Happy Friday!

Well the employment numbers looked pretty good this morning.  I hope they're legit.  We need to keep some of this momentum going.

The U.S. Senate voted overwhelmingly to ban insider trading by Congressional leaders. The decision, which was a remarkable turn for a bill that had been left for dead, came after repeated media reports last year of questionable trading by politicians. The House of Representatives is expected to put the act to a vote next week.  Wow they did something that makes since...

From Stansberry today:
The Human Resources Administration (HRA) of New York City added more than 100 workers last July. And it plans to hire another 100 people to serve the growing number of New Yorkers applying for food stamps and rent assistance. According to city records, nearly 1.8 million New Yorkers are currently on food stamps – a 65% increase from four years ago. And those 1.8 million are crowding HRA offices. Despite recently seeing $200 million in state funding cut from its budget, the HRA is hiring. But it's not enough… Or so says the advocacy group Federation of Protestant Welfare Agencies. The group is complaining because long lines are keeping applicants from receiving welfare.

 Next thing you know, welfare recipients won't be able to spend "their" money at strip clubs… Oh wait, that was actually up for discussion in Congress. On Wednesday, the House voted 395-27 to pass a bill requiring states to block welfare debit cards from being used at casinos, strip clubs, and liquor stores. The measure was approved by the House last December, but dropped from the final law. It was reintroduced, sponsored by Louisiana Republican Rep. Charles Boustany, as a stand-alone vote.

 Any sane person would see the issue with allowing welfare recipients to withdraw taxpayer money from strip club and casino ATMs. Alas, many in Congress do not – despite the fact that California welfare recipients withdrew $1.8 billion from casino ATMs in 2010 (according to the Los Angeles Times).

The opponents' defense… "In many neighborhoods, the closest ATM is located in a nearby liquor store," Democratic Rep. Gwen Moore said when the bill was debated last December. Moore said the bill would "humiliate and marginalize" poor people.

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The U.S. increased the debt ceiling on Friday (with 52 votes from the Senate), allowing us to borrow another $1.2 trillion to goose the economy. According to the financial blog Zero Hedge, two days later, the dry powder is down to $1.1 trillion… We added $120 billion to the national debt in two days.

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Here is an interesting look on Facebook I read yesterday.

According to the filing, Facebook generated $3.71 billion in revenue in 2011, up 88% year over year. And net income was $1 billion, up 65% from the year before. Would you join the frenzy to buy a company at nearly 30 times revenue and 100 times earnings?

Facebook is a great business. It's got 47% operating margins and 18% net margins. It's got a fortress balance sheet with no debt and almost $4 billion in cash and securities. And it's got more than 870 million regular users who, I suspect, buy something once in a while based on ads they see there.

Facebook could be the next Google, whose market cap has nearly sextupled since its 2004 debut. But the odds are against it. Last year, several social media companies started trading. Those include online gaming company Zynga, business networking website LinkedIn, and daily-deal website Groupon. Those companies, with the exception of Zynga, soared the first day of trading (meaning you would have had to buy at the higher prices… few retail investors are actually filled at the low prices). Peak-to-trough, those companies all stumbled… Zynga fell 20%, LinkedIn was down 46%, and Groupon fell 42%.

But they're not down today. They're up, up, up… Zynga – which gets more than 90% of its revenues through the online social games it sells through Facebook – is up 16% this morning and trading for more than 160 times earnings. Other social networking sites are also popping today. LinkedIn is up 7% and trading for 1,000 times earnings. Groupon is up 10%. Groupon has no net profit (hence, no earnings multiple), but it trades at more than 10 times sales.

If this isn't a bubble, there's no such thing. And you know what happens to bubbles… Remember all those dot-com stocks from the late '90s… like Boo.com? The online fashion store spent $188 million in six months and went bankrupt in 2000, along with many other Internet miracles. Didn't we learn anything from that?

If we learned anything, we've forgotten it. That's humanity for you. Individually, many people can be quite intelligent… But put them in a crowd and their wits vanish… The thundering herd never learns.

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Sunday is the Super Bowl, in case you haven't heard.  Some people watch it just for the commercials.  If you are one of those people, you'll like this article.

Top 10 Super Bowl Ads

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Poor Squirrel

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From Krieger:
It’s the first time we have power with people that don’t have courage.  The people on top have power without courage.  You cannot find any other society like it.  Take the knights.  The knights were people who of course, their trade was risking their lives.  In theory, The President of the United States was supposed to be first in battle.  Not someone pushing a button.  The only way you can have a safe society is by moving these types of people (that risk nothing personally and take all the upside) out of their positions.  Making them more accountable.

- Nassim Taleb (in this fantastic interview http://www.econtalk.org/archives/2012/01/taleb_on_antifr.html)

From our perspective, this is a critical idea. As we have said for several years, we do not see Iran as close to having a nuclear weapon. They may be close to being able to test a crude nuclear device under controlled circumstances (and we don't know this either), but the development of a deliverable nuclear weapon poses major challenges for Iran.

