Yes, here comes Mr. President:

Sept. 9 (Bloomberg) -- President Barack Obama urged the pastor of a Florida church not to burn copies of the Koran on the anniversary of the Sept. 11 attacks.

I just want him to understand this stunt hes talking about pulling could greatly endanger our young men and women in uniform, Obama said in an interview on ABCs Good Morning America program.

I wish to contrast this with a few other events.

Like, for instance "piss Christ", an alleged work of art, which featured a crucifix immersed in urine.

The total number of Christian whackos who went on a murderous rampage worldwide as a consequence of this exercise of "Free Speech"?  Zero.

This isn't the only example, of course.  Denigrating Christian symbolism is somewhat of an art form.  New York's Cooper Union exhibited an "artistic piece" that consisted of a man with his pants down and a cross extending from his asshole.  The caption?  "The day I became a Catholic"

Number of violent murderous rampages as a consequence of this exercise in Free Speech?  Zero.

But when a cartoonist, Mr. Westergaard, decided to draw a man oddly reminiscent of Muhammad with a bomb in his turban, he was threatened with death in official "fatwas" of the Muslim religion.

I think it's time for those of us in the civilized world to ask a relatively simple question:

Do you have a legitimate religion - that is, the worship of divinity and prayer for personal peace and enlightenment - when practitioners and priests of that religion threaten people with death for mere speech that they find "unbecoming" (or "blasphemous") toward their particular religious practice?

Or is the truth that you have, in point of fact, a war-based political movement that has co-opted the trappings and claims of religion as a shield from laws that, in the civilized world, would otherwise lead to immediate criminal sanction for the publication and dissemination of these threats?

This is a key question, and one that we, as Americans, had better take notice of.

Christianity and Judaism both can point to passages in The Bible that proscribe certain behavior and call for death by stoning for violations. 

But somewhere in the last 2,000 years, both Christianity and Judaism have come to recognize that this sort of barbarism - that is, attacking someone physically simply because they refuse to believe as you do - is indefensible under both the laws of God and Man, and thus have (with the notable exception of a few nuts) cast that position and approach to "enforcement" of "divine command" aside.

If Islam will not do so, then the rest of the world will have to decide whether it truly values religious freedom, and if it does, it will have to unfortunately commit to the eradication of Islam from the face of the earth.

I'm aware that this is an incendiary statement, incidentally. 

It is nonetheless true.

A religious path - any religious path - that refuses to allow those who do not believe as the adherents to that path do to live in peace without interference and violence is a religion that has declared that one must either submit or die.

In a nation that values religious freedom and in fact has such written into its Constitution, America has no choice in this regard.  A religion that makes such a declaration either by act or word has in fact by doing so declared war on The United States and her citizens worldwide.

For more than 20 years we have allowed this declaration of war - and that's exactly what it is folks - to go unanswered.  The USS Cole, Khobar Towers, 9/11 and more all were military attacks launched by a group that had declared war on America.

We have, thus far, refused to respond in kind, and this is, in my opinion, a critical error.

We must make clear to the Muslims that we have no quarrel with any legitimate religious practice, but that we will not tolerate any claimed "religion" that is in fact a military movement cloaked in a false claim of piety. 

We must further draw the line where any religious path declares a right to put a price on the head of "unbelievers" or those who "insult" their religion, or who offer and incite violence upon those who fail to honor and believe in their particular religious path.  We must with official and national resolve inform the Muslims of the world that they must choose between immediate and permanent cessation of all such activity or we both can and will meet their declaration of war with one of our own.

I fully respect your right to pray toward Mecca any time you'd like.

However, I demand that you respect my right to not pray as you direct, choosing to instead honor divinity on my own terms, or, if I should so choose, to not pray at all.

America must put her foot down here and now and say ENOUGH!

... and not the pump monkey

In the week ending Sept. 4, the advance figure for seasonally adjusted initial claims was 451,000, a decrease of 27,000 from the previous week's revised figure of 478,000. The 4-week moving average was 477,750, a decrease of 9,250 from the previous week's revised average of 487,000.

