJean, This is pretty impressive performance.  It will be interesting to see what happens in a correcting market.  It would be easy to postulate that these names will fall faster than the market.  I hope not, because if they hold up better than the overall market, you may really be onto something.  Have you begun to put real money to work?

  6.  I have noticed that the failure of the U.S. to reduce its "$1.1Trillion" military, while failing to raise taxes to pay for it is often cited as one of the U.S. government’s many failings
    While I can easily agree with this last clause, I fail to see the logic of the proposition as a whole.  There are over 1.3 M U.S. citizens on active duty, plus over 800k in the reserves. The vast majority are stationed in the U.S.; almost 600,000 of the active duty members are civilians. These numbers to not take into account employees of the companies to which the U.S. military contracts, undoubtedly a very large number.
    Without getting into more abstracted arguments about how high the price of oil might be if we had a much smaller defense establishment, or whether U.S. influence in Asia, e.g., Japan, S. Korea, Taiwan, the Philippines, is, or is not, of geopolitical importance to the U.S. — perhaps the correct answer to both questions is "not at all" — wouldn’t you think this would be an unfortunate time to decide to stop distorting the national accounts with a bloated military?  
    Come to think of it, releasing anywhere near the 7.2 M prisoners incarcerated in the U.S. might not represent the best timing either, assuming they are actually producing something useful for their .50per hour.  Slavery, perhaps — but ya gotta play the ball from where it lies.  And it’s in a very big sand trap.  I doubt that many ex-cons would escape the unemployment rolls these days.  In sum, the U.S. military and U.S.prisons are arguably the best "jobs programs" on which the congress can actually agree.  Sad, I know.

  7.  StJean – thanks for the list. Interesting…

  8. Good morning!  

    If you think you are too long (and I REALLY hope no one who subscribes here is) this morning, then the Dow futures can be shorted at 12,350 or lower as that’s about where we got that moronic stick on Friday so we can assume the action above that level was fake, Fake, FAKE.  

    We need to watch our 100% levels of: Dow 12,938, S&P 1,332,Nasdaq 2,530, NYSE 8,362 and Russell 800 (100% was 685) - but, of course, it’s hard to determine anything from what goes on in the futures.

    [0220cjasmine01]Asia was mixed this morning with the Hang Seng off half a point but the Shangai was up 1%, Bombay up 1.25% and Nikkei flat.  Japan upgraded their economic outlook, expecting exports to boost production (must be tear gas and riot gear!) and they are actually all happy about a decline (finally) in China’s PMI.  Nationwide protest are being held in China today but they seem small and peaceful so far:  

    China Raises Bank Reserve Ratios to Counter Inflation. raised reserve requirements for lenders 10 days after boosting interest rates as Premier China’s central bankWen Jiabao tackles accelerating inflation and the risk of asset bubbles. Reserve ratios will increase half a percentage point starting Feb. 24, the People’s Bank of China said on its website today in a one-sentence statement.Central bank Governor Zhou Xiaochuan said policy makers may also use means “including rates and currency” to tackle inflation, in an interview in Paris after the reserve-ratio announcement. “China has a profound liquidity and inflation problem that is, even with this latest tightening, getting further ahead of policy makers,” said Glenn Maguire, chief Asia economist at Societe Generale SA in Hong Kong. “This is just the start from China and they will continuing tightening lending and raising interest rates, doing their utmost to contain this,” saidPhilippe Gijsels, the Brussels-based head of research at BNP Paribas Fortis Global Markets

    Morgan Stanley(MS) Lays Out China Doomsday Scenario.

    Brent crude is up 2.5% to $105 in Europe and WTIC is up 5% for us at $94.  The European nations are not as relaxed as we are about oil increases and France is down 1.5%, Germany down 1.2% and the UK is off 0.8% coming into their last hour of trading.  Meanwhile, it’s a tale of two economies over there too as Euro-Zone growth is the strongest in 5 years and German Business Confidence hits an all-time high.  

    Trichet is very worried that persistently high commodity prices will lead to wage increases (we can’t have that!) and is urging immediate action to keep the workers in line.  Also, the ECB Buys Portuguese Debt as Yields Soar.  


    Treasury Bill Rates Close to Eight-Month Lows as Unrest Spurs Haven DemandThree-month Treasury bill rates are close to the lowest levels in eight months as unrest in the Middle East bolsters the refuge appeal of the securities while investors ponder the direction of longer-maturity debt yields. The rate on U.S. government debt maturing in three months traded at 0.0862 percent after slipping to 0.0821 percent yesterday, the lowest level since June 17.  

