A Bear (and OBL) in the Wings?

CNBC’s website writing yesterday about the potential for a huge selloff in September…

So far, over $500 million in so-called put options have been purchased betting that the benchmark Standard and Poor’s 500 index will tumble anywhere from 5% to 11% in September. Some investors are even buying put options calling for 52% decline. A "put" option increases in value as the underlying stock or index falls.

To put it in perspective, a 5% drop in the Dow Jones Industrial Average would be the equivalent of 667 points. An 11% decline would equal 1,468 points. And a 52% drop? You don’t even want to know.

Add to this, the concern of Vice Admiral (ret.) John Scott Redd, who heads the government’s National Counterterrorism Center, who says that this summer’s al Qaeda "chatter" strongly resembles that of the summer of 2001. In other words, an attack may well be coming this time.

We’ve got this intelligence threat; we’re pretty certain we know what’s going on. We don’t have all the tactical details about it, [but] in some ways it’s not unlike the U.K. aviation threat last year. So we know there is a threat out there.

Looks like an "interesting" autumn coming (note refusal to use the word "fall").

Employment

George at Urban Survival is a very public proponent of what seems to be a couple guys crunching bytes they find on the internet and using the frequency of various words to predict the future. The concept assumes the wisdom of crowds, and that collectively, we all know what’s coming, whether we all feel it in the ether, or are just projecting our intentions through our language. I have to admit a certain admiration for the work, as a fairly specific, yet cryptic prediction of a serious "wounding" affecting Vice President Cheney and his political life a while back became clear when Dick (accidentally) shot a Republican supporter in the face while hunting. That was a pretty good "hit," in my estimation.

Now, Urban Survival is crowing about the predictions made earlier this year of a summer "employment crash."

I don’t know how much more clear I could have been putting out the word much earlier this year about the "employment crash" that the time machine/predictive linguistics work of www.halfpasthuman.com said would be showing up by late summer. Sure, at the time with the economy perking along on a profitable war, and a fairly optimistic outlook, it wasn’t clear just where such a crash would come from, but here we are coming along to late summer and oh, lookie here, it’s the employment crash developing right on [linguistically foreseen] schedule.

It’s true. They’ve been trumpeting that for quite some time, but I leave it up to you whether you believe in this stuff or not. Keep in mind the successes are well documented, the misses not so.

But regardless, it’s interesting stuff and bears watching.

Is America the “New Rome?”

Many say "no," but a growing number of people who know of these things are saying "yes, we’re headed that way."

One of those individuals who know what they’re talking about is the comptroller general of the United States, David Walker. He’s on a quest to spread his philosophy of fiscal responsibility and the dangers of ignoring that virtue all over this country. Unfortunately, I don’t believe enough people are listening.

From Dan Radmacher’s article at Roanoke.com:

The Roman Republic fell for many reasons, but three reasons are worth remembering: declining moral values and political civility at home, an overconfident and overextended military in foreign lands, and fiscal irresponsibility by the central government.

As Radmacher notes, Walker’s emphasis is on the third of these problems. This country is experiencing an explosion of debt, and he’s right (as are many others who agree) when he suggests that our ever-increasing and almost impossible to stop debt positions will devour our economic strength.

Rome fell, and if this country’s mostly politically motivated fiscal irresponsiblity continues, so will we.

What interesting through this unwinding, is that the Libertarian philosophy, bring the armed forces back home to defend our homeland and get out of the rest of the world’s affairs so we can take care of ourselves, may well become the only action that will save us, rather than just being seen as a quirky extremist ideal.

Book Recommendation

There are no spy thrillers being written today better than those by Daniel Silva. His latest, The Secret Servant is a fast-paced, brutal and entertaining ride into the world of al-Qaeda, as it exists today. His protagonist, art restorer and Israeli secret agent Gabriel Allon, is working to release the kidnapped daughter of the American Ambassador to the UK. As usual, there are breath-taking chases, puzzles to figure out, and a couple of very satisfying uses of excessive force that Allon is known to employ when required. But aside from the action, the message is a dark one. Militant Islam isn’t just coming. It’s here, and it wants to take over. Silva’s previous Gabriel Allon book The Messenger, deals with a Saudi plot against the Pope. In an interview on his official website, Daniel Silva talks about the realization many people in the West are finally coming around to, that Saudi Arabia is not our friend.

The Saudis are, quite simply, the perfect villains. They have a seemingly endless supply of money and hold the economic security of not only this country but the entire world in the palm of their hand. They have been described as one of our closest allies in the Middle East, yet at various times throughout their history, they have behaved more like enemies than friends. I also believe that Saudi Arabia bears a large responsibility for what happened to this country on 9/11 and have never truly been held accountant. The 9/11 Commission described them as "a problematic ally in the war against terrorism," a stunning example of understatement. They are, to a large degree, the ideologues and financiers of global Islamic extremism. Indeed, I believe one can argue it was the House of Saud that started the fire of the global jihad movement in the first place. The Messenger gave me an opportunity to explore some of those themes.

And…

Q: Without giving too much away of the plot, The Messenger deals with a terrorist conspiracy to attack the Vatican-a conspiracy financed and enabled by a Saudi billionaire and a former Saudi intelligence officer. All of your work has some foundation in fact. I assume this one does, too.

A: It does, indeed. In fact, the plot of The Messenger was inspired to a large degree by a report produced by German intelligence in 2004. They found that a pair of Saudi companies-one of them was a hundred-million-dollar-a-year holding company-were essentially front companies for the Saudi intelligence service, and that these companies had substantial ties to al-Qaeda cells operating in Germany and Indonesia. The report made me think. What if the holding company was owned and operated by a globe-trotting billionaire with close ties to Washington elite? What if he was using his company and his businesses to move men and materiel around the globe? What if a terrorist mastermind was hidden somewhere within his empire? It didn’t take long before I had a frighteningly plausible scenario.

Silva’s work is remarkable and immensely entertaining, but with the clear bell of truth that as you read, is constantly ringing. Link to the interview with Daniel Silva.

Wisdom from the U.K.

I read with great interest the story of Totnes in Devon, UK, a town that wants to become a "transition town," or one that’s come to terms with a future that doesn’t include the reliance on cheap petroleum products that drive our current civilization.

Transition towns are communities which have accepted that peak oil will happen and have started to take steps to ensure that when it does start to impact, they’re ready for it.

They’re not wild-eyed survivalists, they’re just ordinary men and women with an eye to a potentially difficult future.

They believe in relocalisation, growing their food locally – even if that means digging up the local playpark and planting fruit trees or vegetables.

Jim Kunstler would be proud of them!