Thursday, November 20, 2008

MCR writes:


It won't be long this time. I'd write more but I've been overwhelmed by your responses to my last long entry. That made me want to be sure that everything I put up was worthwhile. I don't want to turn this into my "dumping" ground. It's been a tough week for me. Part of that is that it's still very difficult to watch all this come undone and to be able to see so much of it coming. What was it, five or six weeks ago I told you to start watching Citigroup?... Citigoup stock fell 23% today.

I'll have comments on the cabinet when it's more filled out. You can rule out Robert Rubin for Treasury. He's on the board at Citigroup and that's going to be real messy and won't look good. Today's Dow drop told everyone that we are nowhere near close to a bottom yet and I'm narrowing in on an eventual capitulation maybe in the low 5,000s. But things are so volatile that a metaphoric zero is not out of the question. It is becoming very clear that government leaders around the world are pretty much out of their pay grade, so to speak. The good news from this is that some of them -- and those who work for them --are starting to look all around for options, information and solutions in all kinds of previously ignored places. It's a good thing. We don't know how good yet. We have to let them at least take office before passing judgment and I've been a little pissed at some who have.

As a side note, I really had to laugh my ass off at two of the reactions to my brief spiritual discourse. One said that I was not a Christian if I didn't accept Jesus Christ as the Son of God and the only path. etc. That has no connection to what I believe. Another comment called me a crazy apocalyptic Christian and said they were "out of here". Cheez!... Religion is for people who are afraid of going to Hell. Spirituality is for those who have already been there, thank you!

I give Citigroup two and a half weeks at most. It might well fall sooner and there will be no bailout. That would start a revolution I think. The automakers are screwed and, for the first time today, the news commentators started talking about Chapter 7 rather than Chapter 11. That is liquidation as opposed to restructuring. A Chapter 11 filing is based upon restructuring and an influx of new capital... Excuse me??? "New capital"??? If the government won't invest $25 billion does anyone think the private sector is going to risk a nickle on those behemoths when the financials are trying to hold on to every dollar they have? It was always going to be Chapter 7 liquidation. That was obvious to me. They may pass through Chapter 11 on the way, but there's no way the big three would ever emerge from "Debtor in Possession" status. To make a sick joke... The wheels really are coming off.

Gee, I guess it's OK if I feel a little messed up... Don't we all?

Sending all of you a cyber hug. Thanks for those amazing responses. And yes, after about 18 years I managed to hook up with my old, long-lost pal, Nik P. It was a Kodak moment. -- I'm going to go hug my dawg now.

You go read all the grizzly details about Citigroup and think of all those people who bought all those put options last weekend. There's going to be a big feast over this carcass.

"Step right up! We have it for sale NOW! The United States of America is open for bidding!"... I guess you could say that we sold our soul a while ago, and it feels like there's just a few trying to redeem it as the lights go out. Soon we might just get to emerge from the shadows a bit and we might discover that there are more of us than we think.

JO writes:

The Daily Reckoning also anticipates the Dow going to 5000.

An interesting ratio to keep track of is the one between the value of the Dow and the price of an ounce of gold about which DR says:

In 1982, briefly, you could have bought every one of the stocks in the Dow index for a single ounce of gold. But by the time the stock market finished its epic rise, in January 2000, (while gold was doing an epic fall!) you would have needed 44 ounces of gold to buy the Dow. Now, that ratio has come down considerably. You only need about 13 ounces of gold to buy the Dow. And as stocks come down, the ratio is likely to fall below 5…and eventually back to 1 to 1 (at which time, remember, it will be time to sell gold and buy shares).

Obama Policies on Secrecy
Secrecy News hopes that the policies of the new administration will go further than suggested by the head of the transition team, John Podesta, in recent testimony to the Senate Judiciary Committee.

Podesta, who played an influential role in the development of Clinton administration classification policies, suggested a rollback of Bush's Executive Order 13292 and a reinstatement of "the provisions of [President Clinton's] Executive Order 12958 that establish a presumption against classification in cases of significant doubt."

But, writes Secrecy News,

[R]estoring a 'presumption against classification in cases of significant doubt' will not accomplish much since executive branch classification officers do not experience significant doubt....

A better starting point would be a systematic review of all of the thousands of agency classification guides, geared towards eliminating obsolete or unnecessary classification instructions. Classification guides are the secrecy system's "software." Revising and updating them would be likely to pay immediate dividends in reduced classification....