    "The price climate in Germany has deteriorated considerably," says the Bundesbank, warning that inflation – whether internally generated or from higher world prices – poses a risk to economic activity. 

    Saudi Prince Says Protests May Move to Kingdom, BBC Arabic Says. A member of Saudi Arabia’s royal family warned that the Arab world’s largest economy may see protests unless King Abdullah Bin Abdul Aziz introduces reforms, according to BBC Arabic TV. Prince Talal Bin Abdul Aziz told the London-based broadcaster in an interview aired last night that “unless problems facing Saudi Arabia are solved, what happened and is still happening in some Arab countries, including Bahrain, could spread to Saudi Arabia, even worse.” Necessary reforms include developing the Shoura Council and implementing human and women’s rights, BBC Arabic reported on its website, citing Prince Talal. King Abdullah is the only member of the ruling family who believes in such reforms and is able to carry them out, according to the prince. Prince Talal also supported turning Saudi Arabia into a constitutional monarchy, the BBC added.

    Perry Link describes a series of hastily arranged meetings in the wake of Egypt showing how seriously China’s leaders are treating the situation and what they are doing to nip the Jasmine Revolution in the bud. Not surprisingly, propaganda, beginning with control of the internet, is key.

    "Excessively fast growth in oil consumption is exceeding the tolerance capacity of our country," says the NDRC as it hikes China’s retail gasoline and diesel prices by 4.5%. Since the last increase in December, the price of Brent crude has jumped 10%.

    After more than 90 hours of debate, the Republican-controlled House voted to cut at least $61B in federal spending this year. The measure now heads to the Democratic Senate, along with the possibility of a budget battle that could shut down the government. 

    The House’s package of spending cuts would "undermine and damage our capacity to create jobs and expand the economy," warns Geithner, who refused to comment on whether the government could face a shutdown over a budget impasse. 

    Needless to say, let’s be very careful out there!  

  9. Screens/ Tradinv – I have to say that I didn’t expect this level of performance. Regarding how this will work in a correction (if we ever get one on our way to Dow 36,000), that is the reason while I generate and track a new list every week. It’s time consuming, but well worth the research. I am guessing that 6 months from now I’ll have enough data to reach some conclusion. 
    But honestly, even though these stocks are close to their 52 week high (or at that level), my expectations are that they should hold well in case of a correction. Remember that I pick cheap stocks relative to sales and relative to growth (with a low PEG ratio) to begin with. So, yes they are high, but unlike MoMo stocks, it is usually justified by actual sales and earnings. But I’ll be happy to take 1/2 the market loss in a correction. That would be a nice cushion. We’ll see…

  10. Now, you want a parabolic commodity – Silver 

  11. Ah, that was cleansing!  I need to get a little liberal rant out of the way once in a while.  Now – let’s make some money!  

    As I mentioned last week or the week before, there is A LOT of money being pushed into commodities and US equities at the moment from rich foreign guys like Mubarack, who have to move Billions somewhere "safe."  While we may not think America looks all that safe – what are the alternatives?  Fortunately, our 40-year war on drugs has also produced the largest and most efficient money-laundering system in the World and that means a dictator can wash Billions of Dollars very quickly through our lovely IBanks, where they get to become shareholders in OPEN, NFLX, CMG, etc.  Mubarack’s sons, for example, own 19 Chili’s franchises and shares of Hyundai, Vodaphone as well as a ton of property in "London, Paris, Madrid, Dubai, Washington, D.C., New York and Frankfurt."  

    NFLX/Japar – I take it you mean callers that you sold?  The stock is at $235 so I think rolling to 2012 is a little extreme as you are giving the June callers 6 more months to make money for no reason.  Let’s break this down:  You collected $17 for the March $200 calls and they are now $37.50 so down $20.50 at the moment.  You collected $11.50 for the June $250 calls and they are now $19.50 so down $8 on those at the moment.  You can, if you are so gung-ho bullish on NFLX, sell the June $190 puts for $8.50 which washes your June calls and then you can roll the March $200s to 2x the March  $240s at $9 to pick net $18 back up towards covering your $20.50 loss.  That would leave you with just the March calls to deal with and, if NFLX goes down, then you have no calls left and your only worry would be if NFLX falls more than $40, at which point you’ll have to roll down the June puts you sold to cancel the June callers.  Since the June $190 puts can be rolled down to 2x the June $165 puts about even – I think that’s the way to go and if you aren’t bullish enough to risk NFLX falling to $165 in June – why the Hell would you be chickening out of the long positions with so much time left?  

