Friday, 31 October 2014

Another Russian Win.

Baltic Dry Index. 1424 -04

LIR Gold Target in 2019: $30,000.  Revised due to QE programs.

“The Germans [your nation here] outside looked from America to Russia, and from Russia to America, and from America to Russia again; but already it was impossible to say which was which.”

With apologies to George Orwell and Animal Farm.

Drum roll please, and the winner yet again is, Russia. Russia will now supply natural gas to the Ukraine this winter, to prevent the Ukraine syphoning off the natural gas being shipped across the Ukraine to continental Europe, freezing much of eastern continental Europe as a result. Nice guys in the Ukraine. The cash for the deal, isn’t coming from bankrupt Ukraine of course, helplessly trapped in the regime of US picked puppet billionaires, who wisely keep their wealth far away from God forsaken Ukraine, but instead is to come from the dying EUSSR and the IMF.

Quite why Latin America with its own troubles, and Club Med with massive youth unemployment and a near depression, should be forced into paying IMF Russian “Danegeld” for America’s blundering War Party and their botched coup in Kiev, is anyone’s guess, but this is what’s to happen for America’s Victoria Nuland getting to pick “Yats” to be Prime Minister of the Ukraine. As a sweetener, and to grease the political machine in Washington, Vicky tossed the US Vice President Biden a bone, although whether Hunter Biden is fit for purpose is an open question. Shame Vicky couldn’t toss a sweetener to Latin America and the wrecked youth generation in Club Med, but that’s not how the world works as the Great Nixonian Error of fiat money stumbles towards its end.

Below, welcome to our new lawless age, 21st century style.

Russia Agrees to Terms With Ukraine Over Gas Supply

Oct 31, 2014 1:32 AM GMT
Russia agreed to terms for restoring natural-gas exports to Ukraine, laying the groundwork to prevent residents going without heat as temperatures drop.

The gas negotiations, brokered by the European Union, came as pro-Russian rebels stepped up attacks on Kiev government forces. European leaders said they hoped the deal would help improve ties between the two countries.

“This breakthrough will not only make sure that Ukraine will have sufficient heating in the dead of the winter,” European Energy Commissioner Guenther Oettinger said at a news conference in Brussels last night. “It is also a contribution to the de-escalation between Russia and Ukraine.”

----The deal came after the EU rebuked Russia for an announcement by Foreign Minister Sergei Lavrov that the country would recognize separatist elections planned for Nov. 2 in Ukraine’s rebel-held territories.

Under yesterday’s agreement, Russia said it would resume sending natural-gas to Ukraine -- halted since June -- after receiving the first tranche of debt repayment and upfront payments for future deliveries.

Ukraine agreed to pay $3.1 billion to Russia by the end of this year to partially cover $5.3 billion of NAK Naftogaz Ukrainy’s debt to Russian exporter OAO Gazprom (OGZD), according to Russian estimates. The first tranche, $1.45 billion, will be paid “in the coming days,” Russian Energy Minister Alexander Novak said.

----Ukraine has funds to pay for 4 billion cubic meters of gas purchases in November and December, Ukraine Energy Minister Yuri Prodan said. The EU and the International Monetary Fund will help Ukraine make payments, Oettinger said. The EU depends on Russian gas piped across Ukraine to meet about 15 percent of its demand.

Ukrainian energy firm hires Biden’s son as lawyer

- Associated Press - Saturday, June 7, 2014
WASHINGTON — Vice President Joe Biden’s weekend trip to support Ukraine’s fragile democracy comes soon after his youngest son was hired by a private Ukrainian company that promotes energy independence from Moscow.

The company leases natural gas fields in the breakaway Russian-backed state of Crimea and is owned by a former government minister with ties to Ukraine’s ousted pro-Russian president.

The hiring of Hunter Biden, 44, by Burisma Holdings Limited in April was approved by the company’s owner, a former senior minister and political ally of Viktor Yanukovych, the exiled Ukrainian president. Yanukovych fled to Russia in February after protests erupted over his efforts to establish closer economic ties with Moscow.

