Market Clues

The Treasury Department released some information about their plan to extricate the banking system from the mess they've gotten themselves and the whole planet's economy into. The solution is simple and elegant---have the banks ignore the accounting rules for six months, then plead for help from the government.

The Treasury's plan to ignore the mark-to-market accounting rule that has made the banking system technically insolvent is apparently a concession to the fact that the rule will destroy the banks if left alone. Yet, they are doing this instead of an outright change in the rule, a subtle distinction which leaves no room for green eyeshaders to complain. It's quite a neat feat when you think about it, especially since most of the people don't realize that the Treasury's plan is simply an end-run around the rules---so much the better.

The stress test for banks isn't going to be that hard to pass. The New York Times reports:

According to the new Treasury Department guidelines, the banks would have to assume that the economy contracts by 3.3 percent this year and remains almost flat in 2010. They would also have to assume that housing prices fall another 22 percent this year and that unemployment would shoot to 8.9 percent this year and hit 10.3 percent in 2010.

Clearly, if the Administration is able to buy time (and it will be October before there would be a need for more capital by the stressed bankers), we could get a recovery of sorts between now and then. But, this delay tactic likely won't work and we'll be back in the soup later this year. That next step could be a real doozy if we spend the next six months dreaming that a bounce in bank stock prices has cured all that's wrong in this Greater Depression.

Tech weakness caused the market to end lower on Thursday despite notable strength in the bank stocks:

Change From 25 Feb 2009 To 26 Feb 2009

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	-1.22%	-88.81
DIAMONDS TRUST SER 1 (DIA)	-1.14%	-83.04
ULTRA DOW30 PROSHRS (DDM)	-1.93%	-140.40
PT ULTRSHRT DOW30 PS (DXD)	+2.29%	+166.71
S&P 500 (index)	-1.61%	-116.92
S& P DEP RECEIPTS (SPY)	-1.63%	-118.23
ULTRA S& P500 PROSHRS (SSO)	-3.05%	-221.63
PT ULTRSHRT SP500 PS (SDS)	+3.24%	+235.37
NYSE Composite (index)	-0.84%	-61.42
ISHARES NYSE CMP IDX (NYC)	-0.66%	-48.22
S&P SmallCap 600 (index)	-2.05%	-148.83
PROSH ULTRA SMALLCAP (SAA)	-3.86%	-280.46
SHORT SMALLCAP600 PR (SBB)	+2.76%	+200.64
ULTRASHORT SMALLCAP6 (SDD)	+4.01%	+291.86
Russell 2000 (index)	-2.10%	-153.05
ISHARE RUS 2000 INDX (IWM)	-1.87%	-135.75
ULTRA RUSSELL2000 PR (UWM)	-3.69%	-268.45
ULTRASHORT RUSSELL20 (TWM)	+3.48%	+253.16
NASDAQ-100 (index)	-2.72%	-197.74
POWERSHARES QQQ TR 1 (QQQQ)	-2.80%	-203.45
ULTRA QQQ PROSHARES (QLD)	-5.43%	-394.64
PT UTLRSHRT QQQ PS (QID)	+5.42%	+394.37
S&P MidCap 400 (index)	-1.79%	-129.90
ISHARE SP MC 400 INX (IJH)	-1.58%	-115.16
ULTRA MC400 PROSHRS (MVV)	-2.50%	-181.87
PT ULTRSHR MC400 PS (MZZ)	+3.28%	+238.47
GREENHAVEN CONT IDX (GCC)	+0.24%	+17.52
Amex Gold (index)	+1.54%	+112.19
MKT VECT GOLD MNRS (GDX)	+1.82%	+132.60
STREETTRACKS GOLD TR (GLD)	-0.10%	-7.03
DB GOLD DBL SH ETN (DZZ)	+0.09%	+6.86
DB GOLD DBL LG ETN (DGP)	-0.14%	-10.35
Semiconductor Sector (index)	-1.76%	-127.64
ULTRA SEMICONDUCTORS (USD)	-3.37%	-245.15
ULTRASHORT SEMICONDU (SSG)	+2.77%	+201.73
ISHARE DJ FIN SC INX (IYF)	+0.92%	+66.95
ISHARES LEHMAN 20 YR (TLT)	-1.05%	-76.53
ISHARESLEHMAN 7-10YR (IEF)	-0.26%	-18.55
ISHARES LEH AGG FD (AGG)	-0.52%	-38.07
ISHARES GS $ INVESTO (LQD)	-0.64%	-46.48
ISHARES LEHMAN 1-3YR (SHY)	+0.05%	+3.46
ProShares ETFs
PROSHARES ULTRASHORT LEHMAN 7-10 (PST)	+0.82%	+59.78
PROSHARES ULTRASHORT LEHMAN 20YR (TBT)	+2.30%	+167.13
SHORT QQQ PROSHARES (PSQ)	+2.70%	+196.04
SHRT DOW30 PROSHARES (DOG)	+1.09%	+79.01
SHRT S& P500 PROSHRS (SH)	+1.52%	+110.44
SHRT MC400 PROSHARES (MYY)	+1.85%	+134.66
SHORT SMALLCAP600 PR (SBB)	+2.76%	+200.64
SHORT RUSSELL2000 PR (RWM)	+1.96%	+142.86
PT UTLRSHRT QQQ PS (QID)	+5.42%	+394.37
PT ULTRSHRT DOW30 PS (DXD)	+2.29%	+166.71
PT ULTRSHRT SP500 PS (SDS)	+3.24%	+235.37
PT ULTRSHR MC400 PS (MZZ)	+3.28%	+238.47
ULTRASHORT SMALLCAP6 (SDD)	+4.01%	+291.86
ULTRASHORT RUSSELL20 (TWM)	+3.48%	+253.16
PST ULSHT RSL1K VALU (SJF)	+4.11%	+298.95
PST ULSHT RSL1K GR (SFK)	+3.90%	+283.38
PST ULSHT RSL MC VAL (SJL)	+3.79%	+275.20
PST ULSHT RSL MC GR (SDK)	+3.72%	+270.48
PST ULTSHT RSL2K VAL (SJH)	+2.56%	+185.78
PST ULSHT RSL2K GR (SKK)	+5.09%	+369.88
ULTRASHORT BASIC MAT (SMN)	+2.01%	+146.42
ULTRASHORT CONSUMER (SZK)	+3.85%	+280.18
ULTRASHORT CONSUMER (SCC)	+4.58%	+332.65
ULTRASHORT FINANCIAL (SKF)	-1.56%	-113.20
ULTRASHORT HEALTH CA (RXD)	+11.12%	+808.66
ULTRASHORT INDUSTRIA (SIJ)	+2.61%	+189.99
ULTRASHORT OIL & GAS (DUG)	+0.10%	+7.57
ULTRASHORT REAL ESTA (SRS)	+8.86%	+644.28
ULTRASHORT SEMICONDU (SSG)	+2.77%	+201.73
ULTRASHORT TECHNOLOG (REW)	+1.58%	+114.87
ULTRASHORT UTILITIES (SDP)	+3.18%	+230.87
PROSHARES SHR MSCI E (EUM)	+0.53%	+38.18
PROSHARES SHORT MSCI (EFZ)	+0.93%	+67.64
PROSHARES ULTRASHORT (EFU)	+1.58%	+114.95
PROSHARES UTLRASHORT (EEV)	+1.61%	+117.04
PROSHARES US MSCI JP (EWV)	+3.20%	+232.38
PROSHARES ULTRASHORT (FXP)	+5.42%	+393.78
ULTRA QQQ PROSHARES (QLD)	-5.43%	-394.64
ULTRA DOW30 PROSHRS (DDM)	-1.93%	-140.40
ULTRA S& P500 PROSHRS (SSO)	-3.05%	-221.63
ULTRA MC400 PROSHRS (MVV)	-2.50%	-181.87
PROSH ULTRA SMALLCAP (SAA)	-3.86%	-280.46
ULTRA RUSSELL2000 PR (UWM)	-3.69%	-268.45
PST ULT RUS1000 VAL (UVG)	-2.96%	-215.15
PST ULT RSL1000 GR (UKF)	-4.00%	-291.15
PST ULT RSL MC VALU (UVU)	-3.62%	-263.23
PST ULT RSL MC GR PS (UKW)	-3.53%	-256.75
PST ULT RSL2000 VALU (UVT)	-3.10%	-225.17
PST ULT RSL2000 GR (UKK)	-4.84%	-351.73
ULTRA BASIC MATERIAL (UYM)	-1.64%	-119.19
ULTRA CONSUMER GOODS (UGE)	-3.80%	-275.97
ULTRA CONSUMER SERVI (UCC)	-4.20%	-305.50
ULTRA FINANCIALS PRO (UYG)	+1.23%	+89.76
ULTRA HEALTH CARE PR (RXL)	-9.66%	-702.57
ULTRA INDUSTRIALS PR (UXI)	-2.95%	-214.50
ULTRA OIL & GAS PROS (DIG)	-0.64%	-46.19
ULTRA REAL ESTATE PR (URE)	-8.81%	-640.82
ULTRA SEMICONDUCTORS (USD)	-3.37%	-245.15
ULTRA TECHNOLOGY PRO (ROM)	-2.17%	-158.06
ULTRA UTILITIES PROS (UPW)	-3.28%	-238.57
Other ETFs
PS NQ100 BUYWRITE (PQBW)	-1.74%	-126.79
POWERSHARES DB BASE (BOM)	-0.94%	-68.27
POWERSHARES DB BASE (BDD)	+4.53%	+329.13
POWERSHARES DB BASE (BOS)	-3.74%	-272.05
POWERSHARES DB CRUDE (DTO)	-8.37%	-608.44
POWERSHARES DB CRUDE (SZO)	-4.39%	-318.92
POWERSHARES DB CRUDE (DXO)	+10.50%	+763.61
POWERSHARES DB CRUDE (OLO)	+3.81%	+277.07
300% Leverage ETFs
DIREXION LARGE CAP BULL 3X SHARE (BGU)	-4.55%	-330.80
DIREXION LARGE CAP BEAR 3X SHARE (BGZ)	+4.69%	+341.35
DIREXION SMALL CAP BULL 3X SHARE (TNA)	-4.68%	-340.28
DIREXION SMALL CAP BEAR 3X SHARE (TZA)	+5.25%	+381.86
DIREXION ENERGY BULL 3X SHARES (ERX)	-1.14%	-82.93
DIREXION ENERGY BEAR 3X SHARES (ERY)	+0.47%	+34.04
DIREXION FINANCIAL BULL 3X SHARE (FAS)	+3.75%	+272.66
DIREXION FINANCIAL BEAR 3X SHARE (FAZ)	-2.66%	-193.49

Additional stock market commentary -- for subscribers only -- can be found here: Subscriber Notes (if you're reading this in plain text format or on the blog, visit the MyClues Home Page and click on "Subscriber Notes" in the Quick Links section at the top of the page).

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posted by Bob Carver  # 10:22 PM

Paul McCulley argued that we need private banks in a piece we excerpted a couple of days ago. But, he didn't make much of a case other than a bit of hand-waving that, "Capitalist economies usually want their banking systems owned by the private sector, where loans and investments are made on commercial terms, in the pursuit of profit." The facts of history point to the experiment of entrusting our money to banks as a failure. The "pursuit of profit," it appears, often leads to excesses which the public taxpayer has to clean up.

A lot of Wall Street types, with obvious conflicts of interest, argue that the government is not capable of running the banks. That's hogwash, as any reading of history will amply demonstrate. The government has a far better record of running the country than the banks do of keeping the economy humming. In fact, about every twenty years or so (which we've documented before), bank mismanagement blows up and the government has to step in and bail them out. It's about time the taxpayer owned the banks outright.

Look back in history. Did the banks construct the public works projects which made America the greatest country on the planet? No, they did not. All of the major projects undertaken by the government have been successes. America is where it is today because of government, not in spite of it. The private sector has a long history of abject failure---90% of all new businesses fail within a couple of years---and the latest decade is just the worst one of all in terms of jobs lost to that insidious corporate plan of "offshoring." Essentially, big business has been working hard to deconstruct the fiber of America for the last two decades. Large companies have not created a single new job (net of layoffs) in that span of time! And, who are we bailing out today? Large banks who failed to understand the simple concept that market prices can go down as well as up!