Not low enough (mid-300s) for there to be net job generation.  But the futures roared anyway, with the CNBS mouth-breathing crew all claiming that this was a "nice" number.

Here's where most of the excitement was likely coming from:

The problem is one that I identified nearly six months ago, which is that people don't count as "unemployed" in the claims data if they either give up or exhaust their extended benefits.

The latter is a very real problem as the "leading edge" of the unemployed are now rolling off those EUC programs each and every week, and this distorts the figures severely.  Yes, this will drive some of them to seek work (gee, no more government cheese?) but not all will succeed, and those that don't now have no income from the government cheese or a job.  This impact began roughly in June of this year and is now in "full roar", with the maximum roll-off coming sometime in the middle of 2011.

Yet the paradox is that the official "reports" do and will continue to show this development as economic improvement.

Like hell it is.

The other problem with these numbers is that in order to file for jobless benefits you must have had a job for a continual (and substantial) period of time - typically four quarters (one year) prior to being laid off.  Therefore, "re-layoffs" don't count, and those who were marginally attached and then lose their job anew also don't count.  They count in the real economy though.  Further, if you lose your job, file, find a new job, and lose that one you don't count as a new claim - even though you're (again) unemployed.

Nonetheless, for all their flaws these figures are all we have on a weekly basis, and the market loved what it saw this morning, taking a hop north.  We'll see if, once people have a bit of time to reflect on the roll-off from the benefit rolls, they continue to see things in as positive a light.

PS: As "Madman" on the forum pointed out....

""For the latest reporting week, nine states didnt file claims data to the Labor Department in Washington because of the federal holiday earlier this week, a Labor Department official told reporters. As a result, California and Virginia estimated their figures and the U.S. government estimated the other seven, the official said."" from Bloomberg. FYI...................

Estimated eh?  Hmmm....

That's been "the trade" the last year or so, of course.

Investment-grade credit is up, and "high yield" is up radically, both off their early 09 lows.  Then again so is the stock market.

But as the Mike Pento interview showed, those who ignore the obvious rumblings in that market are going to eventually get their heads cut off.

Do you really think that bailing out Europe with a hastily-cobbled-together $1.2 trillion credit line has solved the structural problems with balance sheets over there?  The entitlement spending beyond the ability to pay with taxation?  If you do, you're deluded.

Ireland swallowed it's largest lender and now is paying just under 4% more than Germany.  Is that "good and sufficient" for Irish debt?  Well, probably not.

All risks like this seem to be in the background and "out over there somewhere" until they blow up in your face.  By the time the risk becomes "apparent" the door is small and the crush of the crowd large.  Maybe you're good enough to get through first, maybe not.  But history provides a multitude of lessons, and few people learn them in time.

Do you think that lending the government money for 10 years at 2.654% makes sense?  Have you ever seen a real rate of price inflation that would leave you with a positive rate of return, when one considers the things you have to buy?  Remember, CPI excludes food and energy at the "core", but we all eat and we all consume energy.  Yeah, ok, pull the other one folks.

Even more stupid are people lending folks like Stanley money for thirty years at 5.2%, or even "mighty IBM" that borrowed for three years at 1%.  What did IBM do with the money?  They bought back stock!

Stanley is even more amusing.  Anyone care to take a bet on China not burying them at some point over the next 30 years?  That's the bet you took if you lent them that 30 year money.  Bluntly, I think the people who bought those bonds are nuts.

Stock buybacks sound great until you realize that reducing the divisor makes EPS (earnings per share) go up but also makes LPS (that is, losses per share) increase as well.  Put another way, buybacks increase the common equity's leverage.  What happens when you start to report negative earnings? 

Yep.

The general rule of investing is that you want to buy when prices are low and sell when they are high, not the other way around.  It would be hard to argue that bond prices are low when yields are at record lows, since bond prices move inverse to yields.

Pundits will argue that when something is cheap it can get cheaper, and when expensive it can get more expensive.  True enough.  But the time to be buying government debt was in the early 1980s, when yields were stratospheric - and absent collapse of the nation, were destined to head down.

