Light Shines Through Micro Cracks on Marblehead

Its Friday at last.
In my line of work I manipulate DNA. 90% of the time it behaves as expected and there are no problems with the cutting and pasting that I do to it. 10% of the time though, the cells I use to propagate the DNA or the DNA itself decides it want to branch out and do weird things. That 10% of the time takes up most of my time trying to fix it. I am sure it is the same scenario across all job fields, so do not think you are alone when things go a little crazy!

First off, I would like to thank the people that have left comments here. I appreciate that you take the time to check out my posts. Reader Anonymous G wanted a post that detailed the price of Gold during the Great Depression. I looked it up, and its a pretty boring story:
http://en.wikipedia.org/wiki/Image:Au_annual_average_USD_price_1793-2005.png
You can see Gold was not very exciting until the US left the Gold standard behind. Great summation on Gold's role in the great depression form the WIKI entry:
"One reason why the Federal Reserve did not act to limit the decline of the money supply was regulation. At that time the amount of credit that the Federal Reserve could issue was limited due to laws which required partial gold backing of that credit. By the late 1920's the Federal Reserve had almost hit the limit of allowable credit that could be backed by the gold in its possession. This credit was in the form of Federal Reserve demand notes. Since a "promise of gold" is not as good as "gold in the hand", during the bank panics a portion of those demand notes were redeemed for Federal Reserve gold. Since the Federal Reserve had hit its limit on allowable credit, any reduction in gold in its vaults had to be accompanied by a greater reduction in credit. Several years into the Great Depression the private ownership of gold was declared illegal and reduced the pressure on Federal Reserve gold."
No wonder the Great Depression happened, the bankers could not create money from thin air! Where would we be without our Fiat currency indeed.

My major theme for this blog is the Economic Disconnect between where we are economically and where we are told we are by the usual suspects. Today's ripper of a down draft was the second time in the last 3 months that a little reality was pushed onto the markets, and lo and behold, they didn't like it! Shocking really. Here is the basic headline found everywhere, this one from Yahoo Finance:

Stocks Sink on Black Monday AnniversaryFriday October 19, 6:14 pm ET By Tim Paradis, AP Business Writer
Stocks Plummet Amid Lackluster Profit Reports, Credit Concerns on Black Monday Anniversary

Lackluster profits and credit concerns are nothing new, as you know already. Apparently the market did not know that fact. I wrote a while back how the market was acting as though the 3 weeks in late August through early September were the only loan losses, mortgage defaults, write downs, and profit shortfalls that were going to occur. This is the second wake up call for the market now. Unfortunately, like a person on a Monday morning, the market will hit "snooze" at least one more time before a trend down is really started.

Its prediction time!
Now understand, I am no economist, stock broker, fed head, or any other kind of financial expert. What I am about to write is my own ideas, NOT INVESTMENT ADVICE.

Over this weekend all the talk will be about how terrible the credit market is and how much trouble banks are in. FED rate cut talk will dominate all discussions, totally ignoring that the ones we already had have not made the slightest bit of difference. With a bunch of cheery earnings outlooks for some Tech companies next week I fully expect the market to give up most of the losses from today. Add to that the wonderful work of the Plunge Protection Team buying futures strong before Monday's open. By example, the DOW was down 366 points, on Monday it will be up over 250 points. The markets will finish next week higher than they started this week.

That said, we are at a point where the Economic Disconnect is starting to filter through to the average person. Light (eventually) shines on Marblehead if you will. Oil over $90 a barrel is not funny anymore with the winter heating months coming up. Even the mainstream media sources were covering the Oil price as a function of the DOLLAR COLLAPSE! You know its serious when the MSM even comments on the currency. I think going forward, there will be a third wake up call in the next 3 months. That call is going to be hard to ignore, as I imagine it will be a MAJOR bank having serious issues with solvency. As home prices collapse into the years' end, eventually the reality of the enormity of the issues faced will settle in. Then the correction down will begin in earnest. One thing to keep in mind is that when things change, they will change fast. Market moves can be brutally quick, so its better to be positioned beforehand. I am struggling right now with the decision to unload all my gold and silver mining stocks into the rally next week. If a major bank has a blowup, all banks will have to raise cash and they will sell what they CAN, not what they WANT to make money available. Gold is highly liquid, and I expect any major market fall to take gold down along with it, even though fundamentally gold is strong. Its not fair or fun, but thems the brakes. Of course, I could be totally wrong here on all counts, but I am giving you my 2 cents up front, not after everything happens so I look really smart.

I spent a while checking out the Must Read blogs listed on the left, there was just so much news to take in it was overwhelming. Even reports of a secret meeting by Merrill Lynch (lynched?) was hinted at. Should be interesting this weekend.

OK, enough thinking! It's Friday night and its football preview time. The Patriots play the Dolphins on Sunday and it will not be a great game. Patriots win 34-13 in a practice game really. Game of the weekend is Monday night, Jaguars vs. Colts. If the Jaguars can try and not play a soft zone defense, and they can score over 24 points, they will win the game. If not, Colts win. My final, Colts 31 Jags 21. Just not enough firepower to score points, thought the Jags will run the ball all over the Colts.

Fun stuff:
Final fight scene from "Conan the Barbarian", stunning music and the final sword fight is brutally real:
http://www.youtube.com/watch?v=JE9_oEfkV_E

Rock Blogging:
Mighty Bosstones do "Detroit Rock City" and for once a remake far surpasses the original:
http://www.youtube.com/watch?v=HizBbvDICzI

Van Halen "Atomic Punk" I am always amazed most people never heard this song, easily Halen's most nasty good song:
http://www.youtube.com/watch?v=1XrdzdsRcE0

Keep the comments coming and have a great weekend.