Read it Here First: Steve Forbes’ Tanker War Story

On February 2, 2012 I posted “Iran Cannot Close the Straight of Hormuz, Unless…” where I talked about the Tanker War of the 1980s. At that time, nobody in the media was talking about that forgotten conflict. (See the screenshot below of a Google News search showing no results found.)

Three weeks later, Steve Forbes wrote “War With Iran Is Coming!” which contains a summary of what I wrote. However, as you can see by the exclamation point in Forbes’ title, he is a raging warmonger. So, of course, he had to conclude:

“Nevertheless, you may see a repeat of the Tanker War. In the heat of battle the ayatollahs may not be able to contain themselves.”

Forbes is implying that Iran would take action only after the war started, giving us a little glimpse of the matrix. An attack on Iran is clearly being planned right now.

But what “heat of battle” is Forbes talking about? Iran’s military is pathetic. Read journalist Eric Margolis’ report here. Excerpt:

“Iran has been unable to modernize most of its 1960’s/1970’s vintage military arsenal, much of which was supplied by the US and Britain to the Shah.”

I’m no fan of the Ayatollahs, but I can’t help but notice that the federal treasury is empty. And I can’t help but notice that warmongers like Steve Forbes are largely responsible.

Here is the Google News search that I mentioned above:

Note: I shouldn’t have described the “Tanker War” was “forgotten”. Of course, the mainstream media knows about it, but their job is to sell the war on Iran. So, of course, they have to harp on how dangerous Iran is – not on how we gave them a serious beating when they tried to close the Strait of Hormuz 25 years ago.

Note: I would have linked to Eric Margolis’ website directly, but it was off line when I was writing this. In any case, it is well worth adding to your reading list as you will learn things that are concealed by the mainstream media.

James Altucher’s House Conspiracy

Why did Steve Jobs and Steve Wozniak have to start-up Apple Computer in the Jobs-family’s garage? Why don’t suburban American houses have workshops for that sort of thing?

Because of a conspiracy, that’s why.

Last year, James Altucher created controversy when he wrote: “Why I Am Never Going to Own a Home Again“. Said James:

“Lets spell out very clearly why the myth of home-ownership became religion in the United States. Its because corporations didn’t want their employees to have many job choices. So they encouraged them to own homes. So they can’t move away and get new jobs. Job salaries is a function of supply and demand. If you can’t move, then your supply of jobs is low.”

I don’t have any evidence for a labor-mobility conspiracy, however about 25 years ago, I read a very interesting article about the design of suburban houses. The author stated that mortgages guaranteed by the various agencies of the federal government would not be approved for houses that had workshops or pantries.

If you have a workshop, then maybe you can make yourself a nice chair instead of buying it from Sears. And if you have a pantry, maybe you can grow some food in the back yard and store it over the winter, saving on grocery bills.

American retailers frowned upon such activity, so they hired lobbyists and got rules installed to prevent the construction of houses that were too self-sufficient to their taste.

Sure, many people put workbenches in their garages, but in my suburb that was only a few feet of space. And when you consider how entrepreneurial the American people have been throughout their history, the lack of workshop space is very surprising.

In a second post, Altucher wrote:

“…it’s a fact that many early factories would often provide housing for their employees and then charge them for the ‘rent’ and deduct it from their salaries. This was a standard technique only 100 years ago.”

To this I would add that you don’t have to go back 100 years. Just last year, Hershey was housing workers in Pennsylvania. They docked the rent from paychecks such that some workers were taking ‘home’ only $1 per hour. See the post I wrote here. And only a few years ago, the garment industry housed thousands of Asian girls in squalid barracks in Saipan, which is American soil. See the post I wrote here.

Altucher’s larger point is dead-on: a good deal of our culture is shaped by the sneaky machinations of commercial interests.

Note: The world has changed since the American suburbs were built. Today, you can produce things like software, websites, and other virtual goods without a workshop filled with power-tools. So, that’s a change for the better – at least until we are all using tablets.

Note: My grandmother used to can tomatoes that my grandfather grew in their large backyard. The local supermarket lost out on a lot of Ragu sales.

Note: It was a long time ago, but I think I read that article in Chronicles Magazine.

Note: If anybody knows more about this subject, please let me know. I would ask the famous “housing historian”, Newt Gingrich, but I can’t afford the million-dollar fees that he was charging Fannie Mae and Freddie Mac.