Moreover, while the Iranians may aspire to a deterrent via a viable nuclear weapons capability, we do not believe the Iranians see nuclear weapons as militarily useful. A few such weapons could devastate Israel, but Iran would be annihilated in retaliation. While the Iranians talk aggressively, historically they have acted cautiously. For Iran, nuclear weapons are far more valuable as a notional threat and bargaining chip than as something to be deployed. Indeed, the ideal situation is not quite having a weapon, and therefore not forcing anyone to act against them, but seeming close enough to be taken seriously. They certainly have achieved that.

- Stratfor  “Considering a U.S.-Iranian Deal,” January 24th, 2012

I’ve Always Loved History
I’ve always loved history.  Even all the way back to grade school I remember it being my favorite subject.  Very early on I noticed certain patterns in history and I wondered why they occurred.  When I was first exposed to European history, I recall being absolutely floored by how certain countries could become so rich and powerful and then subsequently collapse so stunningly and rapidly.  The one that really boggled my mind was Spain - the homeland of my maternal grandfather who I never met.  Here was a country that conquered and viciously looted essentially all South America other than Brazil (thanks to the pope being magnanimous enough to grant that part of the world to Portugal in the Treaty of Tordesillas), Mexico, Central America and parts of the United States.  The gold and especially silver that was taken back to Spain was the stuff of legend, yet almost at the same time they had defeated the native peoples overseas their kingdom at home was crumbling.  Not to bore anyone with too much history, but by the mid 1500s the Spanish had essentially conquered the Aztecs (Mexico) and the Incas (Peru).  At the time, the Aztec capital, Tenochtitlan was estimated to be larger than any city in Europe.  Despite these tremendous “successes” and the riches that came with them, the battle of Rocroi in Northern France in 1643 less than one hundred years later marked the end of Spanish dominance in Europe.  What is so fascinating to me is that while the conquistadors were out raping and pillaging halfway around the world the domestic economy was experiencing economic crisis.  There were episodes of major currency debasements in the homeland as the crown was forced to fight wars on their borders as well as fund the excursions abroad.  It is important to note that the collapse came pretty quickly as it was only in 1627 when things were still looking pretty good for the empire that The Count-Duke Olivares famously stated: “God is Spanish and fights for our nation these days.”  Does this story sound familiar?

It’s the Leadership Stupid
The reason I put the Taleb quote at the top is because it is such a phenomenal interview and I request that every one reading this takes the time to listen to it this weekend even though it is very long.  In the part just prior to the quote I used he talks about how society is now separated into three categories.  The category that he has the most disdain for are those with “no skin in the game.”  These are the self-proclaimed “elite” of the Western world today.  This group is varied but generally consists of politicians, Wall Street executives, the CEOs of large state-connected and protected multi-national corporations and mainstream media “journalists” or as Gerald Celente likes to call them “presstitutes.”  As Taleb notes, these “elites” have no honor or courage.  They are groveling little manipulator parasites.  They have created a world in which they are able to reap all of the upside and have no downside.  When things go against them they just bail themselves out on the back of the rest of society.

Then of course there is the group with “skin in the game.”  This group consists of the unconnected wealthy, the middle classes and the poor.  This is why class warfare is such an absurd thing.  OWS is not about class warfare.  It is about the battle between those with skin in the game versus the “elite” that rig the game and call it capitalism so they can later demonize it and consolidate power further.  It is about the 99.9% of humanity against the technocrat and crony capitalist alliance.  It is free humanity against a fascist system that is not capitalism or free market in any way shape or form.  Yes, I think OWS needs to make this message more clear, but it’s not about money.  It is about excessive power.  Yes money in large amounts does equal power but it is the system itself that is the cancer.  If we didn’t have a money system where money is counterfeit and can be created at will with a computer keystroke by the Ben Bernank payoffs and system rigging would be considerably more difficult for these clowns (although of course it would still happen).  

Taleb then describes the final group.  Those that “don’t have upside.” These people are there to “take the downside of others.”  The best example of this class is the military of course.  They risk it all for themselves and their family for essentially no reward except the satisfaction that they are doing good.  Here is where I think things get interesting.  What happens when the military realizes they aren’t fighting for the good of their nation?  What happens when they realize the wars they are risking their lives for are merely to help those with “all the upside and no downside,” ie the elite to consolidate power for themselves?  What happens when the military realizes their sacrifice is undermining the very Constitution they swore to uphold?  I will tell you what happens.  They support Ron Paul; which is exactly what has happened.   