Hunter Biden’s employment means he will be working as a director and top lawyer for a Ukrainian energy company during the period when his father and others in the Obama administration attempt to influence the policies of Ukraine’s new government, especially on energy issues.

Biden’s Son Hunter Discharged From Navy Reserve After Failing Cocaine Test

Lawyer Pursued Military Service as a Public-Affairs Officer

By Colleen McCain Nelson and Julian E. Barnes  Updated Oct. 16, 2014 7:35 p.m. ET
WASHINGTON—Vice President Joe Biden ’s son Hunter was discharged from the Navy Reserve this year after testing positive for cocaine, according to people familiar with the matter.

Hunter Biden, a lawyer by training who is now a managing partner at an investment company, had been commissioned as an ensign in the Navy Reserve, a part-time position. But after failing a drug test last year, his brief military career ended.

Mr. Biden, 44 years old, decided to pursue military service relatively late, beginning the direct-commission process to become a public-affairs officer in the Navy Reserve in 2012. Because of his age—43 when he was to be commissioned—he needed a waiver to join the Navy. He received a second Navy waiver because of a drug-related incident when he was a young man, according to people familiar with the matter.

In the currency wars, it was Japan’s turn to beggar their neighbours again.

Why did I take up stealing? To live better, to own things I couldn't afford, to acquire this good taste that you now enjoy and which I should be very reluctant to give up.

Japan, with apologies to Cary Grant. To Catch A Thief.

Japan central bank shocks market with fresh easing

Published: Oct 31, 2014 1:21 a.m. ET
LOS ANGELES (MarketWatch) — In an unexpected move, the Bank of Japan’s policy board voted by a 5-to-4 margin to expand the pace of its quantitative easing, sending Tokyo stocks soaring and the Japanese yen falling sharply.

The central bank expanded the size of its Japanese Government Bond purchases to the equivalent of “about 80 trillion yen” ($727 billion) a year, an increase of ¥30 trillion from the previous pace. It said it would also buy longer-dated JGBs, seeking an average remaining maturity of 7-10 years.

The central bank also said it would triple its purchases of exchange-traded funds and real-estate investment trusts.

Concerns about dwindling inflation appeared to drive the move, with the Bank of Japan saying that “on the price front, somewhat weak developments in demand following the [April 1] consumption-tax hike and a substantial decline in crude-oil prices have been exerting downward pressure recently.”

With the Fedsters busy dressing up stock markets for today’s end of the month and crash season, what could possibly go wrong after next month’s happy US voters vote? Mr and Mrs Squid have never been richer, no word about happiness.

US and China tighten in unison, and damn the torpedoes

The world has changed abruptly for investors as the US Federal Reserve and the People's Bank of China both brush aside deflation warnings and press ahead with monetary tightening

Mind the monetary gap as the world's two superpowers turn off the liquidity spigot at the same time.

The US Federal Reserve and the People’s Bank of China have both withdrawn from the global bond markets, each for their own entirely different reasons. The combined effect is a shock of sorts for the international financial system.

The Fed’s message on Wednesday night was hawkish. It did not invoke the excuse of a stronger dollar or global market jitters to extened bond purchases. It no longer sees “significant” constraints to the labour market. Instead it spoke of “solid job gains” and a “gradual diminishing” of under-employment.

This a tightening shift, and seen as such by the markets. The euro dropped 1.5 cents against a resurgent dollar within minutes of the release, falling back below $1.26. Rate rises are on track for mid-2015 after all.

The Fed is no longer printing any more money to buy Treasuries, and therefore is not injecting further dollars into an interlinked global system that has racked up $7 trillion of cross-border bank debt in dollars and a further $2 trillion in emerging market bonds. The stock of QE remains the same. The flow has changed. Flow matters.