Government is the only legal entity specifically granted the power to create money according to the US Constitution. A private company was delegated the right to print money by the Federal Reserve Act of Congress, which established the right of that private bank---owned only by other banks---to create money. And, now, with the ridiculous right to print many dollars for each dollar on deposit at member banks, what have we ended up with?---a situation where the public is being forced to ante up all those printed dollars that went down the drain due to banker greed!

And, what kind of unfair system is it that requires the government, from which the power to print money derives, to pay interest on the money that banks printed in the first place? The banks essentially are allowed to have their cake and eat it, too. They print money, then demand that the borrower not only pay back this new money, but pay back even more than they borrowed! It's a shameful practice---and one which both Christians and Muslims unthinkingly, but hypocritically, engage in. For instance, the Bible says,

If he has exacted usury Or taken increase --- Shall he then live? He shall not live! If he has done any of these abominations, He shall surely die; His blood shall be upon him. ---Ezekiel 18:13

You shall not charge interest to your brother --- interest on money or food or anything that is lent out at interest. ---Deuteronomy 23:20

In fact, an excellent case can be made for the idea that the payment of interest on a loan is the source of most of the imbalances in the financial system, leading to overproduction, inflation and a general inequity in capital distribution.

What we need is for the government to come into the market, take over the banks and start lending money for entreprenuers to create new products and new businesses to displace the rotten old corporate guard who have been running the country straight into the ground for several decades.

Barring a solution to this crisis, the Greater Depression will only continue to grow larger until it engulfs America's government and forces it into insolvency. It's time to eliminate private ownership of banks by seizing their assets and appointing a federal Czar of Banking who will place strict controls on just how much money can be printed by government-owned and government-run banks. It's the only way this endless cycle of banking crises can be controlled in the long run.

One of the few politicians who knows anything about the fact that the whole financial system is built to fail is Ron Paul. Today, before the House interrogation of Ben Bernanke, he made a statement about how we desperately need a new system instead of more air to be pumped into an old, patched and leaky spare tire:

Watch Ron Paul on CNBC video.

The market wiggled and waggled all day, ending slightly lower:

Change From 24 Feb 2009 To 25 Feb 2009

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	-1.09%	-80.05
DIAMONDS TRUST SER 1 (DIA)	-0.97%	-71.13
ULTRA DOW30 PROSHRS (DDM)	-2.38%	-174.87
PT ULTRSHRT DOW30 PS (DXD)	+2.10%	+154.68
S&P 500 (index)	-1.17%	-85.67
S& P DEP RECEIPTS (SPY)	-0.79%	-57.87
ULTRA S& P500 PROSHRS (SSO)	-1.79%	-131.27
PT ULTRSHRT SP500 PS (SDS)	+1.68%	+123.43
NYSE Composite (index)	-1.42%	-104.54
ISHARES NYSE CMP IDX (NYC)	-1.51%	-110.93
S&P SmallCap 600 (index)	-2.37%	-173.99
PROSH ULTRA SMALLCAP (SAA)	-2.90%	-213.00
SHORT SMALLCAP600 PR (SBB)	+1.21%	+89.08
ULTRASHORT SMALLCAP6 (SDD)	+4.07%	+299.50
Russell 2000 (index)	-2.68%	-197.28
ISHARE RUS 2000 INDX (IWM)	-2.07%	-152.32
ULTRA RUSSELL2000 PR (UWM)	-4.72%	-346.64
ULTRASHORT RUSSELL20 (TWM)	+4.38%	+321.63
NASDAQ-100 (index)	-1.28%	-94.38
POWERSHARES QQQ TR 1 (QQQQ)	-0.66%	-48.53
ULTRA QQQ PROSHARES (QLD)	-1.14%	-83.67
PT UTLRSHRT QQQ PS (QID)	+1.04%	+76.49
S&P MidCap 400 (index)	-1.42%	-104.33
ISHARE SP MC 400 INX (IJH)	-1.07%	-78.89
ULTRA MC400 PROSHRS (MVV)	-2.91%	-214.22
PT ULTRSHR MC400 PS (MZZ)	+2.39%	+176.04
GREENHAVEN CONT IDX (GCC)	+0.39%	+28.45
Amex Gold (index)	-1.62%	-119.34
MKT VECT GOLD MNRS (GDX)	-1.79%	-131.66
STREETTRACKS GOLD TR (GLD)	-1.67%	-122.61
DB GOLD DBL SH ETN (DZZ)	+3.77%	+277.19
DB GOLD DBL LG ETN (DGP)	-3.22%	-236.36
Semiconductor Sector (index)	+3.00%	+220.42
ULTRA SEMICONDUCTORS (USD)	+5.65%	+415.13
ULTRASHORT SEMICONDU (SSG)	-5.81%	-427.19
ISHARE DJ FIN SC INX (IYF)	-0.49%	-36.08
ISHARES LEHMAN 20 YR (TLT)	-1.15%	-84.90
ISHARESLEHMAN 7-10YR (IEF)	-0.91%	-66.60
ISHARES LEH AGG FD (AGG)	-0.09%	-6.53
ISHARES GS $ INVESTO (LQD)	-1.36%	-100.29
ISHARES LEHMAN 1-3YR (SHY)	-0.19%	-13.98
ProShares ETFs
PROSHARES ULTRASHORT LEHMAN 7-10 (PST)	+1.82%	+133.78
PROSHARES ULTRASHORT LEHMAN 20YR (TBT)	+3.08%	+226.26
SHORT QQQ PROSHARES (PSQ)	+0.40%	+29.70
SHRT DOW30 PROSHARES (DOG)	+1.05%	+77.05
SHRT S& P500 PROSHRS (SH)	+0.95%	+69.78
SHRT MC400 PROSHARES (MYY)	+1.30%	+95.48
SHORT SMALLCAP600 PR (SBB)	+1.21%	+89.08
SHORT RUSSELL2000 PR (RWM)	+2.23%	+163.95
PT UTLRSHRT QQQ PS (QID)	+1.04%	+76.49
PT ULTRSHRT DOW30 PS (DXD)	+2.10%	+154.68
PT ULTRSHRT SP500 PS (SDS)	+1.68%	+123.43
PT ULTRSHR MC400 PS (MZZ)	+2.39%	+176.04
ULTRASHORT SMALLCAP6 (SDD)	+4.07%	+299.50
ULTRASHORT RUSSELL20 (TWM)	+4.38%	+321.63
PST ULSHT RSL1K VALU (SJF)	-0.10%	-7.57
PST ULSHT RSL1K GR (SFK)	+1.72%	+126.64
PST ULSHT RSL MC VAL (SJL)	+2.08%	+153.20
PST ULSHT RSL MC GR (SDK)	+0.23%	+16.71
PST ULTSHT RSL2K VAL (SJH)	+5.20%	+382.06
PST ULSHT RSL2K GR (SKK)	+4.33%	+317.95
ULTRASHORT BASIC MAT (SMN)	+3.45%	+253.65
ULTRASHORT CONSUMER (SZK)	+1.78%	+131.05
ULTRASHORT CONSUMER (SCC)	+2.01%	+147.85
ULTRASHORT FINANCIAL (SKF)	+0.97%	+70.97
ULTRASHORT HEALTH CA (RXD)	+1.99%	+146.29
ULTRASHORT INDUSTRIA (SIJ)	+5.04%	+370.36
ULTRASHORT OIL & GAS (DUG)	+1.41%	+103.46
ULTRASHORT REAL ESTA (SRS)	+3.31%	+243.66
ULTRASHORT SEMICONDU (SSG)	-5.81%	-427.19
ULTRASHORT TECHNOLOG (REW)	-0.24%	-17.33
ULTRASHORT UTILITIES (SDP)	+1.63%	+120.02
PROSHARES SHR MSCI E (EUM)	+1.71%	+125.64
PROSHARES SHORT MSCI (EFZ)	+2.22%	+162.86
PROSHARES ULTRASHORT (EFU)	+5.04%	+370.29
PROSHARES UTLRASHORT (EEV)	+3.43%	+252.43
PROSHARES US MSCI JP (EWV)	+4.10%	+301.12
PROSHARES ULTRASHORT (FXP)	+4.41%	+324.19
ULTRA QQQ PROSHARES (QLD)	-1.14%	-83.67
ULTRA DOW30 PROSHRS (DDM)	-2.38%	-174.87
ULTRA S& P500 PROSHRS (SSO)	-1.79%	-131.27
ULTRA MC400 PROSHRS (MVV)	-2.91%	-214.22
PROSH ULTRA SMALLCAP (SAA)	-2.90%	-213.00
ULTRA RUSSELL2000 PR (UWM)	-4.72%	-346.64
PST ULT RUS1000 VAL (UVG)	-1.63%	-119.58
PST ULT RSL1000 GR (UKF)	-1.99%	-146.23
PST ULT RSL MC VALU (UVU)	-3.04%	-223.18
PST ULT RSL MC GR PS (UKW)	-1.84%	-135.53
PST ULT RSL2000 VALU (UVT)	-5.03%	-369.64
PST ULT RSL2000 GR (UKK)	-4.81%	-353.65
ULTRA BASIC MATERIAL (UYM)	-3.84%	-282.45
ULTRA CONSUMER GOODS (UGE)	-1.99%	-146.21
ULTRA CONSUMER SERVI (UCC)	-2.09%	-153.53
ULTRA FINANCIALS PRO (UYG)	-0.41%	-30.13
ULTRA HEALTH CARE PR (RXL)	-3.74%	-275.20
ULTRA INDUSTRIALS PR (UXI)	-4.62%	-339.44
ULTRA OIL & GAS PROS (DIG)	-0.99%	-72.65
ULTRA REAL ESTATE PR (URE)	-5.14%	-378.18
ULTRA SEMICONDUCTORS (USD)	+5.65%	+415.13
ULTRA TECHNOLOGY PRO (ROM)	+0.59%	+43.13
ULTRA UTILITIES PROS (UPW)	-1.43%	-105.05
Other ETFs
PS NQ100 BUYWRITE (PQBW)	-0.06%	-4.42
POWERSHARES DB BASE (BOM)	-3.68%	-270.67
POWERSHARES DB BASE (BDD)	-0.41%	-30.13
POWERSHARES DB BASE (BOS)	-0.17%	-12.77
POWERSHARES DB CRUDE (DTO)	-8.06%	-592.58
POWERSHARES DB CRUDE (SZO)	-5.01%	-368.08
POWERSHARES DB CRUDE (DXO)	+6.31%	+463.89
POWERSHARES DB CRUDE (OLO)	+3.34%	+245.62
300% Leverage ETFs
Direxion Large Cap Bull 3x Shares (BGU)	-3.13%	-230.45
Direxion Large Cap Bear 3x Shares (BGZ)	+2.66%	+195.50
Direxion Small Cap Bull 3x Shares (TNA)	-6.74%	-495.48
Direxion Small Cap Bear 3x Shares (TZA)	+7.13%	+523.79
Direxion Energy Bull 3x Shares (ERX)	-1.80%	-132.32
Direxion Energy Bear 3x Shares (ERY)	+2.07%	+152.24
Direxion Financial Bull 3x Shares (FAS)	-0.36%	-26.16
Direxion Financial Bear 3x Shares (FAZ)	+0.02%	+1.31

Additional stock market commentary -- for subscribers only -- can be found here: Subscriber Notes (if you're reading this in plain text format or on the blog, visit the MyClues Home Page and click on "Subscriber Notes" in the Quick Links section at the top of the page).

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posted by Bob Carver  # 9:40 PM

Although we got our cycle low in stocks and Tuesday would surely have been a rally day despite anything Bernanke said before Congress, it was clear that the market rally was catalyzed by Fed Head Bernanke's straightforward and logical explanation of the Treasury/Fed's plan to right the banking system. Once the market realized that the government has no intention of nationalizing the banks, investors rushed to buy what they considered extremely cheap bank stocks. Bank of America soared 20.97% and Citibank 21.50% on belief that they would survive fallout from the current Greater Depression---with the government's help, that is.

