I
spend a lot of time in these letters beating on the talking heads that stream
constantly across the cable financial news networks, with my favorite target of
course being CNBC. Today I won’t be doing a lot of that, but I do have to
explain to the new readers just why I do attack them so viciously. So first let
me dispense with the logics behind trashing main stream media.

No one
likes to get lied to. But there’s huge differences between the impact of
someone’s lies on your personal well being. If someone you never met says "Boy
the fish were jumping in the boat yesterday and we caught 10 of the biggest fish
you’ve ever seen" you can dismiss that or accept that. But the bottom line is
that whether you believe it or not, it won’t have any substantial impact on your
life. But when people on financial networks that have been elevated to the
status of "guru, Gods, and trusted advisors" lie to you, there’s a good chance
that the actions you take based on their lies will indeed, very much impact your
life. Just to give you the quickest of example, Famed guru Jim Cramer declared
several months ago that housing had bottomed. It was going to be all wine and
roses. Since then foreclosures have hit more all time records, mortgage defaults
have hit all time records, the median price has fallen, and there is no bottom
in sight.

If you were one of the Cramer groupies and ran out and bought
a home on his declaration, chances are good that already you are "upside down"
on your home. It is worth less than you paid for it several months ago. I can
assure you it will be worth even less in the coming year. Now you have to make a
value decision in your head. Did Cramer really believe housing had bottomed, or
did he simply lie and push the Wall Street/banker agenda? In my mind the opinion
is simple. He simply lied to everyone. Which in turn has caused "X" amount of
people to do something that will cost them dearly.

That in a nutshell is
why I rake these talking heads over the coals each week. That is why I expose
their statements, call them out, and badger them to death. I want to rent a
little space in their heads, maybe make their conscious bug them a bit. I cannot
for the life of me understand how these people sleep at night, knowing full well
that they are lying to people who look to them for guidance. I’ll never stop
ripping them, and I’ll never stop showing you all the facts that you’ll really
need to make wise decision. Got that? Great.

It is not popular, nor has
it been an easy thing to do, to bet against America. For the past 80 years,
betting against America has been a good way to ruin. But what happens if the
very things that made America the great economic power it always was, have been
changed? Does it not stand to reason then that maybe the out come has changed
also? Yes that would be logical. Here, let me give you an example. Not 40 years
ago America was the manufacturing powerhouse of the world. Approximately 70% of
our nations economy was based on the manufacture and export of solid goods. Now
manufacturing makes up just about 30% of our economy, with "services and
consumption" running 70% of the activity. That’s a massive change, no? Yes. And
therefore you certainly wouldn’t make predictions about something like exports,
based on the statistics from 1965. No, you’d use 2009 statistics.

Yet in
some "National Pride" or ego centric display of hubris, 90% of the "people"
simply will not allow themselves to believe that you can indeed bet against
America, despite all the metrics of our economy being absolutely "bass ackwards"
from what made us great for all those years. I find it curious at least, mind
numbing at best. Maybe it’s the adage "old habits die hard" or something
similar, but in any case imagining a similar outcome ( America comes out on top
yet again, as always) when all the "inputs" have been perverted from historical
norms is something akin to lunacy.

You all know the saying that the
definition of insanity is "doing the same thing over and over, and expecting a
different result." Yet for some deep rooted psychological reason people tend to
be quite comfy with the idea that "you will get exactly the same result despite
doing everything completely different". Does that compute? Not at all, yet this
is indeed what most are led to believe. If the inputs that were different were
just "slightly" different, one could come away with the idea that "it’s close
enough". But yet we aren’t talking about slightly different, or even remotely
similar. For example in 1980 we were the worlds largest creditor. Today we are
the worlds largest debtor. This is not an insignificant change folks. That is
change of biblical proportions. Yet no one suggests it will effect the ‘end
game". I assure you it will.

Because we walk the "economic beat" so to
speak, and most people equate the economy to the stock market (it’s not one and
the same) we generally hear more bickering about stocks, than the economy as a
whole. I’d venture to say there are 50,000 web sites that all declare they know
what stocks are doing, where they’re going, if its a bull market or a bear, etc
etc. On any given day you can march a raging bull and a violent bear on the same
stage and each will give you their opinion as to where we are, and where we’re
going.  Let me give you an example of that dichotomy as I present you the two
views, one by a self professed "professional trader" and one by David
Rosenberg:

Skeptics say the market is
way ahead of itself, but a reasonable case can be made for continued
bullishness. It goes something like this:

-The world is awash in government provided liquidity
and low interest rates. The Federal Reserve last week made clear it will keep
rates extraordinarily low for an "extended period." A Wall Street Journal
article today by E.S. Browning expands on these points.
-Since the stock markets in the U.S. are increasingly
institutional markets, with participants basing investments to a degree on
leverage, those low rates are meaningful.
-Those low rates also will fuel more mergers,
generally a stock market plus.
-U.S.
corporates generally have their acts together. Earnings are solid. Yes, they are
generally based on cost cutting rather than revenue growth, but that means when
new revenues eventually show up, a significant portion will flow to the bottom
line.
-The rest of this economically
interconnected world is alive and kicking, especially in economically important
areas of Europe and Asia. So the U.S. consumer, hampered by unemployment and
lower house values, won’t have quite as much of the global growth burden as in
previous recoveries.
-Market dynamics
support the bull. Stocks are supposed to look forward and given our current
situation, even at sub-par growth rates, it is not far-fetched to thing
employment will start slowly increasing in the U.S. in the second half of 2010.
Another market dynamic: the plethora of skeptics is a positive for further price
gains. The majority view is typically a contrary indicator.

Now
for Rosenberg’s look at things when asked if this was some form of a new bull
market. The last secular bull started in 82, and he compares the
two:

P/E multiples were 8X, not 26X
Dividend yields were 6%, not sub-2%
The stock market was trading at a
discount to book, not 2X premium
Monetary policy was aimed at reducing money growth
and inflation rates, not creating both as is the case now
Fiscal policy was aimed at reducing nondefense
spending, not accelerating it
Deficits were peaking and coming down, not surging to
10%+ relative to GDP
Global trade
barriers were being torn down, not erected
Deregulation back then was in; today it is all about
re-regulation and government ownership
Union membership was on the way down; today it is
back on the rise
The dollar was
entering a Plaza Accord bull market, not a mercantilist bear market
Credit, household balance sheets and
participation rates were expanding, not contracting
Tax rates on income, capital gains, and dividends
were declining then; rising now

As you can see, there’s no lack
of opinions when it comes to bull or bear, concerning the stock market. But what
I’m suggesting is something deeper, much much deeper. See, we make money in the
markets whether its a bull or a bear. I don’t much care which way the market is
going, as long as it establishes a trend, we’ll make our little fortunes. So the
direction of the "market" is really neither here nor there, since we are going
to profit from it either way. But what about America itself? Are you an American
bull, or bear? See that’s a much bigger question. I’d venture that most cannot
conceive of a world where America isn’t  the big dog. I not only can conceive
it, I belive it to my bones.

That’s not popular, and frankly I don’t
like it much either. See, I live here too. But I cannot let pride, ego, hubris
or any other "feeling" sway what my rational mind knows to be true. America the
great, has been dismantled to the point where economically we are doomed. They
can slow it, massage it, play with it, etc, but the end result will be the same.
We will not be the economic engine of the world and for the first time in 100
years, our standards of living are going to contract forcefully.

We are
witness to a generational event. The list of "never before’s" is so long, it
makes me shudder. Here at home we can rattle off the standard nightmares easily.
Trillions in debt, deficits for ever, record foreclosures, raging unemployment,
a service economy versus a manufacturing economy, people with no savings, too
much debt, etc etc. But there’s new developments that make this particular time
of economic history very unique. Enter China.

Everyone is pretty
comfortable with the idea that China’s a huge part of the global economy, but
few will come to the conclusion that China will dominate global economics in the
future. The cite Japan for example and say "see, Japan though they were going to
be hot too" and of course Japan isn’t hot, it’s frozen in a permanent recession.
But there is a huge difference between Japan and China. Japan is relatively a
democracy to some extent. China is a communist regime. China became the
manufacturing powerhouse of the world and everyone had to send them their
currency to get "product". But maybe more important than that, China never had
to rely on us for protection. So, in the past when we would have an issue with
say Japan’s yen, our Government would call their Government and suggest that if
they like having our military bases there, keeping them safe from the Russians,
Koreans, and Chinese, maybe they better pay attention to the yen. Well they
would of course.

China couldn’t care less about America, or her leaders,
or her military. We have absolutely NO power over these people. Their army is
bigger than ours, they can crank out more munitions that we can. They don’t have
socialist touchy feely whacko’s in their Government, so they can tell us to "go
to hell" when they don’t like Kyoto, Copenhagen, or any other Global Governance
initiatives. They laugh out loud at our inept economic advisors, and when we
threaten them over the value of their yuan, they simply say "shut up, look what
you’re doing to your own dollar jackass". This is a war we cannot win folks.
While we wallow in unrepayable debt, they sit on trillions in hard currency.

Because of the audacity and egomaniacal character of our idiot bankers,
they really think they can "pressure" China into cracking first in this currency
devaluation war. Uhm, well, no they can’t. We will lose, and they will win. As
they shift more and more of their attained dollars into gold, silver and
resources, we use our dollars which we first printed out of thin air, then
borrowed, to bail out bankers. They’ve got 2000 years of culture where they
watched generations of fools do foolish things. We are an entertainment to
them.