The Fed has ended QE3 more gently than QE1 or QE2. This helps but it may also have given people a false sense of security. The hard fact is that the Fed has tapered net stimulus from $85bn a month to zero since the start of the year.

The FOMC tried to soften the blow in its statement with pledges to keep interest rates low for a very long time. This assurance has value only if you think QE works by holding down interest rates, as the Yellen Fed professes to believe.

It cuts no ice if you are a classical monetarist and think that QE works its magic through the quantity of money effect, most potently by boosting broad M3/M4 money through purchases of assets outside the banking system.

"The great merit of gold is precisely that it is scarce; that its quantity is limited by nature; that it is costly to discover, to mine, and to process; and that it cannot be created by political fiat or caprice."

Henry Hazlitt

At the Comex silver depositories Thursday final figures were: Registered 66.18 Moz, Eligible 114.74 Moz, Total 180.92 Moz.    

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.

No regular crooks today, just increasing turmoil in the oil and gas patch. The price slump intended to undo Russia by the American War Party, is increasingly undoing the long range plans of western energy companies. But don’t let on to the Fed’s Plunge Protection Team busy goosing US stock markets ahead of next week’s US elections. Long before President Putin waves a white flag over Moscow to the American War Party, Venezuela, Brazil and Mexico will have collapsed under the regime of cheap oil, along with almost all of the USA’s heavily indebted oil and gas frackers. It’s a funny old world on central planning by unelected, central banksters untroubled by the workings of the real economy. With any luck, 1998 here we come. In 1998 crude oil sold for 11.91 a barrel, US inflation adjusted 17.10, compared to 1946 1.63 inflation adjusted 19.23, and WTI of 81.17 today, Brent Crude 86.13.

"If the financial system goes down, our business is going down and, trust me, yours and everyone else's is going down, too."

Lloyd Blankfein. CEO Goldman Sachs. November 8, 2009

Oil Rout Seen Diluting Price Appeal of U.S. LNG Exports

Oct 31, 2014 6:01 AM GMT
Oil’s collapse is eroding the appeal of potential U.S. LNG exports to Asia as it cuts the cost of competing supplies linked to the price of crude.

Brent’s 22 percent drop this year outpaced the 8.9 percent decline in natural gas at Henry Hub, the benchmark for U.S. liquefied natural gas shipments that are scheduled to begin in 2015. When the cost of processing and shipping American supplies to Asia is taken into account, the price advantage over oil-linked cargoes from producers such as Qatar has more than halved, according to data compiled by Bloomberg.

While the U.S. shale boom prompts the world’s biggest natural gas producer to plan exports of the fuel, it’s also boosting the country’s crude output to the most in 30 years, helping drive down global oil prices.

“The U.S. will not sell cheap gas,” Umar Jehangir, the deputy secretary of development and joint ventures at Pakistan’s Petroleum and Natural Resources Ministry, said in Singapore on Oct. 29, adding that the opinion was his own. “U.S. LNG will be exactly the same price as gas coming out of Qatar to Asia.”

-----With Brent at $87.12 a barrel as of Oct. 29 and U.S. natural gas at $3.728 per million Btu, the gap shrinks to $2.28, all else being equal. If Commerzbank AG’s forecast for $85 Brent and $5 per million Btu natural gas next year are accurate, the difference will be about 50 cents. It was $5.26 at the end of last year.

Oil Set for Biggest Monthly Drop Since 2012 on Global Oversupply

Oct 31, 2014 6:29 AM GMT
West Texas Intermediate headed for the biggest monthly decline in more than two years amid signs that OPEC boosted output to a 14-month high even as crude slumped into a bear market. Brent was steady in London.

Futures were little changed in New York, bringing October’s drop to about 11 percent. Production from the 12-member Organization of Petroleum Exporting Countries increased by 53,000 barrels a day to 30.974 million, a third monthly gain, a Bloomberg survey shows. Traders are split on whether Saudi Arabia will deepen the crude price cuts that propelled oil into a bear market this month.