The tech stocks of NASDAQ, however, didn't lead the market higher this time around. This lack of leadership from the "lead dogs" is a strong message that the market isn't quite out of the woods yet. Despite the fact that we're moving into its 18th month since the October 2007 high, this wave C down in the secular bear market which started in 2000 (the top we called to the exact day, you may recall), we may not have quite seen the last low just yet. Still, anyone quibbling over the timing of a few days at the end of a bear market that has lasted 3,260 days certainly doesn't have much patience. You don't have to buy low tick or sell high tick to make money in the market.

The Bubble in Gold

Has the bubble in Gold burst? It's certainly possible, but time will tell. The Dollar Index is also looking almost as toppy as Gold and a weaker US Dollar is good news for economies around the world---a falling dollar is a disincentive for risk-averse investors to hide in super-safe US Treasuries. With no safe place to hide, those dollars end up in riskier investments, such as stocks. And, that's good for everyone because, without investment in growing companies, there is no progress possible. Gold is the worst investment over the long term---it's a dead metal which is typically extracted from Mother Earth with deadly cyanide. If you're trying to be more "green," you should abhor the mining of Gold.

There is, however, strong evidence pointing toward the presence of substantial quantities of Gold in seawater (1.1 × 10^-8 grams/liter). Up until now, extracting Gold from seawater has not been economically feasible. But, a new process is underway which will make it possible to drastically lower those costs and recover trillions of grams of Gold from the oceans of the world. And, without the need for poisonous chemicals. Wonder what that will do to the price of Gold?

Microsoft Gets What It Deserves

Despite having a hoard of $21 Billion in the bank, Microsoft is hacking employees to save money. But, they are using their own software to calculate severance pay. And, of course, they got it completely wrong, giving more money to some employees than they were supposed to receive, and less to others. So, they're asking laid-off employees to send some of the money back. Now they know what their poor customers have to put up with---software that's garbage in, garbage out. We hope the employees who got their "bonus" tell Microsoft exactly where to go ("Hades" is one word for that destination).

Microsoft is a poster child for the whole corrupt corporate scene, which has no loyalty to or from any of its employees. It's no wonder the stock has done nothing but decline for the last decade.

Stocks rallied sharply higher on Tuesday just as we said they would:

Change From 23 Feb 2009 To 24 Feb 2009

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	+3.32%	+236.16
DIAMONDS TRUST SER 1 (DIA)	+3.13%	+222.99
ULTRA DOW30 PROSHRS (DDM)	+6.25%	+444.46
PT ULTRSHRT DOW30 PS (DXD)	-6.23%	-443.45
S&P 500 (index)	+3.78%	+268.67
S& P DEP RECEIPTS (SPY)	+3.79%	+269.72
ULTRA S& P500 PROSHRS (SSO)	+7.57%	+538.63
PT ULTRSHRT SP500 PS (SDS)	-7.55%	-536.88
NYSE Composite (index)	+4.06%	+288.58
ISHARES NYSE CMP IDX (NYC)	+4.05%	+288.46
S&P SmallCap 600 (index)	+4.09%	+291.28
PROSH ULTRA SMALLCAP (SAA)	+5.05%	+359.17
SHORT SMALLCAP600 PR (SBB)	-3.26%	-231.90
ULTRASHORT SMALLCAP6 (SDD)	-7.52%	-535.38
Russell 2000 (index)	+4.52%	+321.32
ISHARE RUS 2000 INDX (IWM)	+3.69%	+262.58
ULTRA RUSSELL2000 PR (UWM)	+7.92%	+563.21
ULTRASHORT RUSSELL20 (TWM)	-7.87%	-560.25
NASDAQ-100 (index)	+3.50%	+248.99
POWERSHARES QQQ TR 1 (QQQQ)	+3.30%	+234.95
ULTRA QQQ PROSHARES (QLD)	+6.22%	+442.37
PT UTLRSHRT QQQ PS (QID)	-6.41%	-456.15
S&P MidCap 400 (index)	+4.45%	+316.40
ISHARE SP MC 400 INX (IJH)	+4.16%	+295.85
ULTRA MC400 PROSHRS (MVV)	+8.30%	+590.47
PT ULTRSHR MC400 PS (MZZ)	-8.46%	-601.74
GREENHAVEN CONT IDX (GCC)	+0.73%	+52.01
Amex Gold (index)	-8.21%	-583.95
MKT VECT GOLD MNRS (GDX)	-8.14%	-579.41
STREETTRACKS GOLD TR (GLD)	-3.07%	-218.40
DB GOLD DBL SH ETN (DZZ)	+7.64%	+543.83
DB GOLD DBL LG ETN (DGP)	-5.47%	-389.26
Semiconductor Sector (index)	+5.28%	+375.85
ULTRA SEMICONDUCTORS (USD)	+8.28%	+588.99
ULTRASHORT SEMICONDU (SSG)	-9.42%	-670.42
ISHARE DJ FIN SC INX (IYF)	+9.49%	+675.53
ISHARES LEHMAN 20 YR (TLT)	-0.10%	-7.46
ISHARESLEHMAN 7-10YR (IEF)	-0.38%	-26.88
ISHARES LEH AGG FD (AGG)	-0.20%	-14.02
ISHARES GS $ INVESTO (LQD)	-0.36%	-25.65
ISHARES LEHMAN 1-3YR (SHY)	-0.07%	-5.07
ProShares ETFs
PROSHARES ULTRASHORT LEHMAN 7-10 (PST)	+0.38%	+27.29
PROSHARES ULTRASHORT LEHMAN 20YR (TBT)	-1.07%	-76.37
SHORT QQQ PROSHARES (PSQ)	-3.16%	-224.57
SHRT DOW30 PROSHARES (DOG)	-3.18%	-226.07
SHRT S& P500 PROSHRS (SH)	-3.85%	-273.90
SHRT MC400 PROSHARES (MYY)	-4.45%	-316.63
SHORT SMALLCAP600 PR (SBB)	-3.26%	-231.90
SHORT RUSSELL2000 PR (RWM)	-3.99%	-284.20
PT UTLRSHRT QQQ PS (QID)	-6.41%	-456.15
PT ULTRSHRT DOW30 PS (DXD)	-6.23%	-443.45
PT ULTRSHRT SP500 PS (SDS)	-7.55%	-536.88
PT ULTRSHR MC400 PS (MZZ)	-8.46%	-601.74
ULTRASHORT SMALLCAP6 (SDD)	-7.52%	-535.38
ULTRASHORT RUSSELL20 (TWM)	-7.87%	-560.25
PST ULSHT RSL1K VALU (SJF)	-9.20%	-654.50
PST ULSHT RSL1K GR (SFK)	-6.41%	-455.93
PST ULSHT RSL MC VAL (SJL)	-9.53%	-677.88
PST ULSHT RSL MC GR (SDK)	-6.74%	-479.70
PST ULTSHT RSL2K VAL (SJH)	-9.20%	-654.57
PST ULSHT RSL2K GR (SKK)	-7.35%	-523.00
ULTRASHORT BASIC MAT (SMN)	-7.86%	-559.11
ULTRASHORT CONSUMER (SZK)	-4.70%	-334.09
ULTRASHORT CONSUMER (SCC)	-6.89%	-490.27
ULTRASHORT FINANCIAL (SKF)	-20.01%	-1423.38
ULTRASHORT HEALTH CA (RXD)	-4.03%	-286.49
ULTRASHORT INDUSTRIA (SIJ)	-7.22%	-513.75
ULTRASHORT OIL & GAS (DUG)	-9.35%	-664.95
ULTRASHORT REAL ESTA (SRS)	-15.41%	-1096.71
ULTRASHORT SEMICONDU (SSG)	-9.42%	-670.42
ULTRASHORT TECHNOLOG (REW)	-5.83%	-414.90
ULTRASHORT UTILITIES (SDP)	-6.20%	-440.99
PROSHARES SHR MSCI E (EUM)	-5.67%	-403.10
PROSHARES SHORT MSCI (EFZ)	-3.86%	-274.91
PROSHARES ULTRASHORT (EFU)	-8.00%	-568.97
PROSHARES UTLRASHORT (EEV)	-10.96%	-780.03
PROSHARES US MSCI JP (EWV)	-7.74%	-550.87
PROSHARES ULTRASHORT (FXP)	-10.83%	-770.70
ULTRA QQQ PROSHARES (QLD)	+6.22%	+442.37
ULTRA DOW30 PROSHRS (DDM)	+6.25%	+444.46
ULTRA S& P500 PROSHRS (SSO)	+7.57%	+538.63
ULTRA MC400 PROSHRS (MVV)	+8.30%	+590.47
PROSH ULTRA SMALLCAP (SAA)	+5.05%	+359.17
ULTRA RUSSELL2000 PR (UWM)	+7.92%	+563.21
PST ULT RUS1000 VAL (UVG)	+9.57%	+680.78
PST ULT RSL1000 GR (UKF)	+6.71%	+477.58
PST ULT RSL MC VALU (UVU)	+10.14%	+721.14
PST ULT RSL MC GR PS (UKW)	+7.88%	+560.35
PST ULT RSL2000 VALU (UVT)	+9.11%	+648.14
PST ULT RSL2000 GR (UKK)	+7.54%	+536.37
ULTRA BASIC MATERIAL (UYM)	+7.98%	+567.67
ULTRA CONSUMER GOODS (UGE)	+4.95%	+352.03
ULTRA CONSUMER SERVI (UCC)	+7.12%	+506.48
ULTRA FINANCIALS PRO (UYG)	+21.39%	+1522.07
ULTRA HEALTH CARE PR (RXL)	+4.08%	+290.22
ULTRA INDUSTRIALS PR (UXI)	+6.62%	+470.67
ULTRA OIL & GAS PROS (DIG)	+8.96%	+637.30
ULTRA REAL ESTATE PR (URE)	+16.92%	+1203.63
ULTRA SEMICONDUCTORS (USD)	+8.28%	+588.99
ULTRA TECHNOLOGY PRO (ROM)	+6.35%	+451.99
ULTRA UTILITIES PROS (UPW)	+6.15%	+437.40
Other ETFs
PS NQ100 BUYWRITE (PQBW)	+1.16%	+82.18
POWERSHARES DB BASE (BOM)	-6.53%	-464.81
POWERSHARES DB BASE (BDD)	+9.91%	+705.07
POWERSHARES DB BASE (BOS)	-2.48%	-176.29
POWERSHARES DB CRUDE (DTO)	-5.28%	-375.40
POWERSHARES DB CRUDE (SZO)	-2.80%	-199.29
POWERSHARES DB CRUDE (DXO)	+8.42%	+599.14
POWERSHARES DB CRUDE (OLO)	+3.71%	+264.16
300% Leverage ETFs
Direxion Large Cap Bull 3x Shares (BGU)	+10.77%	+766.26
Direxion Large Cap Bear 3x Shares (BGZ)	-11.15%	-793.25
Direxion Small Cap Bull 3x Shares (TNA)	+10.97%	+780.84
Direxion Small Cap Bear 3x Shares (TZA)	-12.06%	-857.74
Direxion Energy Bull 3x Shares (ERX)	+13.33%	+948.21
Direxion Energy Bear 3x Shares (ERY)	-13.84%	-984.91
Direxion Financial Bull 3x Shares (FAS)	+27.44%	+1952.13
Direxion Financial Bear 3x Shares (FAZ)	-29.59%	-2105.53

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posted by Bob Carver  # 9:54 PM

The idea of the government performing banking functions is both logical and required to deal with the current Greater Depression, but traders do not like it one bit.

As Paul McCulley explains in John Mauldin's latest Outside the Box:

Capitalist economies usually want their banking systems owned by the private sector, where loans and investments are made on commercial terms, in the pursuit of profit. But also in the context of prudential regulation, so as to minimize the downside to taxpayers of the moral hazard inherent in the two safety nets for depositors.