The Great Joe Weisenthal Rally of 2012

On December 15th, I posted “S&P 500 Fractal End-of-Range Signal” where I wrote:

“The market has been range-bound for this long because half of investors are thinking: ‘the economy is improving, so I should be buying stocks’, and the other half are thinking: ‘the wheels are coming off of Europe, so I should be selling stocks.'”

I predicted that the market would break out of its range within the next few weeks. Three weeks later, that’s exactly what happened. However, I didn’t predict which way it would break; only that the range was long in the tooth.

However, the next day, Joe Weisenthal at Business Insider posted this:

“Want to see a CLEAR sign that funding stress has eased in Europe? …this has a lot to do with the ECB’s actions that will allow banks to borrow money super-cheaply for 3 years and buy sovereign debt that’s yielding a lot more. If that’s the case, it’s working. Major shift here in the last few days/weeks.”

He totally nailed it. So, I hereby christen this rally as “The Great Joe Weisenthal Rally of 2012.”

Moral of the story: Don’t fight the Fed, or the ECB!

Next week, we get another LTRO operation from the ECB. So that’s a very big deal.

Larry Kudlow, Patriotic Globican

What’s a globican? It’s a word I have coined to describe a globalist who lives in the USA. Calling such people Americans isn’t quite right because their loyalties lay with the multinational corporations that run the world.

A globican fights for policies that enrich the multinationals, even if it comes at the expense of the nation in which they reside.

In the video below (at the 2:40 mark), we see an example of a proud globican fighting for his people. Multinationals are people too, right? Shouts Kudlow:

“What’s up with this ‘foreign minimum tax’ business? This sounds like an attack against internationalism, the multinationals, and the business community hates it.”

The Obama administration has announced its intention to change the way multinationals are taxed. No details were given, so its hard to criticize a plan that hasn’t been fleshed out. But Kudlow is outraged at the very idea of US domiciled multinationals paying taxes to the US treasury.

Of course, the first thing a president Kudlow would do would be to spend $2 trillion on an invasion of Iran. Where would he get the money? Not from taxing multinationals, that’s for sure. He would borrow it and pile the debt on the US taxpayer. Once Joe Sixpack paid for the invasion, and got blown up by an IED, Kuldow’s multinationals would flood into the country to make fat profits on reconstruction, base-building, oil, etc. Then they would squirrel away the profits in the Cayman Islands.

Note: Multinationals and “business community” are not synonymous as Kudlow implies.

Note: I’m sure that Kudlow meant to say “globalization” instead of “internationalism”, but what he said is amusing since The Internationale is the communist anthem. Of course, globalism isn’t communist or capitalist, but rather plutocratic. White cat, black cat, who cares? As long as it advances plutocracy.

Martin Armstrong Ain’t No Oracle

I see that there is a movie about Martin Armstrong. I didn’t realize that he was out of prison. In any case, I agree with Barry: “Way too conspiratorial…”, but I will go further.

Martin Armstrong is a bullshit artist. How do I know that? Because he writes a lot about this super-intelligent computer that he invented 25 years ago.

And I have a degree in computer science.

So when he writes things like:

“Now I needed my children to help put a face on the computer. By this I mean I had to teach it how to communicate. I initially established a type interface.”

…I burst out laughing. No engineer would ever say “type interface.” The term is “command line interface”. Maybe you remember it from the old days of MS-DOS. If you look at the Wikipedia article, you will not see the term “type interface” anywhere on the page.

Right? It’s a joke. Armstrong writes gaffes like that constantly whenever he is carrying on about the magical computer that can predict the future.

If you see him, open up your Mac and start up the “Terminal” app. Ask him to type in a “copy” command. I bet he will stare at it like a deer in the headlights.

Note: Armstrong’s “type interface” quote can be found on this page. There’s a lot of text on the page, and the quote is nearer to the bottom. But I’m sure you know how to search a page for a piece of text, right? Right???

I Signed Sherrod Brown’s Petition

You can too at:

The petition is to pressure John Boehner to stop blocking a bi-partisan Senate bill that would deal with China’s currency manipulation. Read more in this Washington Post story.

And no, the world would not end if we played hard-ball with China. It didn’t end in 1985 when we did the same thing with Japan and Germany. In fact, you could probably make a case that the 1985 Plaza Accord was one of the pillars of the robust economic growth that we enjoyed during the late 1980s and Clinton years.