    Sleep/StJ – They are sociopaths for the most part.  No better than anyone else who is in jail except they run a "legal" con.  Check out the description of Sociopathic Behavior – it’s pretty much a resume for a successful politician:


    • Glibness and Superficial Charm 
    • Manipulative and Conning - They never recognize the rights of others and see their self-serving behaviors as permissible. They appear to be charming, yet are covertly hostile and domineering, seeing their victim as merely an instrument to be used. They may dominate and humiliate their victims. 
    • Grandiose Sense of Self  - Feels entitled to certain things as "their right." 
    • Pathological Lying  - Has no problem lying coolly and easily and it is almost impossible for them to be truthful on a consistent basis. Can create, and get caught up in, a complex belief about their own powers and abilities. Extremely convincing and even able to pass lie detector tests. 
    • Lack of Remorse, Shame or Guilt - A deep seated rage, which is split off and repressed, is at their core. Does not see others around them as people, but only as targets and opportunities. Instead of friends, they have victims and accomplices who end up as victims. The end always justifies the means and they let nothing stand in their way. 
    • Shallow Emotions  - When they show what seems to be warmth, joy, love and compassion it is more feigned than experienced and serves an ulterior motive. Outraged by insignificant matters, yet remaining unmoved and cold by what would upset a normal person. Since they are not genuine, neither are their promises. 
    • Incapacity for Love 
    • Need for Stimulation - Living on the edge. Verbal outbursts and physical punishments are normal. Promiscuity and gambling are common. 
    • Callousness/Lack of Empathy - Unable to empathize with the pain of their victims, having only contempt for others’ feelings of distress and readily taking advantage of them. 
    • Poor Behavioral Controls/Impulsive Nature - Rage and abuse, alternating with small expressions of love and approval produce an addictive cycle for abuser and abused, as well as creating hopelessness in the victim. Believe they are all-powerful, all-knowing, entitled to every wish, no sense of personal boundaries, no concern for their impact on others. 
    • Early Behavior Problems/Juvenile Delinquency  - Usually has a history of behavioral and academic difficulties, yet "gets by" by conning others. Problems in making and keeping friends; aberrant behaviors such as cruelty to people or animals, stealing, etc. 
    • Irresponsibility/Unreliability - Not concerned about wrecking others’ lives and dreams. Oblivious or indifferent to the devastation they cause. Does not accept blame themselves, but blames others, even for acts they obviously committed. 
    • Promiscuous Sexual Behavior/Infidelity - Promiscuity, child sexual abuse, rape and sexual acting out of all sorts. 
    • Lack of Realistic Life Plan/Parasitic Lifestyle - Tends to move around a lot or makes all encompassing promises for the future, poor work ethic but exploits others effectively. 
    • Criminal or Entrepreneurial Versatility - Changes their image as needed to avoid prosecution. Changes life story readily.


    My sister-in-law is getting her PHD in criminal psychology and remarked to me how similar the markers were for successful politicians and lifetime criminals.  Food for thought…

    PCLN/CSL – So if you "learned your lesson" from NFLX – why not leave PCLN alone?  You are still playing for a less than 10% move in the stock and taking a big risk compared to the reward.  I’d be more inclined to play PCLN for a miss and sell 4 March $530 calls for $3.10 ($1,240) and 2 April $350 puts for $3.50 ($700) and buy 3 April $540 calls for $4.50 ($1,350) so that’s a net credit of $590 and that’s less than it would cost you to add another call if you get worried up to a 33% move up in price so your risk is being a little bit stuck on a $100 move in the stock vs making money on ANYTHING else that happens other than a $100 drop (20%+) and then you can DD and roll the puts to something like the July $260 puts, which are $1.90.  If you don’t think that the put side is "safe" – then your original idea is madness, right?   