There is an old story of a Russian soldier who saved the life of the czar and was told that as a reward he could have anything he wanted. "Please change my commanding officer!" he begged.

In the coming weeks and months, it should be possible to do a lot better than that.

Obama Letters on Federal Agencies
I Wonder If Al Franken Still Is Dismissive Of Voter Election Fraud Now
by Mark Crispin Miller, author of Fooled Again: The Real Case for Electoral Reform
CNN Recognizes The End of Suburbia
Rank and File Spies for Obama
Though the election is history in more ways than one, the above article gives some indication of the forces that were at work during this election. Talk about broad support.


Aragorn said...

Gold is the answer-purchase Venezuelan gold coins tax-free:

bullpasture said...

I enjoyed seeing your comments regarding the relationship between the price of gold and the cost of stocks in the DOW index as you referenced the Daily Reckoning column. You have thus pointed out that the real true value of owning physical gold is not just "to make a bunch of money" but rather to preserve your investment capital while prices of equities depreciate during a crisis. As the market bottoms out, you now have a store of money with which to acquire vast amounts of stock at cheap prices. With these new equities in your fist, you can now commence to "make money"! The best explanation of this viewpoint I have ever read (and it makes so much sense without having to assume the persona of a "goldbug") is from the April 2008 blog entry of DeForest McDuff at this web address

Jaikyro said...

Which is the best choice when investing in gold; buying coins from sites as Aragorn linked or investing in bullion as seen on

ES355GIBSON said...

MCR - KILLER entry!

I listened to some of the hearings today with the Big 3, man alive....

Those guys are certified CLUELESS

Big check for a BIG head filled with cigar smoke and brandy..

Rice Farmer said...

Citigroup Said to Urge SEC to Reinstitute Ban on Short-Selling

Grasping at straws.

Patchd said...

Jaikyro, I wish I knew the answer to your question. I've been thinking about putting some money into, but don't know how safe that is. I like their system, though. The question is, how sustainable is that system, with the way things are going? I'd still love to be able to know that is reliable, though. What do you think about

Lafe said...

On Venezuala gold - yes physical gold in your possession is best but it would also help to have the weight and purity in English so I'd avoid Venezualan and Mexican gold for Maple Leafs, Eagles, Krugers etc...

On the Dow/Gold Ratio - friends used to laugh when I repeated Richard Russell's comment from years back that gold and the dow will cross, gold on it's way up and the dow on it's way down. Now they call me asking where they can get gold.

On ETF's and other digital bullion - I pulled out of all of them a year ago due to increased risk from geographical issues to accounting issues. Gold you can hold is the best.

Mike I'm so glad you're back on the scene and good to see you letting your spiritual side hang out. Amen to you, sir.

Stacy Brittain said...

Hello Mike and FTW,

I finished Rubicon and am working to try and understand what the #*&^% is going on these days! I read your blog regularly and am thankful for your work. Please keep it up...


Stacy Brittain said...

Hello Mike and Crew,

I recently finished Rubicon (a terrifying and excellent book to read) and regularly read your blog to try and gain some understanding on what is going on in the world!

I just wanted to say THANKS for your work and posts and please keep it up.


Anonymous said...

Hi Mike,

I have always loved your columns and ftm, but I have to disagree on the chapter 7 for the the big 3. The Chinese will come in and turn their useless USD into harder assets by purchasing 1 or more of the auto cos. They have more dollars than any rational nation should and are already moving to buy major stakes in 1 or more of them...

fiveyears said...

At the top of the page it says Act 2: From the Wilderness' Peak Oil Blog. what do any of your recent (and we can go back quite a bit) posts have to do with "Peak Oil?"

And please spare us the "well it all ties in to Peak Oil" commentaries. It doesn't. You've lost the plot of this particular blog, getting caught up instead with the excitement of the chance to tell us how right you were when you were originally crying in the wilderness.

businessman said...

Mike...Thanks for the comment about religion and spirituality. I can definitely relate to it.

I realize that this post is long, but with all of the recent discussion around religion in here, combined with so many people in here seeking both the truth and alternative perspectives, I thought I should post it.

I was raised Catholic, was an altar boy in school helping the priests serve mass, and I went to Catholic school for 12 years. And both during and after Catholic school and through my adult life I've been doing what I can to discover the truth about both religion and spirituality.