Today we have a bond market that is wildly distorted by the actions of central banks and governments.  The traditional bond buyer, especially on the longer end of the curve, is the pension fund or other provider of some sort of "Defined Benefit" program (e.g. insurance companies selling annuities) that needs to fund a cash flow into the future off the coupon, and therefore is interested primarily in analyzing for default risk and yield to either maturity or (if provided in the offering) yield-to-call.

But today you have people buying bonds because they are desperate for some sort of return.  The paradox of the current bond market is that much of the money being poured into them is actually destroying the yield necessary for those annuities and pension funds to be able to pay their beneficiaries!  The higher prices are driven and the lower yields fall the further one is tempted to "reach" out the risk curve to get the magic numbers to add up.  If and when the organizations doing this collapse under their funding deficiencies the commensurate forced selling and wild backup in yields will be something to behold - from a distance.

Sharply falling yields and commensurate rising bond prices look good for the trader who is primarily interested in capital gains, but they're ruination for those who have a cash flow stream coming in for plans such as those pensions that need a solid stream of interest payments that meet the actuarial requirements for solvency.  This is a serious issue that few if any are talking about, but they should be - because with the critical shortfalls in pension funds and the dramatic upsurge in the sale of annuities by insurance companies this is a risk that is literally as large, if not larger, than the housing market credit implosion.

The Fed shows no sign of backing off its idiocy when it comes to manipulation of the market and neither does our government.  As a consequence, I fully expect that we're going to recognize this risk "the hard way" with one of these somewhere down the road:

As with the siren that I sounded more than two years ago with pension funds - and which is now coming to the recognition point with the mainstream press, I fully expect that this article will also be ignored - right up until the unwind begins.

Then there will be countless pundits and market prognosticators who will say "nobody could have seen that coming" while insurance companies and pension plans implode and corporations that have adjusted their business models to require grossly-distorted yields will buckle and fail.

When it comes, whether it is in a few months or a few years from now, I will simply sit back and hoist my now-shopworn sign:

Beware...

You've heard the siren song I'm sure.

"Retail is pulling out money; that's a contrarian indicator and means the market is going to go up."

No it doesn't, and no it isn't.

Here's the chart, incidentally:

Credit Zerohedge

If that was happening because people were "scared", well, you might be right.

But that's not what's going on.

People are liquidating their accounts to live on them.

This is not capitulation, it is survival, and it is quickening.

More than ten years ago I wrote a piece called "Investable Capital" in which I explored the coming tsunami that was going to overtake any and all attempts to float the markets higher and blow more liquidity bubbles. 

Quite simply, it is the boomers ultimately having to live on their accumulated funds.

My original (late 90s) "best guess" was 2015 for that to start, with that point being the secular valuation top driven by inflows from this part of the population.  I didn't count on a 60% dive in the market and a "recovery" that left the indices a third off their highs happening in 08 and 09. 

But that's what we got, and a bit of "back of the envelope" massaging of my old thesis has that "little change" materially accelerating the "knee" point.

In short I'm willing to bet this is a secular, not cyclical shift, and if your valuation thesis involves this being "dumb money" that is simply scared (and thus doing what it usually does, that is, pulling money at the bottom) you're going to be proved dead wrong and quite possibly dead broke on top of it.

If you ever wondered why I call CNBC "CNBS", this ought to make the point for you.

Watch how their alleged "reporter" (having a pretty face does not mean you have anything better than rocks in the cranial cavity) tries to lead Mike Pento - and gets her head ripped off.

There is a fairly bright line between reporting and advocacy.  One is practiced by journalists and is (or at least used to be) common on what are supposedly news channels, which CNBS claims to be.  The other is common to late night "Ginsu Knife" commercials, hour-long specials on how to make a gazillion dollars flipping real estate, why timeshares in Orlando are the best possible vacation value and other similar topics and are usually prefaced with a nice crawler that says "paid commercial advertisement."

It's rare that you get to see someone refuse to take the sort of BS that is dished out daily on the Pumptastic GE propaganda network, choosing instead to shove it right back in the host's face.

I bet Mike isn't invited back....