    Trade-offs/ZZ- Hey, just because I’m against a policy does not mean I think it should be reversed tomorrow.  I was fine with Obama’s gradual winding down of the war – that is what you have to do.  The problem with military spending is we send so much of that money to be spent and wasted overseas so, as you point out, we may spend $1Tn a year and that may create 2M jobs, but that’s $50,000 spent per job – we could spend that in this country and actually build stuff we need.  Even if the thing we build isn’t "profitable" like solar farms or high-speed rails or bridges and tunnels and road and water treatment facilities and power stations and aquaducts…..  At least what we leave behind will be a benefit to future generations, who will have assets that they can use as they build a productive economy.   What assets have we gotten from the last $10Tn of military spending?   We don’t even try to invent new stuff anymore – we just spend money on whatever crap the Defense sector can’t unload on foreign countries.  

    Prisoners are the same thing.   We "pay" to have them in prison.  While a few companies may be able to benefit from exploiting the prison labor – it’s simply another way we pool wealth into the top 1%, rather than distributing an equitable amount of wages to 7M people in the bottom 90%, who would immediately go out and spend the money in their local economy and that money has a known multiplier effect that is 3 times greater than money spent at large corporations.  

    You can’t do nothing because you are afraid to do something – that’s how we got into this mess!  

    Silver/StJ – Very nuts but doesn’t look like it’s stopping.  

    Europe closed at the lows.  Down 1.5% on DAC and CAC and down 1% on the FTSE

  12. There are only two choices in a global scarcity of jobs.  Eliminate the 2 billion excessive people who need jobs, or create 2 billion jobs.
    Who on earth can create 2 billion jobs? $2billion may be ridiculously miniscule when talking about money and brain cells but when applied to population is means we have a third more folks than our world economy can support.  What entity (ties) can make that much work, genuine work?
    Those crying out for more employment for the massive numbers of under and unemployed—-with 175,000 new jobs alone required here in the U.S. every month—are whistling in the wind.
    This miracle, and that’s precisely what it would have to be— will not happen, not now, not 5 years from now, and not 20 years from now.  The truth that the people won’t face and the one that key politicians keep well hidden is that no entity on earth, no international consortium  can bring about a way that does anything but scratch the surface of our baked in employment problems that have moved front and center as foremost insoluble problem all over the world. I think Egypt had 50% of its people so unoccupied that they had to give them government jobs which did nothing. And yet they still rioted enough to depose their rulers. To what end? Is that going to make available the jobs these people need?
    A new paradigm will have emerge to get to the people what they need to survive.  Prosperity? Without a great deal of  very good luck, connections, and legacy appointments,(the top 1-6%) the rest of the world’s people have been on an ever more descending track regarding the ‘progress’ in new careers, jobs, new businesses, and self-employment opportunities for over 40 years.  There are too many people that need to be occupied living in world with too little to be done—— and too few among them imaginative, aggressive, or financied enough at creating the jobs their compatriots need.
    The new paradigm will likely consist of new fiat or virtual cash that circulates only, at first, within a country (like any other commodity it will likely find someone at HBS who teaches finance to arrive at a way to exploit it with  some kind of intergalacticv 200X derivative). 
    If some honorable politician will step forward and say," a) we need trillions to fix our infrastructure, b) we have tens of millions of people—-- and their children, and their children’s children— who need jobs and will need to be paid and trained to build maintain the i/f/structure.  We can’t borrow that money and we can’t tax those who already fork over half their incomes to pay for it.  It wouldn’t be fair and it wouldn’t be anywhere nearly enough even if we could manage the votes to tax them more. We will need to have a domestic currency that provides everyone with what they need to survive—- and there won’t be any unions to extort money from one class of worker over another.  This is the pay and benefits, take it or leave it".
    That politician is likely to made king or queen.

  13. Phil
    Was so mice to hear your version of wars, control, and sciopathic behavior. I now know you understand my rantings. Arlyn was sexuallly abused by her parents, lost thyroid to cancer, I was disabled, and we were arested for the purpose of extracting money. All charges dismissed because they were false, only hearsay. Where did the money go? The court got $600, a tow truck $450, $300 drug testing evaluation, $2,000 repair car and truck damage, $10,000 destroyed heat pump, $1,000 repair doors, $500 killed a cat, I have no idea damage to other property, and $25,000 to lawyers. Notice the government got only $600 but what did they spend doing this. Like a speeding ticket $100 fine, $2,000 to insurance company raising the rates. Redistribution from the bottom to the top by the government. What do we get lip service by sociopathic politicians. Even Glen Beck gets it. I have been writing a leter to my senator John Barrasso since Friday. He is the worst of the republicans and USED TO BE A DOCTOR, wants to cut all public healthcare!