WTI and Brent have fallen more than 20 percent from their June peaks, meeting a common definition of a bear market, as leading OPEC members resisted calls to cut output. Global supplies are rising, with the U.S. pumping at the fastest pace in more than three decades while Russia’s production climbed to near a post-Soviet record.

“OPEC members are keeping prices low by raising their production as a way to remain competitive against the expanding output in the U.S.,” Will Yun, a commodities analyst at Hyundai Futures Inc. in Seoul, said by phone today. “Positive economic data we saw from the U.S. failed to provide an upward push to oil as supply concerns are too deeply rooted.”

OPEC Boosts Oil Output as Prices Slide to Four-Year Low

Oct 30, 2014 11:00 PM GMT
OPEC countries boosted oil output to a 14-month high in October as crude futures sank into a bear market, a Bloomberg survey showed yesterday.

Production by the 12-member Organization of Petroleum Exporting Countries climbed by 53,000 barrels a day to 30.974 million, led by gains in Iraq, Saudi Arabia and Libya, according to the survey of oil companies, producers and analysts. Last month’s total was revised 14,000 barrels a day lower to 30.921 million because of changes to the Iraqi, Kuwaiti, Nigerian and Qatari estimates

OPEC nations lifted output as Brent crude dropped to a four-year low amid ample global supplies and sluggish demand. The group’s biggest producers, Saudi Arabia, Iraq, Iran and Kuwait, have cut their official selling prices, sparking speculation they will compete for market share rather than trim output. Ministers will gather next month to discuss the group’s production target.

“The data confirms that there’s a battle over market share,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by phone yesterday. “The members are playing chicken with the market.”

Oil Prices 1946-Present

The first table shows the Annual Average Crude Oil Price from 1946 to the present. Prices are adjusted for Inflation to January 2014 prices using the Consumer Price Index (CPI-U) as presented by the Bureau of Labor Statistics.

"Of all the contrivances for cheating the laboring classes of mankind, none has been more effective than that which deludes them with paper money."

Daniel Webster

Have a great weekend everyone. More rape and pillage by unaccountable central banksters, thieving Great Vampire Squids, and bent politicians next week. November, the start of the Santa Claws rally.

Richard Wittington, an honest dreamer, travels to London “where the streets are paved with gold”. Fairy Bow Bells realises his destiny, and supplies him with an introduction to leading derivatives gambler, Lloyd Blankfein ….

With apologies to Richard Gauntlett.

The monthly Coppock Indicators finished September.

DJIA: +141 Down. NASDAQ: +289 Down. SP500: +216 Down.  

Thursday, 30 October 2014

And The Band Played On.

Baltic Dry Index. 1428 +33

LIR Gold Target in 2019: $30,000.  Revised due to QE programs.

In central banking as in diplomacy, style, conservative tailoring, and an easy association with the affluent count greatly and results far much less.

J. K. Galbraith

Just as the Fedster’s give up on QE Forever, to rely instead on the magic of  ZIRP Forever and a talking chair, comes this from China. How long before the BRIC crumbles, the EUSSR collapses, and the Fed can no longer support US stock markets. Surely they can manage the Great Illusion beyond next Tuesday’s US mid-term elections, but then what. Apre moi, le deluge. Just don’t let on to Brussels and Berlin.

I want to share something with you: The three little sentences that will get you through life. Number 1: Cover for me. Number 2: Oh, good idea, Boss! Number 3: It was like that when I got here.

President Xi, with apologies to Alan Greenspan.

ICBC Posts Biggest Jump in Bad Loans Since ’06 on Economy

Oct 30, 2014 1:54 AM GMT
Industrial & Commercial Bank of China Ltd., the world’s largest lender by assets, reported its biggest jump in bad loans since at least 2006 as the property market slumped and the economy cooled.