But as is the wont of capitalists, they love levering the sovereign's safety nets with minimal prudential regulation. This does not make them immoral, merely capitalists. And over the last decade or so, the way for bankers to maximally lever the inherent banking model has been to become non-bank bankers, or as I dubbed them a couple years ago, shadow bankers.

Shadow Banking needed some seal of approval, so that providers of short-dated funding could convince themselves that their claims were de facto "just as good" as deposits at banks with access to the government's liquidity safety nets. Conveniently, the rating agencies, paid by the shadow bankers, stood at the ready to provide such seals of approval.

And it was all grand while ever-larger application of leverage put upward pressure on asset prices. There is nothing like a bull market to make geniuses out of levered dunces. Call it the Mae West Doctrine, where if a little fun is good and more is better, then way too much is just about right.

Now, with excess leverage running in reverse, the economy is being dragged under the wheels built by the Shadow Banks, with the government and the Fed trying to keep the economy running. The markets think they are failing, but McCulley thinks it may be a premature judgement:

The United States government now has both the tools and the will to save the private banking system, and more importantly, the real economy, from its own debt-deflationary pathologies. Not that it will be easy. But it can be done, notwithstanding the catcalls that greeted Secretary Geithner last week.

And the essential game plan is clear: use the power of the Fed, the FDIC and the Treasury to create government-sponsored shadow banks, such as the Term Asset-Backed Securities Lending Facility (the TALF) and the Public-Private Investment Fund (the P-PIF).

The formula? Take a small dollop of the Treasury's free-to-spend taxpayer money (there is still $350 billion left) to serve as the equity in a government sponsored shadow bank, and then lever the daylights out of it with loans from the Federal Reserve, funded with the printing press. That's the formula for the TALF, to provide leverage, with no recourse after a haircut, to restart the securitization markets.

Unfortunately, Secretary Geithner hasn't laid out the precise parameters of how to mix these three ingredients, which is driving the markets up the wall. But make no mistake, these are the ingredients, along with continued direct capital infusions into banks where necessary.

Uncle Sam has the ability to substitute itself---not himself or herself!---for the broken conventional bank system, levering up and risking up as the conventional banking system does the exact opposite.

Yes, there will be subsidies involved, sometimes huge ones. And yes, the process will seem arbitrary and capricious at times, reeking of inequities. Such is the nature of government rescue schemes for broken banking systems, while maintaining them as privately owned.

You might not like it. I don't like it, because regulators should never have let bankers, both conventional bankers and shadow bankers, run amok. But they did.

So it's now time to hold the nose and do what must be done, however stinky it smells, not because it's pleasant but because it is necessary.

Only with the full force of the sovereign's balance sheet can the Paradox of Deleveraging be broken.

The markets are not convinced:

Change From 20 Feb 2009 To 23 Feb 2009

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	-3.41%	-250.89
DIAMONDS TRUST SER 1 (DIA)	-3.50%	-257.74
ULTRA DOW30 PROSHRS (DDM)	-6.76%	-497.81
PT ULTRSHRT DOW30 PS (DXD)	+6.96%	+512.66
S&P 500 (index)	-3.48%	-256.55
S& P DEP RECEIPTS (SPY)	-3.58%	-263.54
ULTRA S& P500 PROSHRS (SSO)	-6.99%	-514.78
PT ULTRSHRT SP500 PS (SDS)	+6.88%	+506.64
NYSE Composite (index)	-3.55%	-261.74
ISHARES NYSE CMP IDX (NYC)	-3.33%	-245.30
S&P SmallCap 600 (index)	-4.12%	-303.59
PROSH ULTRA SMALLCAP (SAA)	-7.55%	-556.09
SHORT SMALLCAP600 PR (SBB)	+3.48%	+256.05
ULTRASHORT SMALLCAP6 (SDD)	+8.57%	+631.49
Russell 2000 (index)	-4.00%	-294.42
ISHARE RUS 2000 INDX (IWM)	-3.84%	-282.88
ULTRA RUSSELL2000 PR (UWM)	-8.09%	-596.03
ULTRASHORT RUSSELL20 (TWM)	+7.77%	+572.64
NASDAQ-100 (index)	-3.54%	-260.69
POWERSHARES QQQ TR 1 (QQQQ)	-3.50%	-257.68
ULTRA QQQ PROSHARES (QLD)	-6.88%	-506.45
PT UTLRSHRT QQQ PS (QID)	+7.19%	+529.23
S&P MidCap 400 (index)	-4.01%	-295.02
ISHARE SP MC 400 INX (IJH)	-4.12%	-303.15
ULTRA MC400 PROSHRS (MVV)	-7.56%	-557.10
PT ULTRSHR MC400 PS (MZZ)	+8.18%	+602.61
GREENHAVEN CONT IDX (GCC)	-0.44%	-32.16
Amex Gold (index)	-1.65%	-121.62
MKT VECT GOLD MNRS (GDX)	-1.51%	-111.39
STREETTRACKS GOLD TR (GLD)	-0.07%	-5.27
DB GOLD DBL SH ETN (DZZ)	-0.11%	-7.76
DB GOLD DBL LG ETN (DGP)	-0.22%	-15.96
Semiconductor Sector (index)	-4.14%	-305.04
ULTRA SEMICONDUCTORS (USD)	-7.57%	-557.23
ULTRASHORT SEMICONDU (SSG)	+7.96%	+586.17
ISHARE DJ FIN SC INX (IYF)	-3.43%	-252.32
ISHARES LEHMAN 20 YR (TLT)	+0.92%	+68.04
ISHARESLEHMAN 7-10YR (IEF)	+0.09%	+6.96
ISHARES LEH AGG FD (AGG)	+0.51%	+37.93
ISHARES GS $ INVESTO (LQD)	-0.34%	-24.95
ISHARES LEHMAN 1-3YR (SHY)	-0.01%	-0.87
ProShares ETFs
PROSHARES ULTRASHORT LEHMAN 7-10 (PST)	-0.27%	-20.13
PROSHARES ULTRASHORT LEHMAN 20YR (TBT)	-1.64%	-120.62
SHORT QQQ PROSHARES (PSQ)	+3.55%	+261.64
SHRT DOW30 PROSHARES (DOG)	+3.57%	+262.66
SHRT S& P500 PROSHRS (SH)	+3.49%	+256.88
SHRT MC400 PROSHARES (MYY)	+3.99%	+293.82
SHORT SMALLCAP600 PR (SBB)	+3.48%	+256.05
SHORT RUSSELL2000 PR (RWM)	+3.88%	+285.51
PT UTLRSHRT QQQ PS (QID)	+7.19%	+529.23
PT ULTRSHRT DOW30 PS (DXD)	+6.96%	+512.66
PT ULTRSHRT SP500 PS (SDS)	+6.88%	+506.64
PT ULTRSHR MC400 PS (MZZ)	+8.18%	+602.61
ULTRASHORT SMALLCAP6 (SDD)	+8.57%	+631.49
ULTRASHORT RUSSELL20 (TWM)	+7.77%	+572.64
PST ULSHT RSL1K VALU (SJF)	+6.37%	+469.09
PST ULSHT RSL1K GR (SFK)	+7.40%	+545.39
PST ULSHT RSL MC VAL (SJL)	+7.41%	+545.87
PST ULSHT RSL MC GR (SDK)	+7.49%	+551.42
PST ULTSHT RSL2K VAL (SJH)	+8.04%	+592.56
PST ULSHT RSL2K GR (SKK)	+7.42%	+546.61
ULTRASHORT BASIC MAT (SMN)	+12.64%	+930.66
ULTRASHORT CONSUMER (SZK)	+5.18%	+381.33
ULTRASHORT CONSUMER (SCC)	+5.14%	+378.77
ULTRASHORT FINANCIAL (SKF)	+7.30%	+537.61
ULTRASHORT HEALTH CA (RXD)	+4.54%	+334.58
ULTRASHORT INDUSTRIA (SIJ)	+9.64%	+709.90
ULTRASHORT OIL & GAS (DUG)	+9.27%	+682.91
ULTRASHORT REAL ESTA (SRS)	+13.99%	+1030.26
ULTRASHORT SEMICONDU (SSG)	+7.96%	+586.17
ULTRASHORT TECHNOLOG (REW)	+7.89%	+581.38
ULTRASHORT UTILITIES (SDP)	+5.01%	+369.33
PROSHARES SHR MSCI E (EUM)	+3.06%	+225.24
PROSHARES SHORT MSCI (EFZ)	+3.82%	+281.05
PROSHARES ULTRASHORT (EFU)	+7.64%	+562.76
PROSHARES UTLRASHORT (EEV)	+5.44%	+400.54
PROSHARES US MSCI JP (EWV)	+8.78%	+646.98
PROSHARES ULTRASHORT (FXP)	+2.14%	+157.91
ULTRA QQQ PROSHARES (QLD)	-6.88%	-506.45
ULTRA DOW30 PROSHRS (DDM)	-6.76%	-497.81
ULTRA S& P500 PROSHRS (SSO)	-6.99%	-514.78
ULTRA MC400 PROSHRS (MVV)	-7.56%	-557.10
PROSH ULTRA SMALLCAP (SAA)	-7.55%	-556.09
ULTRA RUSSELL2000 PR (UWM)	-8.09%	-596.03
PST ULT RUS1000 VAL (UVG)	-6.33%	-466.02
PST ULT RSL1000 GR (UKF)	-7.68%	-565.69
PST ULT RSL MC VALU (UVU)	-7.27%	-535.30
PST ULT RSL MC GR PS (UKW)	-6.89%	-507.41
PST ULT RSL2000 VALU (UVT)	-7.82%	-576.32
PST ULT RSL2000 GR (UKK)	-7.58%	-558.46
ULTRA BASIC MATERIAL (UYM)	-14.70%	-1082.79
ULTRA CONSUMER GOODS (UGE)	-4.85%	-357.58
ULTRA CONSUMER SERVI (UCC)	-5.27%	-387.92
ULTRA FINANCIALS PRO (UYG)	-8.64%	-636.13
ULTRA HEALTH CARE PR (RXL)	-4.84%	-356.33
ULTRA INDUSTRIALS PR (UXI)	-9.15%	-674.29
ULTRA OIL & GAS PROS (DIG)	-8.75%	-644.78
ULTRA REAL ESTATE PR (URE)	-14.19%	-1045.45
ULTRA SEMICONDUCTORS (USD)	-7.57%	-557.23
ULTRA TECHNOLOGY PRO (ROM)	-8.61%	-633.85
ULTRA UTILITIES PROS (UPW)	-5.19%	-381.94
Other ETFs
PS NQ100 BUYWRITE (PQBW)	-1.79%	-131.92
POWERSHARES DB BASE (BOM)	-0.24%	-17.75
POWERSHARES DB BASE (BDD)	-3.90%	-286.97
POWERSHARES DB BASE (BOS)	-0.88%	-64.94
POWERSHARES DB CRUDE (DTO)	+5.80%	+427.47
POWERSHARES DB CRUDE (SZO)	+2.98%	+219.55
POWERSHARES DB CRUDE (DXO)	-3.55%	-261.72
POWERSHARES DB CRUDE (OLO)	-1.58%	-116.63
300% Leverage ETFs
Direxion Large Cap Bull 3x Shares (BGU)	-9.80%	-722.19
Direxion Large Cap Bear 3x Shares (BGZ)	+9.39%	+691.87
Direxion Small Cap Bull 3x Shares (TNA)	-11.65%	-857.86
Direxion Small Cap Bear 3x Shares (TZA)	+11.70%	+861.69
Direxion Energy Bull 3x Shares (ERX)	-12.56%	-925.45
Direxion Energy Bear 3x Shares (ERY)	+12.24%	+901.26
Direxion Financial Bull 3x Shares (FAS)	-10.00%	-736.57
Direxion Financial Bear 3x Shares (FAZ)	+9.67%	+712.18

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posted by Bob Carver  # 10:01 PM

We've had bubbles in several markets over the past few decades: stocks, real estate, oil, bonds. Now, we have another one to add to the list: Gold. Yes, the barbaric metal is being sought out by "get rich quick" speculators who think they will get rich on the flight from paper money.