  14. Watch out for silver, it’s looking like someone’s been caught with their hand in the cookie jar…or else someone else thinks they’re catching someone….for Silver, COMEX Mar 1 is a big day…expirations hit. OI last I saw was over 30,000 contracts…if as little as 10,000 stand for delivery COMEX is in trouble……so the press has begun…prooly quiet down after Mar 1, but fireworks till then.

    Basically, when too many stood for delivery in Dec, COMEX didn’t deliver, instead they paid 10-30% premiums to close those contracts……like a drop of blood in the ocean, that doesn’t take long for a shark to smell…..crossing $34, wow…..

    Don’t know how to trade it if your aren’t already in, but would seriously consider profit-taking into Mar….my SVM and SFW prolly going overboard Fri or Mon…depending on how the week goes.

    Glad Amatta didn’t short it……

  15. 2 Choices/Flips – First of all, I would put it to you that somewhere between having 1Bn and 7Bn people on the planet in the last 150 years, we did manage to create a lot more than 2Bn jobs so it’s not "impossible" to create 2Bn more.  Also, your assumption that there are 2Bn people too many assumes 30% unemployment even if we assume all 7Bn people on the planet should be working so let’s dial it all back and start with some reasonable assumptions before we begin a wholesale culling of the herd based on your premise…

    Again, this is brainwashing trick number 1 – to make the situation seem so hopeless that you give up hope of finding a real solution and become ready to embrace alternatives that you otherwise (as a moral, rational human being) would reject.  Of course you are constantly being told that the poor cannot be helped, that suffering is "the norm" that "only the strong are meant to survive" because, if most people believed otherwise, they just might conclude that the poor SHOULD be helped and that suffering is UNNECESSARY and that ALL people had a right to survive and that might lead people to conclude that those who took substantially more than their share in life were the ones causing the problems.  We can’t have that, can we? 

    Of course we can sustain 7Bn people – we do it every day.  The main problem is an uneven distribution of food and medicines and that can be solved by FedEx.  Do we grow enough food to feed 7Bn people?  Of course we do.  Every day 300M Americans eat more food than all 1.5Bn people in India and Pakistan combined.  If we all stopped eating meat half the time we could support another Billion or so people too!  Do we have too many people?  Maybe we do.  China decided they did and took steps to stop it and America could have spun the PR machines to show how progressive China’s ideas were helping to save the planet from a Malthusian disaster but, instead, we vilified the idea of population control to the point where it’s almost impossible for other countries to suggest it.  

    Meanwhile, 7Bn people do NOT need to have jobs.  If it weren’t for television, radio, movies, etc, there would still be a need for tens of millions of artists and entertainers, who would entertain us live, every night as their contribution to the community.  My daughter wants to be an artist and, rather than having to compete against kids in her local community to supply decorative painting for local restaurants and businesses – she has to compete for wall space with 10M copies of "Dogs Playing Poker" or "Boulevard of Broken Dreams"  or whatever other art that has been copied over and over again and distributed around the world.  

    Are our live richer because we have all seen the great "Dogs Playing Poker" or would our lives be richer because we all have our own local artists who produce new and exciting works while we see the masters when we travel – just like they did in the old days?  The same goes for furniture, food, clothing etc – does mass production really enhance our lives?  Is it really better that I go to a small town in Greece and I have to choose between MCD and KFC for lunch at the train station?  

    It’s not about coming up with some new form of currency – it’s our lifestyle that’s messed up.  We need to rethink a lot of the things we do and evaluate what our priorities should be for the next 100 years – especially if we expect to last that long.  

    Good example Shadow, the machine is designed to grind down the individual.  Fortunately, most people have no idea how swiftly the machine can turn against them.  Unfortunately, you do.  

    COMEX/Hoss – Yes, NYMEX is similar.  Even now there are still (and I think they were closed today) 90,287 open contracts into tomorrow’s close of the March contract.  Those people seem to be way beyond screwed to me but maybe I will learn something as I’ve never seen them go with so many open contracts into the wire.  Maybe they decided to accept delivery because they are betting on the Mid-East crisis to escalate (or maybe they already KNOW it will escalate because they are driving it) and Billions will be made by the people who are "forced" to take March delivery at February prices.  It will be interesting as there is no way to even accept delivery of that much oil and, even if they could, there is no way to store it – unless they KNOW there will be a disruption.  

  16.  The drug war and the resulting destruction and corruption is distressing enough in the abstract. When we see specific examples of what it does to real people in the real world, well, I challenge anyone to watch the following and not be upset by what happened.
    One last thought: Corruption Kills Countries.