 China accuses Fed of reckless rate policy. China said the Fed is
endangering global recovery with its insistence on keeping domestic interest
rates near zero for the next 12-18 months. China’s chief bank regulator rebuked
the U.S. for fueling speculative capital flows that may spur asset-price
inflation, which he said has already led to massive dollar arbitrage
speculation. His comments came two days after the CEO of Hong Kong, Donald
Tsang, said he was "scared" because "America is doing exactly what Japan did
last time" when Japan’s zero interest rate policy contributed to the 1997 Asian
financial crisis

So how’s it all going to play out? For the next year to
maybe two, the Fed and Uncle Sam will continue to push stimulus, and deficit
spending to the limits. This will cause rapid inflationary pressures. But, once
that is proven not to work, we’ll roll over into a deflationary depression. I’d
love to say the idiots that caused the nightmare can avert that, but lets face
it, they cannot. However, we are already seeing some tremendous strides as far
as getting things in place for when we CAN emerge from the nightmare and get on
to building America back up.

I’m talking of course about Ron Pauls push
to have the Fed more closely audited and it was approved by the House Financial
committee. Now it should pass after Thanksgiving, giving us some more control
over the mutants that have ruined what was indeed the Grandest Country on the
planet. Look friends, we cannot stop the economic nightmare that lies ahead,
that’s baked into the cake. But as we keep pressuring our psychotic officials,
we are slowly shaping our future. Cap and Trade is getting trashed daily, and
just last week thousands of emails were "stolen" from an outfit that is part and
parcel of the movement for this baloney science. In those emails there’s direct
evidence of substituting data, hiding data that goes against the grain, omitting
data that would prove them silly, etc.  This is exactly what’s needed, pressure
the mutants that have taken control of this place, and wrest it back into the
arms of sane people who care about America, not some global socialist agenda.
It’s working folks.

We can have America back. We can enjoy an economy
that thrives, a future that’s bright. But we need to dismantle the last 25 years
of social engineering and economic suicide. It’s possible and if we all pull
together, keep getting the word out about the reality, we can see it happen. It
won’t happen quick, but we’re seeing it all across the land. Hang in there. In
the meantime, it’s ugly and it’s going to get uglier.

Let’s look around
and see what we’re up against:

Sony
waiting for spending spark. In an interview over the weekend, Sony (SNE) CEO
Howard Stringer said the consumer electronics industry continues to languish and
that "we are waiting for a signal that hasn’t arrived." Stringer noted a
stronger yen and tougher competition from Korea and China had hurt the Japanese
market, while in the U.S. he warned the recovery "will be neither a V nor a W,
but an L."

Ouch. There’s a sharp stick in the eye to all the
talking heads telling us how great the consumer rebound is.

For the first time in US History, the number of
foreclosed homes exceeds the number of homes for sale

If that
isn’t enough to scare the bejesus out of you, nothing is. While Cramer tells his
brain dead sheep that the housing market bottomed 4 months ago, we hit record
foreclosures, Oh and how about delinquencies? Ooops:

About 9.6 percent of borrowers were delinquent on
their mortgage during the third quarter, according to the survey, and another
4.5 percent more were somewhere in the foreclosure process. Overall, about 14
percent of mortgage loans or 7.4 million households were delinquent or in the
foreclosure process during the quarter, according to the group. That is the
highest level recorded by the survey, which has been conducted since 1972, and
is up from about 10 percent of borrowers who were in trouble during the same
period last year

Surely Uncle Sam knows how to deal with all this
right?

Toll warns of FHA train wreck.
Homebuilder Toll Brothers (TOL) said the FHA has created a potential "train
wreck" because it insures home purchases made with down-payments as small as
3.5%. FHA loans accounted for about 8% of the mortgages Toll closed last
quarter, while the agency guarantees 20% of all single-family loans. While the
FHA’s insurance reserve ratio has fallen to an all-time low, a senior government
official denied that the FHA is the next subprime mortgage
crisis.

Okay, so housing’s still shot and getting "shotter" ( okay
it’s not a word, you get it)  surely the inflation they say doesn’t exist is
under control, right?

LOS ANGELES (AP) -
Hundreds of protesters chanted, marched and took over a building Thursday on the
UCLA campus, where University of California regents were scheduled to vote on a
32 percent student fee increase

32%????? Isn’t that price
inflation that they tell us doesn’t exist? It sure it folks, and there’s a whole
lot more of that to come. As I’ve said till I’m blue in the face, things we
don’t need will continue to go lower ( think electronics, etc) things we need
will continue higher ( think insurance, food, energy, etc). Is there inflation??
GOBS and gobs of it.