Nonperforming loans rose 9 percent in the third quarter from the previous three months, the Beijing-based bank said in an exchange filing yesterday. Net income gained 7.7 percent from a year earlier to 72.4 billion yuan ($11.8 billion), matching the median analyst estimate in a Bloomberg News survey.

A struggling Chinese economy is weighing on ICBC’s share price and is poised to drag the company to its weakest full-year profit growth since at least 2001 as more borrowers default. Challenges at home may encourage the bank to add to an overseas expansion that already spans Asia, South America and Europe.

----ICBC’s nonperforming loans rose to 115.5 billion yuan in September from 105.7 billion yuan in June. 
The increase was the biggest since quarterly data became available with the bank’s listing in 2006. Nonperforming credit accounted for 1.06 percent of total advances.

China’s Property Prices May Decline Up to 10%, SouFun Says

Oct 30, 2014 2:36 AM GMT
China property prices may decline as much as 10 percent this year and the slump may extend into 2015, according to SouFun Holdings Ltd.

“Chinese property prices are seeing an adjustment after the rapid increase in the past two years,” Vincent Mo, founder of China’s biggest real estate information website, said in a Bloomberg Television interview with Haslinda Amin in Singapore yesterday. “Prices should stabilize by the middle of next year.”

China’s new-home prices fell in all but one city monitored by the government last month from August, the most since January 2011 when the way the date is compiled changed, as the easing of property curbs failed to stem a market downturn amid tight credit. Home sales slumped 11 percent in the first nine months, prompting the central bank to ease mortgage restrictions on Sept. 30.

All but five of the 46 cities that imposed limits on home ownership since 2010 have removed or relaxed such restrictions amid the property downturn that has dented local revenues from land sales.

Back in the Fedster casino, the loons were out in force secured by the Yellen Put. Reality doesn’t matter until one day it does. When that day comes, will the fraud of QE4 be enough to punt off the final collapse of the Fed’s latest and last bubble? The Fed has gone “all in” that it will be enough. In the last act of the Great Nixonian Error of fiat money, we are all mere serfs in the ending of the age of casino capitalism and unrepayable debt. Four decades of mis and mal-investment have to be unwound. Despite what the hopium witch doctors of casino capitalism say on our TV each day, tomorrow will not be like today, which was like yesterday. Tomorrow will shatter all illusions.

"In economics, hope and faith coexist with great scientific pretension."

J. K. Galbraith.

Dollar Jumps as Fed Ends Bond Buying While Crude Retreats

Oct 30, 2014 6:09 AM GMT
The dollar climbed to a four-week high after the Federal Reserve judged the U.S. economy strong enough to end its asset-purchase program. Metals and oil fell with Hong Kong stocks.

The Bloomberg Dollar Spot Index gained 0.2 percent by 3:08 p.m. in Tokyo, with the euro weakening 0.3 percent and South Korea’s won leading emerging-market currencies lower. Gold dropped 0.4 percent and nickel slumped 2 percent. West Texas Intermediate crude oil slid 0.4 percent. Hong Kong’s Hang Seng Index dropped 0.5 percent after its biggest two-day rally in seven months. Standard & Poor’s 500 Index futures were little changed.

The Fed cited job gains in its decision to wind up the unprecedented bond-buying program, which has suppressed U.S. yields and fueled capital inflows into emerging-market assets. Officials retained a commitment to keep key interest rates low for a “considerable time.” An update on third-quarter U.S. gross domestic product is due today, and euro-area confidence data is scheduled before inflation tomorrow, when the Bank of Japan will report on monetary policy.

“The U.S. currency is back on its uptrend,” said Imre Speizer, a markets strategist at Westpac Banking Corp. in Auckland. The Fed statement “was a hawkish surprise to the market.”

Fed Unshaken by Global Market Turmoil Bets on Job Gains

Oct 30, 2014 4:00 AM GMT
Federal Reserve officials dismissed recent turmoil in global financial markets, and focused instead on “solid” employment gains that will keep them on a path toward an interest-rate increase next year.