  17. power battle in Wisconsin?

  18. @Phil
    Man’s inhumanity will prevent most of your idealism from ever manifesting itself.  The human animal is designed a certain way or has evolved in a certain way that even the rule of law—-which was created by Hammurabai to do away with many of the injustices that you believe are wrong with our lifestyle—has become the preferred tool of the Elite to enhance their riches and power and squash the little guy.
    How does your daughter expect to be paid for her art?  Is there going to be a national endowment that compensates those who sing, dance, act, paint, and otherwise keep us amused and/or provoke our emotions and thoughts?  Over what timeframe do you see this occurring?  And who are the heroes that are going to effectuate all these changes, which are just shy of revolutionary?  
    Ratcheting down to just the United States, to make the example more real, I don’t see the innovation taking place over the last 30 years that is required to put 165,000,000 to work.  We are losing millions of jobs every year while we are adding 175,000 at last count to the work pool.
    It may seem a trick to you that those like myself make it seem hopeless.  But I put it to you that the changes you seek to turn things around and create tens of millions of jobs over the next 20 30 50 years aren’t even in the imaginations of those most affected by this paucity of opportunity,  let alone in the even more fantastic business plan.

  19. Good article by Krugman on the "Wisconsin Power Play":  


    Last week, in the face of protest demonstrations against Wisconsin’s new union-busting governor, Scott Walker — demonstrations that continued through the weekend, with huge crowds on Saturday — Representative Paul Ryan made an unintentionally apt comparison: “It’s like Cairo has moved to Madison.”
    It wasn’t the smartest thing for Mr. Ryan to say, since he probably didn’t mean to compare Mr. Walker, a fellow Republican, to Hosni Mubarak. Or maybe he did — after all, quite a few prominent conservatives, including Glenn Beck, Rush Limbaugh and Rick Santorum, denounced the uprising in Egypt and insist that President Obama should have helped the Mubarak regime suppress it.
    In any case, however, Mr. Ryan was more right than he knew. For what’s happening in Wisconsin isn’t about the state budget, despite Mr. Walker’s pretense that he’s just trying to be fiscally responsible. It is, instead, about power. What Mr. Walker and his backers are trying to do is to make Wisconsin — and eventually, America — less of a functioning democracy and more of a third-world-style oligarchy. And that’s why anyone who believes that we need some counterweight to the political power of big money should be on the demonstrators’ side.
    Some background: Wisconsin is indeed facing a budget crunch, although its difficulties are less severe than those facing many other states. Revenue has fallen in the face of a weak economy, while stimulus funds, which helped close the gap in 2009 and 2010, have faded away.
    In this situation, it makes sense to call for shared sacrifice, including monetary concessions from state workers. And union leaders have signaled that they are, in fact, willing to make such concessions.
    But Mr. Walker isn’t interested in making a deal. Partly that’s because he doesn’t want to share the sacrifice: even as he proclaims that Wisconsin faces a terrible fiscal crisis, he has been pushing through tax cuts that make the deficit worse. Mainly, however, he has made it clear that rather than bargaining with workers, he wants to end workers’ ability to bargain.
    The bill that has inspired the demonstrations would strip away collective bargaining rights for many of the state’s workers, in effect busting public-employee unions. Tellingly, some workers — namely, those who tend to be Republican-leaning — are exempted from the ban; it’s as if Mr. Walker were flaunting the political nature of his actions.
    Why bust the unions? As I said, it has nothing to do with helping Wisconsin deal with its current fiscal crisis. Nor is it likely to help the state’s budget prospects even in the long run: contrary to what you may have heard, public-sector workers in Wisconsin and elsewhere are paid somewhat less than private-sector workers with comparable qualifications, so there’s not much room for further pay squeezes.
    So it’s not about the budget; it’s about the power.
    In principle, every American citizen has an equal say in our political process. In practice, of course, some of us are more equal than others. Billionaires can field armies of lobbyists; they can finance think tanks that put the desired spin on policy issues; they can funnel cash to politicians with sympathetic views (as the Koch brothers did in the case of Mr. Walker). On paper, we’re a one-person-one-vote nation; in reality, we’re more than a bit of an oligarchy, in which a handful of wealthy people dominate.
    Given this reality, it’s important to have institutions that can act as counterweights to the power of big money. And unions are among the most important of these institutions.
    You don’t have to love unions, you don’t have to believe that their policy positions are always right, to recognize that they’re among the few influential players in our political system representing the interests of middle- and working-class Americans, as opposed to the wealthy. Indeed, if America has become more oligarchic and less democratic over the last 30 years — which it has — that’s to an important extent due to the decline of private-sector unions.
    And now Mr. Walker and his backers are trying to get rid of public-sector unions, too.
    There’s a bitter irony here. The fiscal crisis in Wisconsin, as in other states, was largely caused by the increasing power of America’s oligarchy. After all, it was superwealthy players, not the general public, who pushed for financial deregulation and thereby set the stage for the economic crisis of 2008-9, a crisis whose aftermath is the main reason for the current budget crunch. And now the political right is trying to exploit that very crisis, using it to remove one of the few remaining checks on oligarchic influence.
    So will the attack on unions succeed? I don’t know. But anyone who cares about retaining government of the people by the people should hope that it doesn’t.