Well, just like the Oil bubble last year, which hit 145.66/bbl at its peak and has fallen as low as 30.81/bbl since---a decline of almost 79%---Gold is now being pushed to similar heights of delirium. And, of course, only a fool would try to project a high---the investment landscape is littered with the bodies of those who tried to sell the top in Oil last year, for instance.

It's important to realize that the function of Gold in a portfolio is not to make you rich. It's to keep you from becoming poor. A good general rule is have 5% of your portfolio value in Gold coins in a place you can get to them when catastophe strikes (for instance, not in a bank safety deposit box, which would be unreachable should they close the banks). You should also keep 5% in a gold mining stock ETF. And, you should rebalance your holdings periodically so that, as the price of Gold soars as it has over the past few months, you sell into the rally to reduce your holdings back to their 5% value. Of course, that 5% is just an example---your comfort level determines how high your allocation should be.

Fundamentally, Gold will tumble just like Oil did at some point in the future. It's in the nature of bubbles. Whether that tumble comes from two thousand dollars per ounce or one thousand isn't necessary to know. Just know that a crash in Gold is coming and you would be best served to not overcommit to a high porfolio allocation. Once Gold crashes, then you can start buying to bring your asset allocation back to normal.

How do we know that the price of Gold will tumble? We know because there is a lot of Gold in the world which has not yet been mined. If the price goes high enough, prospectors will rush to mine that Gold and bring it to market. And, with the inexorable law of Supply and Demand, the price of the yellow metal will certainly tumble. The only thing standing in the way of that is the slim possibility that civilization will collapse. That's why you want to keep a portion of your portfolio in Gold in the first place---to keep you from being badly hurt by a catastrophic collapse. It's not something that will make you rich. If it does make you rich, watch out---it will only be temporary.

The Gold ETF GLD Is a Scam

For more on why GLD is a scam and you should be selling into the rally, see Risks of Investing in GLD ETF. You have been warned. If you lose money holding this scam, you alone will be responsible for your error.

To Be or Not To Be Nationalized

The debate is finally raging---to nationalize the banks, or not. At least the politicians are debating it out in the open. As soon as they decide one way or the other, we can get on with business. This undecided "middle" ground is doing nobody any good.

Greater Depression Watch

Paul Volcker on CNBC Friday:

The global economy may be deteriorating even faster than it did during the Great Depression, Paul Volcker, a top adviser to President Barack Obama, said on Friday.

Volcker noted that industrial production around the world was declining even more rapidly than in the United States, which is itself under severe strain.

"I don't remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world,'' Volcker told a luncheon of economists and investors at Columbia University.

Stocks tumbled again on Friday, but the smart money was busily buying bargain stocks amongst the rubble (no, they weren't buying bank stocks!):

Change From 19 Feb 2009 To 20 Feb 2009

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	-1.34%	-100.28
DIAMONDS TRUST SER 1 (DIA)	-1.73%	-129.36
ULTRA DOW30 PROSHRS (DDM)	-2.43%	-181.39
PT ULTRSHRT DOW30 PS (DXD)	+2.32%	+172.96
S&P 500 (index)	-1.03%	-77.25
S& P DEP RECEIPTS (SPY)	-0.97%	-72.58
ULTRA S& P500 PROSHRS (SSO)	-2.21%	-164.97
PT ULTRSHRT SP500 PS (SDS)	+2.22%	+166.04
NYSE Composite (index)	-1.57%	-117.24
ISHARES NYSE CMP IDX (NYC)	-1.65%	-123.10
S&P SmallCap 600 (index)	-0.92%	-69.00
PROSH ULTRA SMALLCAP (SAA)	-1.69%	-125.94
SHORT SMALLCAP600 PR (SBB)	+0.82%	+61.24
ULTRASHORT SMALLCAP6 (SDD)	+1.87%	+139.35
Russell 2000 (index)	-1.36%	-101.59
ISHARE RUS 2000 INDX (IWM)	-1.34%	-100.26
ULTRA RUSSELL2000 PR (UWM)	-2.04%	-152.03
ULTRASHORT RUSSELL20 (TWM)	+2.62%	+195.52
NASDAQ-100 (index)	+0.30%	+22.57
POWERSHARES QQQ TR 1 (QQQQ)	+0.28%	+20.75
ULTRA QQQ PROSHARES (QLD)	+0.28%	+21.07
PT UTLRSHRT QQQ PS (QID)	-0.81%	-60.55
S&P MidCap 400 (index)	-0.84%	-62.35
ISHARE SP MC 400 INX (IJH)	-0.77%	-57.17
ULTRA MC400 PROSHRS (MVV)	-2.06%	-154.06
PT ULTRSHR MC400 PS (MZZ)	+1.48%	+110.58
GREENHAVEN CONT IDX (GCC)	-0.58%	-43.22
Amex Gold (index)	+4.03%	+301.01
MKT VECT GOLD MNRS (GDX)	+3.90%	+291.18
STREETTRACKS GOLD TR (GLD)	+2.12%	+158.25
DB GOLD DBL SH ETN (DZZ)	-4.81%	-359.26
DB GOLD DBL LG ETN (DGP)	+4.15%	+309.96
Semiconductor Sector (index)	+0.61%	+45.31
ULTRA SEMICONDUCTORS (USD)	+2.13%	+159.13
ULTRASHORT SEMICONDU (SSG)	-0.62%	-46.05
ISHARE DJ FIN SC INX (IYF)	-0.55%	-41.11
ISHARES LEHMAN 20 YR (TLT)	+0.97%	+72.54
ISHARESLEHMAN 7-10YR (IEF)	+0.28%	+21.24
ISHARES LEH AGG FD (AGG)	-0.51%	-38.25
ISHARES GS $ INVESTO (LQD)	-0.42%	-31.29
ISHARES LEHMAN 1-3YR (SHY)	+0.08%	+6.21
ProShares ETFs
PROSHARES ULTRASHORT LEHMAN 7-10 (PST)	-0.76%	-56.69
PROSHARES ULTRASHORT LEHMAN 20YR (TBT)	-2.03%	-151.30
SHORT QQQ PROSHARES (PSQ)	-0.31%	-23.12
SHRT DOW30 PROSHARES (DOG)	+1.23%	+91.73
SHRT S& P500 PROSHRS (SH)	+1.09%	+81.34
SHRT MC400 PROSHARES (MYY)	+0.80%	+59.85
SHORT SMALLCAP600 PR (SBB)	+0.82%	+61.24
SHORT RUSSELL2000 PR (RWM)	+1.36%	+101.38
PT UTLRSHRT QQQ PS (QID)	-0.81%	-60.55
PT ULTRSHRT DOW30 PS (DXD)	+2.32%	+172.96
PT ULTRSHRT SP500 PS (SDS)	+2.22%	+166.04
PT ULTRSHR MC400 PS (MZZ)	+1.48%	+110.58
ULTRASHORT SMALLCAP6 (SDD)	+1.87%	+139.35
ULTRASHORT RUSSELL20 (TWM)	+2.62%	+195.52
PST ULSHT RSL1K VALU (SJF)	+3.72%	+277.92
PST ULSHT RSL1K GR (SFK)	+1.22%	+91.45
PST ULSHT RSL MC VAL (SJL)	+5.89%	+439.97
PST ULSHT RSL MC GR (SDK)	+1.22%	+91.28
PST ULTSHT RSL2K VAL (SJH)	+3.00%	+224.18
PST ULSHT RSL2K GR (SKK)	+2.75%	+205.64
ULTRASHORT BASIC MAT (SMN)	+1.93%	+143.97
ULTRASHORT CONSUMER (SZK)	+2.58%	+192.43
ULTRASHORT CONSUMER (SCC)	+0.96%	+71.32
ULTRASHORT FINANCIAL (SKF)	+1.14%	+85.44
ULTRASHORT HEALTH CA (RXD)	+2.74%	+204.20
ULTRASHORT INDUSTRIA (SIJ)	+3.22%	+240.71
ULTRASHORT OIL & GAS (DUG)	+4.63%	+345.80
ULTRASHORT REAL ESTA (SRS)	-12.56%	-937.53
ULTRASHORT SEMICONDU (SSG)	-0.62%	-46.05
ULTRASHORT TECHNOLOG (REW)	+0.33%	+24.56
ULTRASHORT UTILITIES (SDP)	+4.88%	+364.48
PROSHARES SHR MSCI E (EUM)	+2.34%	+174.57
PROSHARES SHORT MSCI (EFZ)	+1.23%	+91.69
PROSHARES ULTRASHORT (EFU)	+2.38%	+178.03
PROSHARES UTLRASHORT (EEV)	+4.51%	+336.65
PROSHARES US MSCI JP (EWV)	+1.77%	+131.80
PROSHARES ULTRASHORT (FXP)	+3.84%	+286.56
ULTRA QQQ PROSHARES (QLD)	+0.28%	+21.07
ULTRA DOW30 PROSHRS (DDM)	-2.43%	-181.39
ULTRA S& P500 PROSHRS (SSO)	-2.21%	-164.97
ULTRA MC400 PROSHRS (MVV)	-2.06%	-154.06
PROSH ULTRA SMALLCAP (SAA)	-1.69%	-125.94
ULTRA RUSSELL2000 PR (UWM)	-2.04%	-152.03
PST ULT RUS1000 VAL (UVG)	-3.31%	-247.39
PST ULT RSL1000 GR (UKF)	-1.05%	-78.26
PST ULT RSL MC VALU (UVU)	-0.39%	-28.83
PST ULT RSL MC GR PS (UKW)	-2.24%	-167.59
PST ULT RSL2000 VALU (UVT)	-3.32%	-247.95
PST ULT RSL2000 GR (UKK)	-1.94%	-145.02
ULTRA BASIC MATERIAL (UYM)	+0.73%	+54.60
ULTRA CONSUMER GOODS (UGE)	-2.72%	-203.01
ULTRA CONSUMER SERVI (UCC)	-1.27%	-94.69
ULTRA FINANCIALS PRO (UYG)	-1.35%	-100.44
ULTRA HEALTH CARE PR (RXL)	-2.27%	-169.10
ULTRA INDUSTRIALS PR (UXI)	-3.25%	-242.30
ULTRA OIL & GAS PROS (DIG)	-4.89%	-364.73
ULTRA REAL ESTATE PR (URE)	+11.51%	+859.39
ULTRA SEMICONDUCTORS (USD)	+2.13%	+159.13
ULTRA TECHNOLOGY PRO (ROM)	+0.31%	+23.30
ULTRA UTILITIES PROS (UPW)	-5.07%	-378.26
Other ETFs
PS NQ100 BUYWRITE (PQBW)	+1.15%	+85.66
PWRSHRS NDQ INTERNET (PNQI)	-1.25%	-93.32
POWERSHARES DB BASE (BOM)	+6.42%	+479.54
POWERSHARES DB BASE (BDD)	-4.15%	-309.79
POWERSHARES DB BASE (BOS)	+3.32%	+247.73
POWERSHARES DB CRUDE (DTO)	-1.10%	-81.93
POWERSHARES DB CRUDE (SZO)	-0.51%	-38.39
POWERSHARES DB CRUDE (DXO)	-1.99%	-148.58
POWERSHARES DB CRUDE (OLO)	-0.85%	-63.12
300% Leverage ETFs
Direxion Large Cap Bull 3x Shares (BGU)	-3.29%	-245.81
Direxion Large Cap Bear 3x Shares (BGZ)	+3.65%	+272.34
Direxion Small Cap Bull 3x Shares (TNA)	-4.10%	-306.40
Direxion Small Cap Bear 3x Shares (TZA)	+4.15%	+309.76
Direxion Energy Bull 3x Shares (ERX)	-7.00%	-522.86
Direxion Energy Bear 3x Shares (ERY)	+8.14%	+607.65
Direxion Financial Bull 3x Shares (FAS)	-2.78%	-207.39
Direxion Financial Bear 3x Shares (FAZ)	+3.28%	+244.61

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posted by Bob Carver  # 12:22 PM

We called the recession when it started. We told you when the recession was morphing into the Greater Depression. Now, we're getting company.