A majority of U.S. policy makers at their meeting yesterday also set aside concerns, both among their own members and in financial markets, about too-low inflation, voting to proceed with plans to end their third round of asset purchases.

“The FOMC is making a pretty bold call here,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “The economy’s momentum is strong enough to push through the headwinds of slower world growth.”

While bond and commodities markets have signaled concern about a global slowdown since Fed officials last met Sept. 16-17, U.S. central bankers decided to go with the facts in hand, said Paul Mortimer-Lee, chief economist for North America at BNP Paribas in New York.

“They have concentrated on what they are sure of: the labor side of the economy is improving,” Mortimer-Lee said. On inflation, the message was, “We are going to take our time and look.”

The Federal Open Market Committee maintained its commitment to keep interest rates low for a “considerable time.”

In better news for the talking chair, and the Yellen Put, the ex-Fedster most responsible for the havoc of today’s final bubble, thinks he sees the error of our ways. For what possible reason could he finally be right now? Keep taking the hopium.

 Oh, so they have internet on computers now!

Fallen guru Greenspan, with apologies to Homer Simpson.

Greenspan Sees Turmoil as QE Boost to Markets Unwinds

Oct 29, 2014 2:35 PM GMT
Former Federal Reserve Chairman Alan Greenspan said he doesn’t think the Fed can unwind years of extraordinary stimulus without causing turmoil in financial markets.

“I don’t think it’s possible,” Greenspan said during an event today at the Council on Foreign Relations in New York, responding to a question about the likely market impact of the Fed’s exit.

----While the Fed’s bond-buying program has been a “terrific success” in boosting asset prices, it hasn’t galvanized effective demand in the real economy, Greenspan said.

The Fed’s bond purchases have had a “major effect” on price-to-earnings ratios, capitalization rates in real estate, and all income-earning assets broadly by “getting the real rate of return on long-term assets down,” Greenspan said.

The program “hasn’t been a success on the demand side for one fundamental reason,” Greenspan said. “What you’re basically seeing is an explosion of assets, an explosion of reserve balances, and that’s the only two statistics that are moving.”

The purchases created deposits in the financial system that largely returned to the Fed in the form of reserve balances.

In other news, an energy revolution is coming next decade. In the new graphene based Carbon Age, solar energy is going to wreck the business models of coal, oil, uranium, and even natural gas. The trouble is getting from here to there without a central bankster created depression first.

While You Were Getting Worked Up Over Oil Prices, This Just Happened to Solar

Oct 29, 2014 11:52 AM GMT
Every time fossil fuels get cheaper, people lose interest in solar deployment. That may be about to change.

After years of struggling against cheap natural gas prices and variable subsidies, solar electricity is on track to be as cheap or cheaper than average electricity-bill prices in 47 U.S. states -- in 2016, according to a Deutsche Bank report published this week. That’s assuming the U.S. maintains its 30 percent tax credit on system costs, which is set to expire that same year.

Even if the tax credit drops to 10 percent, solar will soon reach price parity with conventional electricity in well over half the nation: 36 states. Gone are the days when solar panels were an exotic plaything of Earth-loving rich people. Solar is becoming mainstream, and prices will continue to drop as the technology improves and financing becomes more affordable, according to the report.

The chart below shows how far solar will come out ahead in each state in 2016, assuming a worst-case scenario of lower tax credits. The blue bars show the anticipated cost of solar energy (assuming a conservative 20-year lifespan for the panels) minus average electricity prices. Positive numbers indicate the savings for every kilowatt hour of electricity.

----Solar has already reached grid parity in 10 states that are responsible for 90 percent of U.S. solar electricity production. In those states alone, installed capacity growth will increase as much as sixfold over the next three to four years, Deutsche Bank analyst Vishal Shaw wrote in the Oct. 26 report.