  20. Just ran an analysis of the price of gold as compared to the price of silver and the divergence is now the biggest it as been in 5 years! Either silver is overpriced or gold is underpriced! 

  21. Interesting article on retirement options:

    The days of spending your life working for a company and then retiring in relative luxury on a generous pension are long gone. Part of that is union-busting, corporate greed, or whatever bugaboo you want to call it. Mostly, it’s a consequence of a global economy that is pulling hundreds of millions out of poverty but forcing people in the developed world to compete on a wage basis with those in the developing world. It’s great for Western investors and consumers but not so great for Western workers.

    ….We can’t rely on private companies, the stock market, or the taxpayers to maintain our lifestyle in our golden years. And not everyone can just keep on working, either. Nor do I advocate theLogan’s Run option. So, I haven’t the foggiest what to do about all this. 

  22. stjeanluc,  it’s pretty obvious what is going to happen.  The quality of life for the average American is going to decline.  The good ‘ol days are over.  Can’t wait for all the crying-
    Looking way past the last 5 years, silver has historically been 1/16th the price of gold.  So, one could say from a historical reference that Ag is underpriced or gold is overpriced.  To be certain, the last 5 years was not representative of a free market.

  23. Phil,
      Thanks for your help. I am NOT bullish on NFLX. That’s why I don’t think of selling puts to help recover my position. My reason to roll out the short callers further was because I’m not sure NFLX will go down until all of the POMO is done (thus I sold the June 250 calls). By rolling to the March 240s, I guess you think there is a good chance that NFLX can close lower than $240 by March expiration. Is your rationale for selling the puts to take advantage of price swings so that the short puts can be closed out on an upward move while I wait for the stock to overall go down?
      NFLX is your classic "the market can remain irrational longer than you can remain solvent". I’m not a fan of the NFLX business model and it is only a matter of time that competing services are launched.

  24. Matt, you mean the quality of life for the bottom 90%. Since 1979, the income of the top 1% has gone from $350K to $1.3 M while the bottom 20% has gone from $15,500 to $17,500 and the middle 60% from $44K to $57K. I know, that is what some people call the "war" on success. But the average American might be better off if the income redistribution (either through tax reform or straight income) had been a little less brutal. Or maybe the bottom 60% should work harder because I am sure the increase in revenues for the top 1% is solely due to harder work!