Noriel Roubini, who was one of the few economists to warn of the impending collapse of the debt pyramid, now says that the idea of a U-shaped recession is out. We are in a full-blown depression. He says,

It is now clear that this is the worst financial crisis since the Great Depression and the worst economic crisis in the last 60 years. While we are already in a severe and protracted U-shaped recession (as the deluded hope of a short and shallow V-shaped contraction has now evaporated) there is now a rising risk that this crisis will turn into an uglier multi-year L-shaped Japanese style stag-deflation (a deadly combination of stagnation, recession and deflation).

The latest data on Q4 2008 GDP growth (at an annual rate) around the world are even worse than the first estimate for the US (-3.8%): -6.0% for the Eurozone; -8% for Germany; -12% for Japan; -16% for Singapore; -20% for Korea. The global economy is now literally in free fall as the contraction of consumption, capital spending, residential investment, production, employment, exports and imports is accelerating rather than decelerating.

The U.S. has done more (with its aggressive monetary easing and large fiscal stimulus putting it ahead) but two key elements are key to avoid a near-depression and still seriously missing: a proper clean-up of the banking system that may require a proper triage between solvent and insolvent banks and the nationalization of many banks, even some of the largest ones; and a more aggressive and across-the-board reduction unsustainable debt burden of millions of insolvent households (i.e. principal reduction of the face value of the mortgages, not just mortgage payments relief).

Moreover, in many countries the banks may be too-big-to-fail but also too- big-to-save, as the fiscal/financial resources of the sovereign may not be large enough to rescue such large insolvencies in the financial system. Traditionally only emerging markets suffered --- and still suffer - from such a problem. But now such sovereign risk --- as measured by the sovereign spread - is also rising in many European economies whose banks may be larger than the ability of the sovereign to rescue them: Iceland, Greece, Spain, Italy, Belgium, Switzerland and, some suggest, even the UK.

The process of socializing the private losses from this crisis has already moved many of the liabilities of the private sector onto the books of the sovereign: banks, other financial institutions and, soon enough possibly, households and some important non-financial corporate companies. At some point a sovereign bank may crack, in which case the ability of governments to credibly commit to act as a backstop for the financial system --- including deposit guarantees --- could come unglued.

It is clear that the Anglo-Saxon model of supervision and regulation of the financial system has failed. It relied on self-regulation that, in effect, meant no regulation; on market discipline that does not exist when there is euphoria and irrational exuberance; on internal risk management models that fail because --- as a former chief executive of Citi put it --- when the music is playing you gotta stand up and dance.

Ultimately, as we've shown through multiple cycles in history, the private banking system is doomed to repeat this boom-and-bust cycle. Sometimes, the bust cycle is minor---that's called a recession. But, every seventy years or so (probably in tune with the current 72-year Kondratieff Wave), the banking system drags the entire world economy underneath the waves. Is the pain worth it? Some members of society will not survive (financial problems do lead to real suicide as the pain is too severe for some individuals to endure).

At some point, we have to stand up and ask, "Is it time to change the system so that this doesn't happen again?" So far, we have said to the banks, "We hate what you have done, but we will bail you out one more time." Of course, the banking system can be put back on its feet and will continue merrily along for the next seventy years or so. But, inevitably, it will happen again and again until we say, "Enough. It's time to put the banks to sleep---forever." Then, we can start talking about what kind of financial system we really need---and it had better be a system we can live with on a permanent basis.

Here's an analogy: the banking system is a car who performs superbly every day of the year, except the last day. On the last day of the year, it suddenly accelerates to maximum speed and its wheels turn sharply left, throwing the car and its occupants over a cliff. Would you buy a car like that? If you wouldn't, why do you put up with a banking system that's a timebomb just waiting to blow up our society?

The Dow Industrials dropped below 2008's low on Thursday, which confirms a Dow Theory sell signal:

Change From 18 Feb 2009 To 19 Feb 2009

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	-1.19%	-89.68
DIAMONDS TRUST SER 1 (DIA)	-0.96%	-72.80
ULTRA DOW30 PROSHRS (DDM)	-2.08%	-157.28
PT ULTRSHRT DOW30 PS (DXD)	+2.04%	+154.35
S&P 500 (index)	-1.11%	-84.14
S& P DEP RECEIPTS (SPY)	-1.08%	-81.26
ULTRA S& P500 PROSHRS (SSO)	-1.96%	-148.45
PT ULTRSHRT SP500 PS (SDS)	+1.75%	+132.12
NYSE Composite (index)	-0.88%	-66.56
ISHARES NYSE CMP IDX (NYC)	-0.88%	-66.75
S&P SmallCap 600 (index)	-1.32%	-99.43
PROSH ULTRA SMALLCAP (SAA)	-2.63%	-198.57
SHORT SMALLCAP600 PR (SBB)	+1.51%	+114.39
ULTRASHORT SMALLCAP6 (SDD)	+2.27%	+171.43
Russell 2000 (index)	-1.49%	-112.84
ISHARE RUS 2000 INDX (IWM)	-1.40%	-105.41
ULTRA RUSSELL2000 PR (UWM)	-3.31%	-249.73
ULTRASHORT RUSSELL20 (TWM)	+2.84%	+214.85
NASDAQ-100 (index)	-1.70%	-128.45
POWERSHARES QQQ TR 1 (QQQQ)	-1.54%	-116.28
ULTRA QQQ PROSHARES (QLD)	-2.86%	-216.04
PT UTLRSHRT QQQ PS (QID)	+3.19%	+240.82
S&P MidCap 400 (index)	-1.58%	-119.63
ISHARE SP MC 400 INX (IJH)	-1.53%	-115.53
ULTRA MC400 PROSHRS (MVV)	-3.13%	-236.23
PT ULTRSHR MC400 PS (MZZ)	+3.28%	+247.82
GREENHAVEN CONT IDX (GCC)	-0.10%	-7.28
Amex Gold (index)	-4.64%	-350.89
MKT VECT GOLD MNRS (GDX)	-4.63%	-349.78
STREETTRACKS GOLD TR (GLD)	-1.18%	-88.88
DB GOLD DBL SH ETN (DZZ)	+2.99%	+226.24
DB GOLD DBL LG ETN (DGP)	-2.34%	-176.49
Semiconductor Sector (index)	-5.21%	-393.38
ULTRA SEMICONDUCTORS (USD)	-10.56%	-798.17
ULTRASHORT SEMICONDU (SSG)	+9.64%	+728.31
ISHARE DJ FIN SC INX (IYF)	-4.50%	-340.16
ISHARES LEHMAN 20 YR (TLT)	-1.70%	-128.45
ISHARESLEHMAN 7-10YR (IEF)	-0.56%	-41.95
ISHARES LEH AGG FD (AGG)	-0.16%	-11.89
ISHARES GS $ INVESTO (LQD)	-0.82%	-62.04
ISHARES LEHMAN 1-3YR (SHY)	-0.04%	-2.69
ProShares ETFs
PROSHARES ULTRASHORT LEHMAN 7-10 (PST)	+1.24%	+94.05
PROSHARES ULTRASHORT LEHMAN 20YR (TBT)	+3.32%	+250.48
SHORT QQQ PROSHARES (PSQ)	+1.46%	+110.44
SHRT DOW30 PROSHARES (DOG)	+0.97%	+73.44
SHRT S& P500 PROSHRS (SH)	+1.05%	+79.44
SHRT MC400 PROSHARES (MYY)	+1.58%	+119.00
SHORT SMALLCAP600 PR (SBB)	+1.51%	+114.39
SHORT RUSSELL2000 PR (RWM)	+1.62%	+122.49
PT UTLRSHRT QQQ PS (QID)	+3.19%	+240.82
PT ULTRSHRT DOW30 PS (DXD)	+2.04%	+154.35
PT ULTRSHRT SP500 PS (SDS)	+1.75%	+132.12
PT ULTRSHR MC400 PS (MZZ)	+3.28%	+247.82
ULTRASHORT SMALLCAP6 (SDD)	+2.27%	+171.43
ULTRASHORT RUSSELL20 (TWM)	+2.84%	+214.85
PST ULSHT RSL1K VALU (SJF)	+2.19%	+165.77
PST ULSHT RSL1K GR (SFK)	+2.19%	+165.72
PST ULSHT RSL MC VAL (SJL)	-0.97%	-73.14
PST ULSHT RSL MC GR (SDK)	+2.79%	+210.50
PST ULTSHT RSL2K VAL (SJH)	+4.21%	+318.30
PST ULSHT RSL2K GR (SKK)	+2.52%	+190.23
ULTRASHORT BASIC MAT (SMN)	+1.28%	+96.62
ULTRASHORT CONSUMER (SZK)	-0.17%	-12.57
ULTRASHORT CONSUMER (SCC)	-0.19%	-14.55
ULTRASHORT FINANCIAL (SKF)	+9.03%	+682.53
ULTRASHORT HEALTH CA (RXD)	+0.41%	+31.13
ULTRASHORT INDUSTRIA (SIJ)	+3.90%	+294.42
ULTRASHORT OIL & GAS (DUG)	-1.40%	-105.96
ULTRASHORT REAL ESTA (SRS)	+8.46%	+639.47
ULTRASHORT SEMICONDU (SSG)	+9.64%	+728.31
ULTRASHORT TECHNOLOG (REW)	+5.79%	+437.85
ULTRASHORT UTILITIES (SDP)	-0.22%	-16.46
PROSHARES SHR MSCI E (EUM)	+0.80%	+60.26
PROSHARES SHORT MSCI (EFZ)	+0.32%	+24.02
PROSHARES ULTRASHORT (EFU)	+0.41%	+31.17
PROSHARES UTLRASHORT (EEV)	+1.47%	+110.88
PROSHARES US MSCI JP (EWV)	+3.04%	+229.58
PROSHARES ULTRASHORT (FXP)	-0.99%	-74.66
ULTRA QQQ PROSHARES (QLD)	-2.86%	-216.04
ULTRA DOW30 PROSHRS (DDM)	-2.08%	-157.28
ULTRA S& P500 PROSHRS (SSO)	-1.96%	-148.45
ULTRA MC400 PROSHRS (MVV)	-3.13%	-236.23
PROSH ULTRA SMALLCAP (SAA)	-2.63%	-198.57
ULTRA RUSSELL2000 PR (UWM)	-3.31%	-249.73
PST ULT RUS1000 VAL (UVG)	-2.65%	-199.98
PST ULT RSL1000 GR (UKF)	-2.40%	-181.64
PST ULT RSL MC VALU (UVU)	-5.13%	-387.47
PST ULT RSL MC GR PS (UKW)	-1.92%	-144.89
PST ULT RSL2000 VALU (UVT)	-3.73%	-281.83
PST ULT RSL2000 GR (UKK)	-3.49%	-263.74
ULTRA BASIC MATERIAL (UYM)	-1.88%	-142.30
ULTRA CONSUMER GOODS (UGE)	+0.11%	+8.12
ULTRA CONSUMER SERVI (UCC)	+0.38%	+28.86
ULTRA FINANCIALS PRO (UYG)	-8.98%	-678.46
ULTRA HEALTH CARE PR (RXL)	-0.84%	-63.64
ULTRA INDUSTRIALS PR (UXI)	-4.02%	-303.99
ULTRA OIL & GAS PROS (DIG)	+1.03%	+77.83
ULTRA REAL ESTATE PR (URE)	-8.25%	-623.40
ULTRA SEMICONDUCTORS (USD)	-10.56%	-798.17
ULTRA TECHNOLOGY PRO (ROM)	-6.47%	-488.76
ULTRA UTILITIES PROS (UPW)	+0.69%	+51.94
Other ETFs
PS NQ100 BUYWRITE (PQBW)	+0.18%	+13.71
PWRSHRS NDQ INTERNET (PNQI)	-0.44%	-33.19
POWERSHARES DB BASE (BOM)	-1.70%	-128.55
POWERSHARES DB BASE (BDD)	+1.69%	+127.52
POWERSHARES DB BASE (BOS)	+0.04%	+3.28
POWERSHARES DB CRUDE (DTO)	-6.90%	-521.08
POWERSHARES DB CRUDE (SZO)	-4.35%	-328.39
POWERSHARES DB CRUDE (DXO)	+14.86%	+1122.55
POWERSHARES DB CRUDE (OLO)	+5.08%	+383.53
300% Leverage ETFs
Direxion Large Cap Bull 3x Shares (BGU)	-3.27%	-247.04
Direxion Large Cap Bear 3x Shares (BGZ)	+3.29%	+248.35
Direxion Small Cap Bull 3x Shares (TNA)	-4.28%	-323.12
Direxion Small Cap Bear 3x Shares (TZA)	+4.06%	+306.68
Direxion Energy Bull 3x Shares (ERX)	+0.56%	+42.01
Direxion Energy Bear 3x Shares (ERY)	-1.32%	-99.37
Direxion Financial Bull 3x Shares (FAS)	-13.70%	-1035.02
Direxion Financial Bear 3x Shares (FAZ)	+13.04%	+985.52

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posted by Bob Carver  # 12:36 AM

More and more people are beginning to realize that we are going to have to switch to an alternative source of energy almost immediately. For example, US Petroleum Dependency Factor Of History describes the accident of history which made us dependent on goo from the ground:

When the Drake Oil Well in Titusville, Pennsylvania began seeping crude oil 150 years ago, humanity allowed itself to become engulfed in the ecology of oil, according to a Penn State environmental historian. Now in the midst of an energy transition, the U.S. and the world need to keep moving forward toward alternative methods of power generation.

