The Adventures of Charlie Champion

     When the Government dilutes the money supply by printing fiat currency, the result is inflationary.

     In the case of the Federal Reserve , the printing presses are running so fast and furious, that they have already worn out 2 sets of printing presses in the 3 years of the Obama  reign.

     The inflationary pressures are a constant push on prices and a depressant on the purchase power of the American dollar. It takes more and more dollars to buy less and less items.

     Anyone who is responsible forgoing to the grocery store, realizes that the same number of shopping bags, now cost more almosrt weekly, and they also note that much of the packaging has been changed to shrink the amount in the package , while attempting to hide behind a larger box or other creative packaging.

     Yesterday, the Government announced an increase of 2.5% in Gross Domestic Production(GDP) for the 3rd quarter of 2011.

     That announcement coupled with the  European bail out of Greece (another fiasco, that will result in more and more bailouts, and  more and more unbacked paper currency in Europe..Inflation is a many splendid thing..or not!) , sent the stock market soaring.

     It always suprises me, that the so called sophisticated traders and investors can misread the news so dramatically.

     The inflation that is creeping into our economy makes everything more expensive, resulting in more spending for the same items. Hence an increase in GDP….What? We are being burried under paper, our standard of living is dying one paper bill at a time, and the world rejoices at the wonderful news.

     No double dip recession, the economy is growing!

     No default in Greece, the presses are working overtime around the world.

     The real tragedy of this fiscal disaster is that  there is abundant paper and ink. Perhaps the presses will overheat and refuse to continue printing, or perhaps society will decide that accepting printed paper in exchange for food and shelter is a bad idea,-

My dear friends,

I have told you a number of times during the past 24-36 months, ” do not believe the short term  rallies in the market.”

The economy is in bad shape, and still needs another 18 months to bottom out.

This is assuming that Obama does not get reelected.

If he wins a second term, all bets are off.

When I say bottom out, the last part of this shakeout will be the worst part. As a people we Americans are very adaptable, and have a short memory.

They have gotten us used to a lower standard of living. Gas at 3.75 a gallon is better than 4.25, but still better part of .80-.90 higher than last year.

We are told to drive less, to carpool, and to stock up on sweaters for the winter.  …And  we do it, setling into a less comfortable standard of living.

We are told the rest of the World will love us again if me freeze in the winter, sweat in the Summer,  eat less , and stock up on foods that are generic, and cheaper, meanwhile less fresh and healthy.

Well the rest of the world does not love us, and eating cheap fatty foods is well represented in the spreading rear ends of the American population.

I don’t want to be cold in the winter. I don’t like bulky sweaters. I’ve worked all my life and feel that i’ve earned the right to wear what I want, and heat and air condition my surroundings any way that I choose.

All we have to do is find or keep a job, and pray that inflation and a dropping Stock Market doesn’t wipe out what little we have leftafter loosng our homes.

Sell this bill of goods to someone else.

Beware the Market, especially if the Tax and spend party wins again and does its thing.

America we are in trouble

With QE2 ending at the end of June, the Treasury Department will be forced to go back to global markets in order to sell Treasury Bonds.

Interest rates are sure to rise, dealing a severe blow to the already fragile recovery.

Federal Reserve Chairman, Ben Bernanke’s Qualitative Easing plan has failed to stimulate economic growth, but has done a masterful job of encouraging inflation and a weakening dollar.

Armed with a printing press, and some  obsolete economic theories, he  is fated to  become a Quixotic figure  in World history.

A printing press should be used for printing books, instruction manuals and even Bibles, but not to stimulate free enterprise economic growth and investments.

The insidious  inflation is having the result of disrupting economic growth, rather than encouraging it.

How can an entreprenure invest in a new enterprise when inflation makes price stability questionable.

This coupled with increasingly stringent government regulations and the onset of Obamacare have done a masterful job of strangling the economy.

According to a recently released report, the combined public and private sectors of our economy spend upwards of a $2 billion just on interest on all our debt.

The borrowed money which this interest services, has been spent on consumption rather than capital investment.

This is leaving nothing available for real growth or new creations.

QE2 has done nothing but service our debt and given a momentary artifical bounce in an otherwise floundering economy.

The current and proposed future taxes which are being piled upon the “wealthy” (ie the entreprenure) is making the  economic recovery  increasingly reminiscent of a black hole.

More Later

The Federal Reserve and our fearless leaders in Washington have set up a “Can’t Lose” scenario for big bank speculation.

Their traders are almost guaranteed winners . This is  a “no brainer” situation which leaves me  sorry that I left the tradeing desk  a lifetime ago.

The big banks can borrow money from the Fed for close to 0%, which they theoretically should be lending to consumers for mortgages, small business loans, and other economy stimulating  activities.

Instead they are useing this almost free money to speculate or trade in foreign currencies, or to buy commodities such as oil , gold futures, or anything else which is benefiting from a falling dollar.