  25. Phil,
    I agree with you about military spending. It too much; way too much.
    Why not let NPR stand on its own? Why does the federal government have to subsidize them? They seem to have a penchant for the absurd in my opinion. I have noticed that they move from their normal lefty newspeak to the moderate whenever they come into the crosshairs of losing their welfare.
    All that aside. I do not see a  real danger of hyperinflation at least according the the money supply. Every time the FED starts to unwind/backoff/exit the money machine, deflation begins to rage immediately.
    They are running scared right now. All this talk of hyperinflation is not backed up by facts. We need to ask ourselves why they are needing to inject so much money. Something is amiss…I think. Likey they can never inject enough to cause more than moderate inflation say around 2-4 percent, but even this is not sustainable, maybe no real inflation,l not like is being volleyed around in our chat anyway.
    This from that old gold bug Gary North; and I tend to agree about the dollar. If the middle east heats up more; three things are sure bets…oil, gold and the dollar. add coal to that if oill get high enough.
    The fact that Bernanke & Co. adopted QE2 indicates that the talk of an exit strategy proved untenable. The FED had adopted an exit strategy. It shrank the base. Then it reversed itself.
    So, the slow rise in consumer prices over the last year was consistent with FED policy, given the overhang of excess reserves. But the FED has backed away from its 2010 policy.
    The extent of the reversal is huge, as we can see. That is why we need charts. We have to see it.
    The FED is saying that it dares not deflate. Bernanke has not told us why such a great reversal was necessary. His words remain low key. But when we see the extent of the reversal, we ought to conclude that something major forced his hand and the other members of the Board, Hoenig excepted. The FED is pushing, but prices are now accelerating. If we include food and energy, the CPI is moving up far more rapidly than it was three months ago.
    The Median CPI remains subdued.
    I look at the trend of prices. The trend is up. I look at the adjusted monetary base, the trend is up this year, but not year to year. Not yet, anyway.
    So, the FED has lots of slack. It can continue to inflate. The question is: What is it inflating in order to avoid? Why is the FED in panic mode?
    The FED’s policy is hurting the bond market. It is buying T-bonds, but T-bond rates have been rising. I think they are rising because investors think QE2 is likely to be permanent, that there will be no exit strategy, and the price level will rise.
    But we are nowhere near serious price inflation. Talk of near-term mass inflation is silly. Talk of hyperinflation is even more silly. There is no looming crisis of the dollar.

  26. Here’s your amiss……China….we have slack, they don’t. We have severe trade imbalances caused by their peg and subsequently their practically stealing our manufacturing base(like a leech). We need thhe dollar to depreciate to stimulate our exoirts, generate inflation to pay our debts and hopefully, re-ignite our economy.

    At last look, the Dollar peg was $6.57. So, yes Ben can continue to print like crazy because of our slack, BUT the Chinese, who print $6.57RMB for every dollar printed are literally sitting on a bomb. So what do they do, they desperately attempt to export their dollars by buying commodities and resources around the world. And now, in the ME we are seeing the effects of that.

    Bernanke’s been saying it all along, and I don’t know if I totally agree with his strategy, but that’s the game. We inflate, and because of the peg they inflate 6.57 times faster.

    They(the Fed) are trying to reverse capital flow out of the US , to hopefully, turn our economy around, but it can’t be done without harmony between fiscal(read Congress) and monetary policy(Fed). While we have been recovering from a credit induced heart attack, large oligarchies with a different agenda have quietly seized control. They have now paralyzed our political will, thereby forfeiting the fiscal changes required, and allowing themselves to profit from the imbalances.

    System is broken, and will probably remain so until we see Cairo in Washington DC….hopefully not worse. And sadly, what we really need to do is start thinking about what we want the world to look like on the other side, because it’s damn near too late IMHO.

    But WTF do I know, I’m just a house husband who reads too much.


  27. Oh, and before y’all start blowing up about how it’s this or that or not really China, Please understand this is a gross oversimplification, but the best I could do sitting on floor by the potty waiting for Hope to finish her business to we can read a bedtime story and sleep. :)

  28. I agree, it is China. It would seem that anything we do to shake the RMB from the dollar or cause the RMB to rise will be of benefit for the US; levelizing the playing field. We are in a currency war with them.
    China has masked their own inefficiency by under cutting (buying/pegging) the dollar for 30 years. They can only compete with us in this way. If they had to pay fair price for labor, environmental prudence and food, they would be in a world of hurt; perhaps that is beginning to happen. I think we forget that they are a communist country with a few free market baubles. This how they have survived.
    I personally think that the good days are ahead for the US. It may take pressing the big default button on a few major cities to wake us up though. I am hedged though…
    The dollar is ok for now, maybe a few more years.

  29. AAPL: Another House husband on paternity leave here too, haha. 
    By the way, it looks like they released the video to go along with the National Enquirer photos of Steve Jobs walking out of the cancer center.  He certainly doesn’t look like he’s at death’s door, per se, but not very healthy IMHO.

  30. hoss, agreed.   And well said.

  31. @Matt
    Exactly.  All around my town or travelling I have been seeing it for over ten years, only getting worse.  With one or two exceptions in my own personal acquaintances and friends I don’t see any progress. This includes salary, hourly, self-employed, professionals—every sector.
    And it’s not just the middle class but those who had healthy small businesses in the past that netted them incomes far in excess of the average upper middle class worker that have had nothing but declining incomes.
    Only one has been able to increase his income every year. And mostly due to the downturn in auto sales in the last few years since people are holding on to their cars longer than ever in recent memory resulting in more maintenance and boosting his aftermarket revenue.