The Iran “Card” and the Idiocy of Western Leadership  
If I was the leader of Russia or China right now I would be salivating and on the floor laughing.  I would be in utter disbelief of how corrupt and immoral and insane and incredibly stupid the technocratic/Wall Street leadership of the Western world is.  I mean they don’t even have to do anything.  All they have to do is sit back and watch us blow our societies up with our actions.  It’s truly remarkable.

Let’s start with Iran.  Please go back to the top and reread the quote from the Stratfor piece.  Stratfor, for those who aren’t aware is one of the most respected geopolitical/intelligence research organizations of the planet.  So this isn’t just me spouting.  Isn’t it interesting how this organization makes it clear in no uncertain terms that Iran is nowhere near a nuclear weapon, yet all the presstitutes on television don’t ever even ask this question.  It is always posed as “well we know they are close so should we attack or not.”  This is how propaganda operates.  It doesn’t even allow you to start with an honest question, rather it starts off with a lie.  If you start off on a question of war with a assumption that is a patent lie how do you think things are going to turn out?  This is the exact same spectacle that we saw in the run up to the war in Iraq and their “weapons of mass destruction” that of course never existed.

All of this just supports my view that Iran is about two things.  First, Iran is not safely a glorified member of the “elite” Western puppet states in the Middle East.  This is a huge problem considering their considerable oil production and the threat that they could choose to not sell that oil in dollars.  Secondly, TPTB understand that the “natives” back home are getting restless and they know that historically speaking nothing works better in a crisis than a big war to get the population to be submissive and do as told.  The interesting thing here is that the U.S. citizenry does not want another war and neither does the rank and file military.  TPTB know this.  As a result, I think all of us need to be on the lookout for an attempted false flag attack that will be blamed on Iran.  This could be a “cyber-attack” (that would be convenient since they could then use it to also censor the web), or otherwise, but in the end this is something to be very cognizant of.  If you are following what is going on you realize that Iran has absolutely ZERO incentive to launch any attack on the U.S.  This would guarantee a response and regime change.  They are not that stupid.

The other interesting thing about the Iran situation is how completely incompetent and idiotic Western leadership actually is.  I am the farthest person from someone that wants to keep the status quo in place, but if I was one of these Western “elites” I can tell you one thing; I wouldn’t be making any of the foolish moves they are making.  The biggest blunder I have seen as of late is the U.S. and Europeans launching a new round of sanctions against Iran, specifically targeting their banking system.  The great irony in all of this is that this action is merely accelerating a move away from the dollar as the currency of choice for many in the region.  The only thing I have seen since these new sanction have been put in place are many more currency swaps between China and other countries.  Most notably recently with Japan and the UAE.  Even South Korea the other day mentioned buying Chinese debt and further diversifying reserves.  Then of course there are deals to sell Iranian oil to India using both rupees and gold.  In a world of tight resources and centrally planned economies whose leaders need to keep their sheep fed, warm and on the highways, Iran’s oil will be sold.  It’s actually comedic to see Europe taking the “offense” by saying they won’t accept Iranian oil.  Europe of all places?  Give me a break.  Yeah, threaten one of the biggest oil exporters in the world as you plunge into a sea of poverty, social chaos and bankruptcy.  Do everything in your power to throw them into the open arms of Russia and China.  You wonder how an empire can decline so fast?  It’s the Leadership Stupid.  History will remember the current crop of leaders in the Western world as the biggest collective or corrupt fools ever assembled on planet earth.

Ron Paul in Denver  
This Tuesday I had the pleasure to attend Ron Paul’s rally in Denver.  I had never been to a political rally before in my life and it was an awesome experience.  Contrary to Joe Scarborough whose anonymous source claims such rallies are filled with anti-Semites I went with another Jew and all I saw were intelligent, open minded, informed citizens coming together for the only principled candidate for the Presidency.  It took place in a large hotel ballroom and was standing room only.  About half an hour before it was to start I went across the hall to the shop to buy a bottle of water and the woman working behind the counter marveled to me about the amount of people attending saying she had “never seen anything like it.”  She also said she was closing her doors at noon to go herself.  Whether or not Ron Paul wins the office is actually besides the point.  He has already won.  As Victor Hugo said “no army can defeat an idea whose time has come.”  Well the time is now and the idea is liberty.

The Dave Janda Radio Show     
This past Sunday I had the pleasure to be on Dave Janda’s “Operation Freedom” radio show, which is broadcast on WAAM Talk 1600 Radio out of Ann Arbor Michigan.  Dave is a phenomenal guy and vigilant fighter for liberty.  He takes time out of his busy schedule as an Orthopedic Surgeon to do this show every Sunday.  Previous guests have included, Bill Murphy, Jim Rickards, Jim Rogers, Gerald Celente, John Perkins, James Turk and many others.  Here is the link to my segment.  I hope you enjoy.   http://www.davejanda.com/audio/MichaelKreiger012912.mp3

Peace and wisdom,
Mike