And I discovered some interesting things that they never told me about back in Catholic school...

1) The person commonly known as Jesus Christ, if he did in fact exist, had a completely different name. His name in his native Aramaic language was Yeshua.

2) There are no writings from the time that Jesus was said to have lived either mentioning him or describing all the great things he is said to have done while he was alive. There has only been one instance where Jesus was mentioned in one sentence in the writings of a very famous man from that same time period...Flavius Josephus. But scholars have debunked that one sentence and have said it's a forgery that was added to Josephus' writings many years after he died.

3) There are writings from the time Jesus is said to have lived, including the Epistles, which refer to the term "Christ." But the term "Christ" at the time was used specifically to describe a mythical entity who was said to be the intermediary for communication between God and the people.

4) The first mention in any writings about the existence of the human being that we've come to know as Jesus Christ did not happen until the Gospels were written. And the Gospels weren't written until approximately 50-90 years after the time when Jesus was said to have died on the cross. In addition, the Gospels were written in Greek, not in Jesus' native language of Aramaic, and they were written by people who never knew Jesus. On top of this, the first Gospel written was the Gospel according to Mark, and scholars have determined that the other three Gospels were written while having access to and knowing of the writings in the Gospel of Mark. There are simply too many verses that are so similar to those in Mark's Gospel, that the other three Gospels could not have been written without first reading Mark's and then borrowing from it.

5) We often hear the term "Jesus of Nazareth" mentioned with reference to Nazareth being the town that Jesus was from. Yet no map from that time shows that a town called "Nazareth" existed back then. There were buildings that existed at the time in the same area, but the area wasn't called Nazareth until years later.

Whether or not Jesus actually lived, the truth is that organized religion is of great value to the powers that be. Instead of having to control millions and millions of people around the world individually, they only have to control their religious leaders. And their religious leaders will then control their own followers for them.

agape wins said...

Most of us understand Mike's writing
about peak oil, and the state of the
World we live in, now we want him to expound on the Spirit, & how we are Slaves to Religion, and it's negative affect! Please stop
repeating what Mike has already
heard, reread what he wrote, does
he endorse a Church, or plege
himself to a Faith. If You can
not say something positive must you
put words in Mike's post which I do not read. Tell us what Your
Foundation is, not what his, or
ours should be--FOR CHRIST"S SAKE!

From your post: "But the term "Christ" at the time was used specifically to describe a mythical entity who was said to be the intermediary for communication between God and the people."

Christ still intercedes, be he a
Myth, Spirit, or just a plain
misunderstood man!
Now you define, for me, this FORCE,
that WE call GOD, which I can not
comprehend, microbe, that I am.

kiki said...

I guess we’re all ‘burping’ frustration these days; it’s hard when there isn’t much we can do but watch what we knew was going to happen, happening. I’m trying to concentrate on ‘scenarios’ I may be faced with and playing them out in my head. Ok, yes, it may be an exercise in futility but it offers me something to do besides taking my frustration out on others who don’t deserve it. I still ‘pop off’ occasionally so it isn’t an all inclusive activity ! Other than that I’m still trying to learn new skills and currently, I’m having a devil of a time trying to start a fire with just wood and hands twirling a stick. I’ve watched the survivalist on tv do it numerous times but it’s no help when I’m trying to get it done myself, it seems. So off to more sprucing up some skills and hey, let’s just let the religion/spirituality thing go; a very personal issue that continues to divide individuals and nations; not much good ever seems to come out of challenging anothers beliefs. Is it really that important we know what MCR and each other believe? jmo

kiki said...

may be of interest to some:

How would anyone be able to ‘argue’ with these pursuers?
Title: Are Pentagon Nerds Developing
Packs of Man-Hunting Killer Robots?

Anonymous said... is also calling for Dow 5000, a reversion to the mean average aggregate return over the last 100 years and in keeping with the Nikkei's performance during Japan's "lost decade".

kenneth said...

to jaikyro and patchd

i am a goldmoney client, and i have no complaints. as far as safety goldmoney purchases the gold, then sells it to you. it is none of this paper money gold, or 8 week delivery nonsense. in addition you holdings are allocated separately, and regular audits are held. also note that your account is insured by lloyd's of london. you can also cash out with a few keystrokes.