"American consumers must take stock and understand our dependency on oil in the context of how we got to this point," said Brian Black, associate professor of history and environmental studies, Penn State Altoona. "Just as a certain path of consumption led us to petroleum dependence, a path will lead us out of it. These paths, of course, are composed by the choices made by the American consumer."

In the late 1800s, oil was not a commodity. In fact, crude oil was a product looking for a purpose. While people did distill a little kerosene and use it in place of whale oil in lamps, one of the first commercial products produced was petroleum jelly - Vaseline - patented in 1872 and discovered when it accumulated in the equipment and workers found it softened their hands.

It took Henry Ford and the mass production of automobiles to push the industry into complex processes like cracking, fractionation and distillation that now produce the gasoline, kerosene, Jet A, benzene and the myriad other products that derive from crude oil.

This also opened up industry to other petroleum-based products including plastics, fabrics, coatings, medications, cosmetics and the entire world of petrochemicals that permeate modern life.

"Together, these uses composed a dependence so pervasive that it remade the ecology of human life," said Black.

"This slow growth of petroleum products over the 20th century led to a centrality in American life that no resource had possessed for humans before. This occurred to the point that in the 21st century petroleum dictates decisions of national security and human security," he told attendees at the annual meeting of the American Association for the Advancement of Science in Chicago.

Such a dependence on petroleum really contradicts the United States' founding principles. Black considers that it would be a telling exercise to imagine the reaction of the founding fathers, Thomas Jefferson or Benjamin Franklin perhaps, allowing the country's autonomy to become compromised by the necessity of a resource for which the nation was beholden to others.

"By declaring our dependence on oil, we can clearly view our history in a way that will allow us to better approach the problem of our energy future," said Black.

According to Black, history tells us that consumers never imagine the next energy source, that the transition from one source of energy to another is unforeseen and sometimes unguided and that in the past, governments have not been involved in these transitions.

What most don't know (but will soon) is that a discovery has been made, not by the government or a university, but in a small laboratory, of an energy source that's unlimited and almost free. This new energy source will obsolete almost all others and usher in a bright future for human civilization. We'll be chronicling its development in the months and years ahead, right here and in our Thermopower Blog.

The bulls and bears fought to a draw Wednesday on Wall Street:

Change From 17 Feb 2009 To 18 Feb 2009

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	+0.04%	+3.03
DIAMONDS TRUST SER 1 (DIA)	+0.01%	+1.00
ULTRA DOW30 PROSHRS (DDM)	-0.04%	-3.21
PT ULTRSHRT DOW30 PS (DXD)	-0.04%	-3.30
S&P 500 (index)	-0.47%	-35.22
S& P DEP RECEIPTS (SPY)	-0.24%	-18.11
ULTRA S& P500 PROSHRS (SSO)	-0.60%	-45.38
PT ULTRSHRT SP500 PS (SDS)	+0.71%	+53.90
NYSE Composite (index)	-0.29%	-22.28
ISHARES NYSE CMP IDX (NYC)	-0.29%	-21.62
S&P SmallCap 600 (index)	-1.09%	-82.19
PROSH ULTRA SMALLCAP (SAA)	-2.12%	-160.28
SHORT SMALLCAP600 PR (SBB)	+0.99%	+75.06
ULTRASHORT SMALLCAP6 (SDD)	+2.42%	+182.94
Russell 2000 (index)	-1.33%	-100.55
ISHARE RUS 2000 INDX (IWM)	-1.42%	-107.39
ULTRA RUSSELL2000 PR (UWM)	-3.07%	-231.67
ULTRASHORT RUSSELL20 (TWM)	+2.78%	+210.04
NASDAQ-100 (index)	-0.53%	-40.15
POWERSHARES QQQ TR 1 (QQQQ)	+0.07%	+5.17
ULTRA QQQ PROSHARES (QLD)	-0.27%	-20.65
PT UTLRSHRT QQQ PS (QID)	0.00%	0.00
S&P MidCap 400 (index)	-1.24%	-93.45
ISHARE SP MC 400 INX (IJH)	-1.10%	-82.93
ULTRA MC400 PROSHRS (MVV)	-2.25%	-170.27
PT ULTRSHR MC400 PS (MZZ)	+2.39%	+180.85
GREENHAVEN CONT IDX (GCC)	-0.86%	-64.95
Amex Gold (index)	+1.15%	+86.89
MKT VECT GOLD MNRS (GDX)	+1.00%	+75.53
STREETTRACKS GOLD TR (GLD)	+1.53%	+115.52
DB GOLD DBL SH ETN (DZZ)	-3.63%	-274.30
DB GOLD DBL LG ETN (DGP)	+2.86%	+215.69
Semiconductor Sector (index)	+0.48%	+36.32
ULTRA SEMICONDUCTORS (USD)	+0.48%	+36.17
ULTRASHORT SEMICONDU (SSG)	-0.76%	-57.64
ISHARE DJ FIN SC INX (IYF)	-0.49%	-37.05
ISHARES LEHMAN 20 YR (TLT)	-0.85%	-64.37
ISHARESLEHMAN 7-10YR (IEF)	-0.73%	-54.99
ISHARES LEH AGG FD (AGG)	-0.21%	-15.57
ISHARES GS $ INVESTO (LQD)	-0.49%	-37.33
ISHARES LEHMAN 1-3YR (SHY)	-0.17%	-12.55
ProShares ETFs
PROSHARES ULTRASHORT LEHMAN 7-10 (PST)	+1.49%	+112.24
PROSHARES ULTRASHORT LEHMAN 20YR (TBT)	+1.30%	+98.45
SHORT QQQ PROSHARES (PSQ)	+0.10%	+7.23
SHRT DOW30 PROSHARES (DOG)	-0.01%	-0.97
SHRT S& P500 PROSHRS (SH)	+0.11%	+8.42
SHRT MC400 PROSHARES (MYY)	+1.26%	+94.93
SHORT SMALLCAP600 PR (SBB)	+0.99%	+75.06
SHORT RUSSELL2000 PR (RWM)	+1.18%	+89.07
PT UTLRSHRT QQQ PS (QID)	0.00%	0.00
PT ULTRSHRT DOW30 PS (DXD)	-0.04%	-3.30
PT ULTRSHRT SP500 PS (SDS)	+0.71%	+53.90
PT ULTRSHR MC400 PS (MZZ)	+2.39%	+180.85
ULTRASHORT SMALLCAP6 (SDD)	+2.42%	+182.94
ULTRASHORT RUSSELL20 (TWM)	+2.78%	+210.04
PST ULSHT RSL1K VALU (SJF)	+1.09%	+82.14
PST ULSHT RSL1K GR (SFK)	-0.19%	-14.72
PST ULSHT RSL MC VAL (SJL)	+3.39%	+256.11
PST ULSHT RSL MC GR (SDK)	+2.30%	+174.04
PST ULTSHT RSL2K VAL (SJH)	+2.57%	+194.45
PST ULSHT RSL2K GR (SKK)	+2.48%	+187.33
ULTRASHORT BASIC MAT (SMN)	+1.25%	+94.23
ULTRASHORT CONSUMER (SZK)	-0.69%	-52.41
ULTRASHORT CONSUMER (SCC)	+0.27%	+20.42
ULTRASHORT FINANCIAL (SKF)	+0.95%	+71.46
ULTRASHORT HEALTH CA (RXD)	+1.37%	+103.82
ULTRASHORT INDUSTRIA (SIJ)	+0.36%	+26.94
ULTRASHORT OIL & GAS (DUG)	+0.83%	+62.98
ULTRASHORT REAL ESTA (SRS)	-2.01%	-151.50
ULTRASHORT SEMICONDU (SSG)	-0.76%	-57.64
ULTRASHORT TECHNOLOG (REW)	-0.32%	-24.18
ULTRASHORT UTILITIES (SDP)	+2.35%	+177.56
PROSHARES SHR MSCI E (EUM)	-0.86%	-65.06
PROSHARES SHORT MSCI (EFZ)	+0.01%	+0.75
PROSHARES ULTRASHORT (EFU)	+0.15%	+11.01
PROSHARES UTLRASHORT (EEV)	-1.83%	-138.25
PROSHARES US MSCI JP (EWV)	-1.62%	-122.65
PROSHARES ULTRASHORT (FXP)	-4.41%	-332.91
ULTRA QQQ PROSHARES (QLD)	-0.27%	-20.65
ULTRA DOW30 PROSHRS (DDM)	-0.04%	-3.21
ULTRA S& P500 PROSHRS (SSO)	-0.60%	-45.38
ULTRA MC400 PROSHRS (MVV)	-2.25%	-170.27
PROSH ULTRA SMALLCAP (SAA)	-2.12%	-160.28
ULTRA RUSSELL2000 PR (UWM)	-3.07%	-231.67
PST ULT RUS1000 VAL (UVG)	-1.31%	-98.65
PST ULT RSL1000 GR (UKF)	+0.05%	+3.86
PST ULT RSL MC VALU (UVU)	-1.80%	-135.84
PST ULT RSL MC GR PS (UKW)	-2.09%	-157.56
PST ULT RSL2000 VALU (UVT)	-2.43%	-183.25
PST ULT RSL2000 GR (UKK)	-2.52%	-190.36
ULTRA BASIC MATERIAL (UYM)	-1.85%	-139.62
ULTRA CONSUMER GOODS (UGE)	+0.40%	+29.87
ULTRA CONSUMER SERVI (UCC)	-1.01%	-76.14
ULTRA FINANCIALS PRO (UYG)	-1.61%	-121.33
ULTRA HEALTH CARE PR (RXL)	-0.39%	-29.57
ULTRA INDUSTRIALS PR (UXI)	-1.22%	-91.99
ULTRA OIL & GAS PROS (DIG)	-0.51%	-38.70
ULTRA REAL ESTATE PR (URE)	+1.68%	+126.72
ULTRA SEMICONDUCTORS (USD)	+0.48%	+36.17
ULTRA TECHNOLOGY PRO (ROM)	+0.15%	+11.04
ULTRA UTILITIES PROS (UPW)	-3.15%	-238.17
Other ETFs
PWRSHRS NDQ INTERNET (PNQI)	+0.07%	+5.53
POWERSHARES DB BASE (BOM)	-1.96%	-148.37
POWERSHARES DB BASE (BDD)	+1.94%	+146.18
POWERSHARES DB BASE (BOS)	-0.88%	-66.59
POWERSHARES DB CRUDE (DTO)	+3.20%	+241.38
POWERSHARES DB CRUDE (SZO)	+1.73%	+130.94
POWERSHARES DB CRUDE (DXO)	-9.79%	-739.69
POWERSHARES DB CRUDE (OLO)	-4.48%	-338.72
300% Leverage ETFs
Direxion Large Cap Bull 3x Shares (BGU)	-0.30%	-22.38
Direxion Large Cap Bear 3x Shares (BGZ)	+0.76%	+57.34
Direxion Small Cap Bull 3x Shares (TNA)	-4.51%	-340.69
Direxion Small Cap Bear 3x Shares (TZA)	+4.48%	+338.28
Direxion Energy Bull 3x Shares (ERX)	-0.95%	-72.09
Direxion Energy Bear 3x Shares (ERY)	+1.02%	+77.05
Direxion Financial Bull 3x Shares (FAS)	-2.67%	-201.40
Direxion Financial Bear 3x Shares (FAZ)	+1.17%	+88.59

Additional stock market commentary -- for subscribers only -- can be found here: Subscriber Notes (if you're reading this in plain text format or on the blog, visit the MyClues Home Page and click on "Subscriber Notes" in the Quick Links section at the top of the page).