Prices across the board are being bid up despite the imminent onset of the next phase of our recession/ depression.

Large multinational corporations are showing growing profits due to the weakened dollar . Overseas sales in foreign currencies are brought back to the U S where an additional profit is realised due to the dollars weakness.

If you pay attention to the economic reports, you will notice an exorbitant number of corporations reporting that they exceeded estimates of earnings per share (E P S ) but they are also reporting shrinking sales volume.

The increased profits despite smaller volume is due to cost cutting overhead.( Layoffs) , in addition to the falling dollar.

A win for multinational corporations, a big LOSS  for the American worker.

The Market continues to recover, passing the Dow 10000 mark and not looking back, yet the U S economy is still mired in a spreading recession.

Unemployment is increasing week by week. Last week the new filings for Unemployment insurance wasd ONLY 510000 ..Only!! Are you kidding me.

They say that is an improvemnt showing a turn in the economy.BULL FEATHERS!!! 

 They don’t care.

They have an agenda which welcomes spreading economic pain for the little guy.

In September consumer credit fell almost $ 15 billion, the 8th consecutive month of contracting consumer credit, (Over $ 170 billion total so far)

Considering that consumer debt is still exceeding historical levels by over 60% of income, or almost 2 1/2 to 1 . This indicates an additional correction can be expected, which should exceed the rapid decrease which we have just experienced.

 These figures do not include the mortgage credit markets, creating an additional credit contraction of $ 4 - 6 trillion.

This scenario, coupled with other market factors which we have discussed over the past 16 months will create a serious deflationary spiral, which should accelerate as the prime ARM’s begin to accelerate in 2010-2011.

At this rate of deflation the burgeoning recession/depression figures to have another 5-8 years, assuming that the Government leaves the economy alone,  Which it won’t.

Next- Don’t forget the falling dollar!!! A great way to further muddy the waters .

Wall Street might think its right, but its really turning left, and a left turn  isn’t good for Capitalism.

Our investments are doing very well !

The Dow is currently holding above 10000.

And this is a  great achievement when you compare it to last March, but very sobering when you realise that this is where it was in the Spring of 1999. This kind of progress could drive a sober person to drink.

When you factor in the fact that the buying power of the dollar is only 70-75% of what it was in 1999,  a case could be made for investors being down 25-30% during the last decade.

“Hot Dog! Are we running backwards, or what!”

In real terms, almost 15% of us  are unemployed, and home prices continue to fall .

Foreclosures are increasing at close to a  5% rate, and the numbers are growing despite various government sponsored and ineptly initiated bailout plans.

What will the future bring? Are things really improving, or is this a sham perpetrated with mirrors.

The Obama presidency has hit some serious bumps in the road, and his future as a viable President is being affected.

A case in point is the Governors race in New Jersey.New Jersey is a traditionally very blue state, and one that Obama carried by better than 15% .

Despite a highly  uninspired campaign, Chris Christie the Republican candidate is running neck and neck with  Governor Corazine.

The panic in the Democratic ranks is evident by the parade of heavy hitters arriving in New Jersey to try and boost Corazines reelection chances.

In the last week, we have seen Vice President Biden, Former President Bill Clinton, and now the President himself, stump the state in an attempt to engender excitement for Corazine, yet the polls continue to signal a dead heat.

This is not a good omen .

A Democratic loss, or even a close win is a repudiation of the Obama policies, and an abandon ship warning from the moderates in his party.

Obama is stuck in a quandary. All the money spent, and the promises made, leave his presidency in a very difficult position.

Going forward is impossible and going backward is unthinkable.

He can’t back away from his promises to rescue the U S economy, if he does the whole country will loose the glow of hero worship, and the historic election will turn into quite a different meaning.

On the other hand, going forward with his expensive rescue and stimulus programs will take $ trillions additional. Since he doesn’t have the money, he will have to borrow or print more .

He has already used up half the trees in North America printing all this money so far. Who knows how many more trees will have to be sacrificed to the voracious printing presses.

The best hope for a successful resolution for the President would be an economic recovery.This way Obama wouldn’t have to do anything, and he would be able to retain his mantle of invincibility.

That is not going to happen, no matter how much the media and the insiders try to run this rally.

“Why not?” You ask.

If you have followed my writings you already have the answer.

Our system is broken, the recovery is an illusion, and the reality is that we are headed into a much more serious recession/ depression.

The consumer credit economy is dead.

The banks aren’t lending to consumers, and the consumers don’t want to borrow anyway.

Consequently demand is shrinking.

Wall Street has managed to keep its rally going by posting higher profits , which they trumpet, yet lower gross sales, which they whisper.

They call it reduced overhead, but what they mean is employee layoffs, and shrinking benefits.

Rest assured, this recovery is a fraud, and the illusion for recovery is a sham.