SPY Fractal Dimension Index End-of-Trend Signal

Those of you using my Fractal Stock Grapher app aren’t surprised that the rally has paused over the past week because the Fractal Dimension Index (FDI) has been flashing an end-of-trend signal. See the black arrow on the screen-shot (click to enlarge):

We haven’t had a signal this strong on the daily chart since last summer. Here is a chart that goes back farther using my FDI indicator for TradeStation – look at the green arrows:

Last summer’s downtrend did indeed come to an end as soon as the FDI gave the signal. But what about the fate of this year’s uptrend? It is indeed long in the tooth and overdue for a correction. However, the FDI only tells us that the trend is likely to end. The market could just as easily go sideways for a while.

I don’t want to be bearish here because the economy is improving, and federal withholding-tax collections are on fire. Yes, Europe is shaky again, but don’t forget that the Fed and the ECB have the money spigots wide open, blasting liquidity onto the fire.

And it is also an election year. The Republican candidates have vowed to chop off Ben Bernanke’s head, so he has an incentive to keep things bubbly until November. My guess is that a market plunge caused by another European crisis will be another buying opportunity, just like they all have been over the last three years.

What is Stephen Roach Smoking?

Morgan Stanley economist Stephen Roach thinks that the USA should pin its hopes for economic growth on increased exports to China. Sounds reasonable, right? China is a fast-growing market after all. But this is probably the dumbest strategy possible. China is a hard-core mercantilist power, and we’ve seen this movie before with Japan.

We have spent decades trying to get Japan to open its markets. And to this day, only 5% of the cars sold in Japan are imports, as opposed to 52.9% in the USA. The Japanese say that their consumers don’t like imports, but in reality Japan is the master of non-tariff trade barriers.

We will see the same from the Chinese. And we will not live to see the day of open markets in China. If we couldn’t accomplish it with Japan, a political ally, how can we expect to fare better with a non-ally like China?

The Chinese have studied the USA-Japan trade relationship, and they have vowed not to repeat Japan’s “errors” – especially the Plaza Accord “error” where Japan allowed the USA to push up the value of the yen.

Roach says not to worry about the yuan because it has been strengthening. But that is not an accurate statement. As a matter of fact, it is a deceptive statement because the PBOC sets the value of the yuan versus the dollar. Roach is trying to fool us into thinking that the value of the yuan is set by market forces.

The fact is that Beijing has been forced by US outrage to fix the yuan higher. We’ve made a tiny bit of progress, but Stephan Roach wants to put an end to it.

What are we supposed to think when confronted by an economist who argues for “free trade” in everything except the yuan? An economist who defends having the yuan set by dictate in Beijing?

When asked (in the linked interview above) how we can level the playing field with China, Roach responds: “Deflect attention away from the currency.” He went on to denounce China’s mercantilist trade practices, but that was an odd way to begin his response, no? “Deflect attention away from the currency” sounds like a talking point to me; probably written by some multinational PR flack.

Each time the PBOC inches up the yuan-dollar peg, the massive sweatshop profits of the multinationals inch down.

Is it impossible to simultaneously pressure the Chinese to float the yuan and open their markets? Not at all. So, Roach’s argument is completely specious.

And the Chinese haven’t strengthened the yuan very much at all in the grand scheme of things. They have only reversed a little bit of their massive devaluations from the 1980s and 1990s. Go here, and make a long-term chart and see for yourself.

Of course, demand for yuan is far higher than it was before the Chinese started devaluing. Just think how many yuan Apple needs to purchase when they go to China to buy iPads from Foxconn. How high would the yuan spike if allowed to float? I don’t know, but you would be hard-pressed to find an economist who thinks it would decline.

If you are bullish on the yuan, you can buy the CYB ETF. However, if you did so when CYB began trading in 2008, you would have only a 1.35% gain. That’s the peg in action. Below is a “percent change” chart comparing the CYB (red line) to the FXE euro ETF (blue line). Click chart to enlarge:

I’m comparing the yuan to the euro to showcase the difference between a currency set by market forces and one set by dictate. The euro bounces around; the yuan is practically a flat line. Anybody who says that China is not a currency manipulator is full of it. The movements of the yuan are purely artificial.

Note: According to the Best Selling Cars Blog, there were no imports at all in the top-30 selling cars in Japan in 2011.