The new America (0 and RINOs building the New Communism Together)

The Dow has been tanking again, and new figures show the U.S. economy shedding jobs at an accelerating rate. One might criticize the U.S. government for the first trillion or two of “stimulus” spending, by observing that it hasn’t worked. But that would be too easy.

Yes, it was crazy, in the middle of a crisis created by debt, to see how far they could run up debt. It was crazy to shore up nearly worthless assets, in the face of irresistible market forces. At a time when the entire investment system desperately needs to be de-leveraged, it was crazy to oil the gears.

But it gets crazier. In the middle of this economic mess, the U.S. politicians are debating not one, but two new programs of unprecedented size, without the slightest understanding of the economic consequences. One is a vast new “health care” plan, to be sold almost entirely on emotion, with President Obama’s snake-oil skills. The only thing clear about it, is the intention of the people behind it: to effectively nationalize the U.S. medical system, by making every part of it report to government bureaucracies. This is what we did in Canada in the 1960s, and we’ve spent the decades since trying to persuade ourselves that waiting rooms are natural.

The other is the “cap and trade” legislation. At a time when it has become all but obvious that the “global warming” scare was an imposture, the U.S. government is going to war against carbon fuels, through a program that can only kill jobs, both directly and through outsourcing of American economic activity to places with lower environmental standards; while igniting protectionist trade wars over the latter.

The scheme will cause gas and electricity prices to skyrocket — to the immediate benefit of the big private energy conglomerates (thus setting them up for further demonization, and the next round of nationalization). By triggering a massive inflation of energy prices, it will do most harm to those on fixed incomes — to the poor and the elderly most of all. Like all such gargantuan schemes, it will create a circus of fraud and corruption. And yet, at the end of the day, it will have no significant impact on the environment.

But still crazier things are happening. Consider: In the time since the current economic problems began to show, around the autumn of 2007, several million U.S. jobs have been erased, most of them in construction and manufacturing — overwhelmingly, jobs done by men. But the government jobs being created to replace them through the “stimulus” spending — jobs that net absorb taxes, rather than generating them — are largely in sectors dominated by women. And this is being done at a time when male unemployment is already higher than female unemployment. In short, another feminist social revolution is being tossed on the top of “health care” and “cap and trade.”

I don’t think they can. For not only has the Democrat party — committed in the main to the “second American revolution” I began to sketch above — control of the White House and both Houses. The Republican party is pulling itself apart. Only half of it is willing to fight: the other half thinks the only way back to power is to accommodate this revolution.

The United States has now caught up with where Canada was about 1982, when Pierre Trudeau completed the “reforms” that would make any return to our pre-Trudeau political and economic arrangements quite impracticable. It would no longer matter who won each election, the choice would now be only between the “fast lane” party and the “slow lane” party.

For the Republicans who would rather have catfights among themselves than challenge a supposedly impregnable Obama, the attraction is the path of least resistance. Once the other side in the “culture wars” has established control of the bureaucracies, the courts, the universities, and the media, standing up against them just isn’t “cool.”

The Democrats needn’t worry much about catfights, because, to use an awkward baseball metaphor, there is no longer a left-field fence. But the right-field fence has moved so far inside first base that you can bunt home runs over it. Or to vary that metaphor, all a Democrat has to do is scream: “I smell an authentic conservative!” — Sarah Palin, for example — and the victim’s own party colleagues will immediately rub her out.

"Correction: Dow has risen 33% since March."

Correction: The March 6-9 crash was an anomaly. You should be looking at YTD numbers that are pretty much flat since the 9/08 fall that was expected due to the bubble.

DOW 8300 is pretty much the average/norm nowadays and will probably continue in 8000 -8700 range for at least another (2) quarters, if not another (2) years with the Marxists' spending. And yes, we could see a drop down to mid to low 70's if things continue to deteriorate (buying opportunity if you have the cash).

Emerging markets (BRIC) is where the money is being made. I'm up 22% (realized) from 1/09 to 6/09. What's the S&P done? 1.2% YTD? Maybe I was just lucky - don't think so. I did my homework on the companies I bought and didn't get greedy and sold at a decent profit.

Best advice: Check out Motley Fools...they have been are still ahead of the curve.

Correction: The March 6-9 crash was an anomaly. You should be looking at YTD numbers that are pretty much flat since the 9/08 fall that was expected due to the bubble.

Correction: You ain't seen nothing yet. We still have our 1936-7 dump still to endure, that will be triggered by Obama's restructuring/deflation of the U.S. economy. We have a rally before us in late fall, I read in Minyanville and FinancialSense.com, after which the butcher's bill will come due as a bullet note, and then we'll see what a real bear looks like.

Working with the 1970's analysis of the late Edson Gould three or four years ago, Jerry Favors and (independently) the guys at Investors' Intelligence re-ran Gould's method using data from 2000 on.

Gould had successfully predicted the amplitude and timing of the 70's bear-market spike bottom and the secular bear's duration within a few months. He died before he could see whether his predictions were valid.

Favors and I.I. found that the market would experience a blowdown and spike bottom sometime about late 2005 to Q1 2006, and that buying would be greenlighted thereafter, although the bear wouldn't end until 2011.

They reckoned without Alan Greenspan's screwing around with liquidity fixes, however, and the Iraq War countertrend bull (which eventually carried to an all-time market high in 2007 -- which isn't an all-time high in deflated terms, but that's another discussion), which have generally gummed up the works and moved the blowoff low and eventual end of the bear out three or four years.

Technician Tim Wood has critiqued the Fed's distortion of cyclicity and the market's timing at FinancialSense.com over the last year or so.

Favors and the Chartcraft Investors' Intelligence staff also understandably figured without Barack Obama and his Obammunists, whose "wrecker" tinkering with the economy is likely to introduce the kind of multiple bottoming events that FDR inflicted on our grandparents and great-grandparents with his political engineering and dollar devaluation, and made the Depression into the Great Depression.

I just follow the techies now and try to get it right. Right now I'm short, but the Fed and the Boys Downtown are still screwing with the markets, so I'm down a bit since mid-April when I sought to call the turn on the March rally -- but Bernanke's been fighting me every step of the way.

The more they do this, the worse things are going to be overall.

But you're right about BRIC, I think, unless the guys who say that foreign markets still buy you diversification are as wrong as they were a couple of years ago when they thought the U.S. and foreign markets would de-link and that energy and offshore investments would provide a hedge against Greenspan's and Bernanke's dollar games. That was before Ben and Hank the Shank walked into the commodity space last summer and knifed everybody in sight.

And accidentally killed Lehman and AIG -- oops.

At this rate, the ground hog is liable to keep seeing his shadow every six weeks until these guys finally knock it off.

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