Do you need more? Nah, that’s enough for one day.
I’m sure you all get the point. Now let’s move onto the markets:

The
fight is on, and it’s getting awful nasty. Here’s the deal folks. Back in March
the market started on a tremendous  bear market bounce. Many of the worst of the
shell shocked fund managers who got beaten bloody in 08, we so afraid of losing
any more money they didn’t catch the wave. Now that the market has passed 10K,
there’s a war going on, a war between those that made their 35% and are happy
and cashing out, versus those fundies that came late, are up only 10 to 15% and
are pressing the market for more. It’s an epic battle, one that the sellers
would win if indeed there was no fraud, manipulation, Fed secret accounts,
wicked futures buying, etc.

But even with those things, its not terribly
clear what the very near term will bring. I said last Sunday that I felt the
market would be a bit weak for a while, and something very interesting happened.
We opened the week at 10,318.61. We soared higher, we dipped hard and went flat.
Do you know where we ended? 10,318.16. Now give me a break. What are the
chances, that millions of traders around the world, some trading hundreds of
thousands of shares,  each with their own idea of what should happen, could come
to the conclusion that the market should end just 45 cents from where it
started. Is that possible? Not really, but that’s what happened.

As this
market has been humming along, short duration "pauses" is all the downside we’ve
seen.  If we take a peek at the advances and the subsequent dips (pauses) we see
something interesting. Here’s a few closes at the highs before a dip, and some
opens starting the next move up. We had  a run to 9370, a dip, and an open at
9119 to start the next run. Then a close at 9622, a dip lower and an open at
9276 to start the next run. A close of 9840, and a dip, then an open at 9434 to
move higher. A close of 10,081, a dip and an open at 9844 to move us back up.  Just recently we put in a close at 10426. We are now at 10318.

Whats all
that mean? Well it just tells us that we spurt higher and then shave off from
237 to 400 points during these pauses and then move higher. (taking out of
course the intra day highs and lows)  So, just recently we hit that 10426, but
we’re at only 10318, meaning if we zoomed up from here, it would be the
shallowest dip of this whole run. Is that possible that we just soar back
higher? Yes, but it doesn’t fit the pattern they’ve been working on, and could
suggest we see a bit more downside before they turn us back higher again. So, we
need to watch for that.

On the gold front, all hell has broken loose and
it’s not just supply and demand, it’s starting to become much wider than that.
Although the ultimate push higher will come when enough people look to it as
being "money" instead of a commodity, or a storehouse of value, we are also
seeing all manner of possible upside pressures coming into play. People are
genuinely worried that the Governments don’t have the gold they say they do.
Fake bars have been found in inventory in Asia. Well thought of sources say that
people are scrambling around the globe to assay the gold in their vaults, and
secure the "real stuff". It’s becoming increasingly clear that there just isn’t
enough of the "real stuff" to satisfy demand, and look out if we ever discover
that some of the supposed gold we hold at Ft Knox isn’t gold at all, just
tungsten bars plated as such. Oh my.

I do expect gold to take it’s lumps
as people who are ‘trading it" take their profits and move on, and the cartels
do their best to beat it lower again. But there’s no doubt in my mind the
economic suicide they have us on will ultimately demand that more and more
Governments move toward the metal, along with the hedge funds that are gold
centric, and the push for more ETF shares. Just an interesting thought here
folks, in the GLD prospectus, there’s no guarantees about the fineness of the
gold they supposedly hold, and no real oversight of the third party auditing of
the gold. Wouldn’t it be a hoot if a lot of the gold they say backs up the ETF
isn’t there and a lot of the stuff that is there isn’t pure gold, it’s some form
of coin melt or worse? Oh my, that would get interesting.

Golds going
higher. Silvers going higher. We’ve said it for 10 years, we’ll say it some
more. As the FED audits show more and more people just how flagrantly they’ve
abused our system, beaten the value of a dollar down to where it’s worth 5
cents, support global governements all in the name of profits, while your taxes
soar, gold will at some point be looked upon as money, not just a valuable. When
that time comes, gold will have it’s real day in the sun. As people continue to
wake up from the stupor they’ve been in for years, when they finally realize
that making 30% in stocks is pretty worthless if your dollar sinks 30%, the
migration to gold will continue.

Let me wrap this up today by wishing
everyone a Happy Thanksgiving. I will NOT be putting out a letter Wednesday
because of the Holiday Thursday, so it’s my last chance to wish you all the
best. Thanksgiving is my favorite holiday by far, and there’s so much to be
thankful for, that at least we have ONE day to catch our breath and say thanks.
I hope you all enjoy good food and drink with good people and share good times.
When it’s all said and done, we really don’t have much else besides that, do we?
Take care and I’ll see you all on Sunday.