The reason solar-power generation will increasingly dominate: it’s a technology, not a fuel. As such, efficiency increases and prices fall as time goes on. The price of Earth’s limited fossil fuels tends to go the other direction.

I think Obama picked me because of my motivational skills. Everyone says they have to work a lot harder when I'm around.

The talking chair, with apologies to Homer Simpson.

At the Comex silver depositories Wednesday final figures were: Registered 66.52 Moz, Eligible 114.41 Moz, Total 180.93 Moz.    

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.

Lisa, if you don't like your job you don't strike. You just go in every day and do it really half-assed. That's the American way.

President Obama, with apologies to Homer Simpson.

The future or is it still avoidable?

The Colder War
John Mauldin | Oct 29, 2014

The story of energy is the story of human expansion. From the days when we roamed the African savanna, we tamed first fire and then other forms of energy, using them as tools to control our environment and improve our lives. The control of energy has always been at the heart of the human story.

This week our Outside the Box essay is from my friend Marin Katusa, who has written a fascinating book about a part of that story, a subplot of intrigue and conspiracy. Under Putin, Russia has aspired to dominate the energy markets. Called The Colder War, Marin’s book is a well-written tale of the rise of Putin and his desire to change the way the world’s energy markets are controlled.

I sat down a few months ago with an advance copy, not sure what to expect. Marin is personally very colorful and entertaining, but would that charisma translate to words on a page? I started on a Sunday afternoon and finished before I laid my head on the pillow that night. The Colder War was an entertaining and gripping story of the rise of Putin and the shifting sands of the world of oil. It was also an insightful overview of the last century. I highly recommend it.

At the end of the day, I disagree with Marin as to Putin’s ability to achieve his vision. While Putin wants to displace the petro-dollar as the global medium of energy exchange, he will fail. But maybe that’s the hometown boy in me thinking my team will win.

----The Colder War

By Marin Katusa
I am going to tell you a story you’ll wish weren’t true.

Sometime soon, likely in the next five years or so, there is going to be an emergency meeting in the White House Situation Room. It probably will start in the wee hours of the morning, when the early risers among Europe’s oil traders and currency speculators have already begun to scramble out of the way of what’s coming. None of the worried participants in that meeting will have a good solution to propose, because there will be no way for the United States to turn without embracing calamity of one kind or another.

The president will listen as his closest advisers lay out the dilemma. After a long silence, he will say, “You’re telling me that everything – everything – is coming unglued.”

He’ll be right. At that point, there will be no good options, only less awful ones.

Don’t count on the wise and worldly who occupy the highest echelons of government power to know what they are doing when they sit in that meeting. Solving the puzzle of what to do will fall to the same kind of people who today are standing by and letting the disaster build.

Some of them just don’t know any better. They see all of mankind’s turmoil as cartoonlike conflicts between white hats and black hats. Others know that reality is more complex, but choose to feign ignorance – it’s so easy, and often politically convenient, to let everything boil down to good guys battling bad guys.

“The singular feature of the great crash of 1929 was that the worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning. Nothing could have been more ingeniously designed to maximize the suffering, and also to ensure that as few as possible escaped the common misfortune. The fortunate speculator who had funds to answer the first margin call presently got another and equally urgent one, and if he met that there would still be another. In the end all the money he had was extracted from him and lost. The man with the smart money, who was safely out of the market when the first crash came, naturally went back in to pick up bargains. …..The bargains then suffered a ruinous fall. Even the man who waited out all of October and all of November, who saw the volume of trading return to normal and saw Wall Street become as placid as a produce market, and who then bought common stocks would see their value drop to a third or a fourth of the purchase price in the next twenty-four months. The Coolidge bull market was a remarkable phenomenon. The ruthlessness of its liquidation was, in its own way, equally remarkable."

J.K. Galbraith. The Great Crash: 1929.

The monthly Coppock Indicators finished September.

DJIA: +141 Down. NASDAQ: +289 Down. SP500: +216 Down.