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posted by Bob Carver  # 9:59 PM

The crumbling international banking system (surely, it's the original Ponzi Scheme) undermined confidence amongst traders Tuesday, causing stock markets around the world to experience heavy selling pressure. As it becomes clear that the varios stimulus programs will phase in only gradually, year 2009 appears to be a lost cause already as far as earnings are concerned. Typical bear market bottoms would require that stock prices must be ratcheted much, much lower before they are consistent not only with historical norms, but also with current levels of leverage. Since the credit bubble burst in 2005 with the top in the real estate market, the credit markets have been deleveraging. This suggests that future rates of growth in the real economy are likely to be considerably slower than historical rates of growth. Both historical and future factors are pointing toward stocks being relatively expensive at current levels, suggesting that we are likely to see the S&P 500 Index move down into the mid-500s before traders find those stocks bargains once again.

The Banking Index plunged to an all-time low on Tuesday as it becomes clear that the entire worldwide banking system is insolvent.

Strong US Dollar

The transformation of the US Dollar from 90-pound weakling to a big, bruising currency is pummeling American shares lower as it creates a big headwind to export profits in two ways. First, it makes American products more expensive for foreigners to purchase and, second, it causes foreign profits to be translated back into a lower number of US Dollars, directly dropping the bottom line of American companies.

Now, everyone longs for the days when the dollar was weak. Well, we can just hope that the "Strong Dollar Policy" is as much a fiction under Obama as it was under Bush.

Much of the "strength" in the Dollar is simply due to weakness in the Euro. The US Dollar moves inversely to the Euro and the Euro is beginning to be seen for what it is: an unviable and artificial currency that will never survive unless Europe is united under one constitution. It ain't gonna happen.

General Motors is Generally Bankrupt

GM is continuing to drain cash from the US Treasury as it revealed plans to shut down most of its brands on Tuesday. This company is undergoing voluntary nationalization in place of involuntary dissolution.

It's time to put this company to sleep, along with the insolvent banks (most of American banks and virtually all European banks).

The stock market suffered its ninth nervous breakdown on Tuesday:

Change From 13 Feb 2009 To 17 Feb 2009

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	-3.79%	-297.81
DIAMONDS TRUST SER 1 (DIA)	-3.56%	-279.84
ULTRA DOW30 PROSHRS (DDM)	-7.10%	-557.43
PT ULTRSHRT DOW30 PS (DXD)	+7.26%	+569.87
S&P 500 (index)	-4.41%	-346.49
S& P DEP RECEIPTS (SPY)	-4.28%	-335.80
ULTRA S& P500 PROSHRS (SSO)	-8.56%	-672.17
PT ULTRSHRT SP500 PS (SDS)	+8.61%	+676.20
NYSE Composite (index)	-5.14%	-403.54
ISHARES NYSE CMP IDX (NYC)	-5.24%	-411.20
S&P SmallCap 600 (index)	-4.19%	-328.76
PROSH ULTRA SMALLCAP (SAA)	-7.77%	-609.97
SHORT SMALLCAP600 PR (SBB)	+4.64%	+364.26
ULTRASHORT SMALLCAP6 (SDD)	+8.08%	+634.29
Russell 2000 (index)	-4.34%	-340.38
ISHARE RUS 2000 INDX (IWM)	-3.96%	-311.06
ULTRA RUSSELL2000 PR (UWM)	-7.62%	-598.17
ULTRASHORT RUSSELL20 (TWM)	+7.87%	+618.22
NASDAQ-100 (index)	-3.71%	-291.32
POWERSHARES QQQ TR 1 (QQQQ)	-3.98%	-312.16
ULTRA QQQ PROSHARES (QLD)	-7.58%	-595.16
PT UTLRSHRT QQQ PS (QID)	+7.54%	+592.31
S&P MidCap 400 (index)	-4.24%	-332.48
ISHARE SP MC 400 INX (IJH)	-4.17%	-327.29
ULTRA MC400 PROSHRS (MVV)	-8.57%	-672.48
PT ULTRSHR MC400 PS (MZZ)	+8.07%	+633.76
GREENHAVEN CONT IDX (GCC)	-3.10%	-243.51
Amex Gold (index)	+3.27%	+256.98
MKT VECT GOLD MNRS (GDX)	+3.70%	+290.43
STREETTRACKS GOLD TR (GLD)	+3.13%	+245.99
DB GOLD DBL SH ETN (DZZ)	-6.29%	-494.08
DB GOLD DBL LG ETN (DGP)	+5.85%	+459.57
Semiconductor Sector (index)	-6.66%	-522.53
ULTRA SEMICONDUCTORS (USD)	-12.13%	-952.40
ULTRASHORT SEMICONDU (SSG)	+11.90%	+933.91
ISHARE DJ FIN SC INX (IYF)	-8.03%	-630.39
ISHARES LEHMAN 20 YR (TLT)	+3.11%	+244.53
ISHARESLEHMAN 7-10YR (IEF)	+1.68%	+132.00
ISHARES LEH AGG FD (AGG)	+0.08%	+6.17
ISHARES GS $ INVESTO (LQD)	+0.55%	+42.99
ISHARES LEHMAN 1-3YR (SHY)	+0.26%	+20.55
ProShares ETFs
PROSHARES ULTRASHORT LEHMAN 7-10 (PST)	-3.53%	-277.16
PROSHARES ULTRASHORT LEHMAN 20YR (TBT)	-5.14%	-403.13
SHORT QQQ PROSHARES (PSQ)	+3.80%	+298.64
SHRT DOW30 PROSHARES (DOG)	+3.49%	+274.29
SHRT S& P500 PROSHRS (SH)	+4.44%	+348.25
SHRT MC400 PROSHARES (MYY)	+4.18%	+328.30
SHORT SMALLCAP600 PR (SBB)	+4.64%	+364.26
SHORT RUSSELL2000 PR (RWM)	+3.74%	+293.66
PT UTLRSHRT QQQ PS (QID)	+7.54%	+592.31
PT ULTRSHRT DOW30 PS (DXD)	+7.26%	+569.87
PT ULTRSHRT SP500 PS (SDS)	+8.61%	+676.20
PT ULTRSHR MC400 PS (MZZ)	+8.07%	+633.76
ULTRASHORT SMALLCAP6 (SDD)	+8.08%	+634.29
ULTRASHORT RUSSELL20 (TWM)	+7.87%	+618.22
PST ULSHT RSL1K VALU (SJF)	+10.30%	+808.80
PST ULSHT RSL1K GR (SFK)	+9.06%	+711.44
PST ULSHT RSL MC VAL (SJL)	+8.61%	+676.02
PST ULSHT RSL MC GR (SDK)	+8.29%	+650.59
PST ULTSHT RSL2K VAL (SJH)	+7.62%	+597.91
PST ULSHT RSL2K GR (SKK)	+6.94%	+544.50
ULTRASHORT BASIC MAT (SMN)	+12.44%	+976.63
ULTRASHORT CONSUMER (SZK)	+6.11%	+479.87
ULTRASHORT CONSUMER (SCC)	+5.53%	+434.44
ULTRASHORT FINANCIAL (SKF)	+16.20%	+1271.45
ULTRASHORT HEALTH CA (RXD)	+3.40%	+266.95
ULTRASHORT INDUSTRIA (SIJ)	+10.74%	+843.37
ULTRASHORT OIL & GAS (DUG)	+12.57%	+986.91
ULTRASHORT REAL ESTA (SRS)	+13.10%	+1028.68
ULTRASHORT SEMICONDU (SSG)	+11.90%	+933.91
ULTRASHORT TECHNOLOG (REW)	+9.13%	+716.58
ULTRASHORT UTILITIES (SDP)	+9.72%	+762.87
PROSHARES SHR MSCI E (EUM)	+7.47%	+586.42
PROSHARES SHORT MSCI (EFZ)	+5.76%	+452.08
PROSHARES ULTRASHORT (EFU)	+10.46%	+821.22
PROSHARES UTLRASHORT (EEV)	+15.48%	+1215.44
PROSHARES US MSCI JP (EWV)	+6.83%	+536.08
PROSHARES ULTRASHORT (FXP)	+13.62%	+1069.33
ULTRA QQQ PROSHARES (QLD)	-7.58%	-595.16
ULTRA DOW30 PROSHRS (DDM)	-7.10%	-557.43
ULTRA S& P500 PROSHRS (SSO)	-8.56%	-672.17
ULTRA MC400 PROSHRS (MVV)	-8.57%	-672.48
PROSH ULTRA SMALLCAP (SAA)	-7.77%	-609.97
ULTRA RUSSELL2000 PR (UWM)	-7.62%	-598.17
PST ULT RUS1000 VAL (UVG)	-11.68%	-916.92
PST ULT RSL1000 GR (UKF)	-7.39%	-580.41
PST ULT RSL MC VALU (UVU)	-12.23%	-960.39
PST ULT RSL MC GR PS (UKW)	-8.64%	-678.31
PST ULT RSL2000 VALU (UVT)	-9.77%	-767.24
PST ULT RSL2000 GR (UKK)	-7.03%	-551.87
ULTRA BASIC MATERIAL (UYM)	-12.21%	-958.55
ULTRA CONSUMER GOODS (UGE)	-6.74%	-529.15
ULTRA CONSUMER SERVI (UCC)	-5.20%	-408.00
ULTRA FINANCIALS PRO (UYG)	-16.44%	-1290.84
ULTRA HEALTH CARE PR (RXL)	-3.48%	-273.33
ULTRA INDUSTRIALS PR (UXI)	-9.14%	-717.83
ULTRA OIL & GAS PROS (DIG)	-12.45%	-977.27
ULTRA REAL ESTATE PR (URE)	-13.37%	-1049.76
ULTRA SEMICONDUCTORS (USD)	-12.13%	-952.40
ULTRA TECHNOLOGY PRO (ROM)	-8.80%	-690.53
ULTRA UTILITIES PROS (UPW)	-9.68%	-760.20
Other ETFs
PWRSHRS NDQ INTERNET (PNQI)	-3.74%	-293.42
POWERSHARES DB BASE (BOM)	+11.38%	+893.39
POWERSHARES DB BASE (BDD)	-8.28%	-650.33
POWERSHARES DB BASE (BOS)	+4.87%	+382.43
POWERSHARES DB CRUDE (DTO)	+12.73%	+999.02
POWERSHARES DB CRUDE (SZO)	+7.25%	+569.21
POWERSHARES DB CRUDE (DXO)	-17.80%	-1397.11
POWERSHARES DB CRUDE (OLO)	-6.78%	-532.23
300% Leverage ETFs
Direxion Large Cap Bull 3x Shares (BGU)	-13.67%	-1073.12
Direxion Large Cap Bear 3x Shares (BGZ)	+13.17%	+1033.93
Direxion Small Cap Bull 3x Shares (TNA)	-11.25%	-883.30
Direxion Small Cap Bear 3x Shares (TZA)	+11.26%	+883.67
Direxion Energy Bull 3x Shares (ERX)	-18.20%	-1428.63
Direxion Energy Bear 3x Shares (ERY)	+18.33%	+1439.17
Direxion Financial Bull 3x Shares (FAS)	-24.34%	-1910.63
Direxion Financial Bear 3x Shares (FAZ)	+24.55%	+1927.56