Truth Lost in Conflicting Chaos

It is spinning out of control.

The NASDAQ was down 1.5% today, with the VIX (volatility index) spiking.

Overseas, Europe is under siege, with Nigel Farage detailing the damage unfiltered immigration will cause, with those seeking to take America down following Europe's lead.

Additionally, there are escalating issues with Russia in the middle, where things are quickly getting nasty, with our side lead by enemies within.

The housing market seemingly everyone is cheerleading is a mirage, as home builders and home sales are crashing.

Physical gold is elusive; however, big money is chasing it. Big money is also betting on increasing rents, which is a signal the economy is far from healed.  Potential home buyers are unable to pull the trigger on purchases of new or existing homes, as median income is stagnant and full time employment growth is non-existent.

Then, there is the stock market, where too many dollars are chasing too few performing assets, creating inflationary values based on nothing.  Retail sales, and manufacturing, have also collapsed.

With conflicting information everywhere, it is tough to decipher propaganda from reality.  Look no further than the lack of inflation in the market, or so we are told by our government and their media partners. In many ways, they seem blended in ironic mesh.

But make no mistake, real trouble is near. The market knows; soon, we all will.

 (chart via WallStreetWindow.com)

The Coming Storm

By a slew of market data, a crash in the capital markets appears imminent. The market is extremely toppy, and as Doug Ross notes in analysis of John Hussman's weekly letter, "When weak participation, rich valuations and scarce bearish sentiment accompanied a record high in the same week, the handful of instances diminish to surround the precise market highs of 1973, 2000, and 2007, as well as 1929 on imputed sentiment data – and the week ended July 17, 2015".

From earlier instances of The Hindenburg Omen, to a recent death cross formation and an increasing disconnect between the worlds of equity and fixed income, multiple and increasing signals within the capital markets indicate trouble on the horizon.

Interest rates should have been hiked over ten quarters ago, even with the putrid economic status.  The raising of the rates would have had a serious negative ripple effect on the overall economy, but this would have been healthy, an opportunity to cleanse the market of excesses and establish true points of equilibrium.

It will not happen now, as multiple, far more significant issues have arisen that threaten to torpedo the not only the capital markets, but the overall economy as well. Of particular note in this well crafted piece is the collapse in the price of oil, which would not be happening in a healthy environment with normal and reasonably efficient supply and demand levels. Rather, it signals great weakness, which in this case, could be catastrophic.

Historical Oil Chart/InvestmentResearchDynamics.com

The collapse in oil is documentation of a contracting economy. Despite the propaganda and data manipulation, as eloquently stated in the Investment Research Dynamics piece, "It’s hard to hide the truth when there’s still checks and balances around to counter-balance the Orwellian fog that is engulfing our system."

As Jim Quinn, who runs truly outstanding blog The Burning Platform, points out, department store sales are imploding, noting "What is revealed when you look under the hood of this economic recovery is that it is a complete and utter fraud. The recovery is nothing but smoke and mirrors, buoyed by subprime auto debt, really subprime student loan debt, corporate stock buybacks, and Fed financed bubbles in stocks, real estate, and bonds."

Add in the massive expansion of the FED balance sheet increasing inflation, and you indeed have an unsustainable mirage of a recovery.  No doubt; the storm is coming ashore.

In the aftermath of this impending collapse, engulfed with smoldering evidence of failure of a slew of centralized government programs, most notably Dodd-Frank, perhaps it will dawn on the minds of those placed in command of governance to all to unwind the centralized government programs, reduce taxation and regulation, unleash the great entrepreneurial spirit of America and embrace the power of free market capitalism, which in the words of noted economist Larry Kudlow, is the best path to prosperity.

False Argument of Minimum Wage

Facts are indeed stubborn.  Given the economic facts we have seen continuously seen for decades regarding the minimum wage, it should be clear the argument is not about "working families"; but rather a political agenda. Once again, the minimum wage is not a wage designed to support "working families" and raising it reduces employment.

Over at Zero Hedge today, a chart showing retail trade offers a notable emerging difference between states that recently hiked the wage and those that held firm. Retail is most telling, as the indusrty has among the highest level of these type of workers.

Retail Trade/Chart via Zero Hedge

Again, raising the wage hurts the very people the propaganda tells us it will help.  In the macro, it reduces the efficiencies of firms, raising costs and restricting their abilities to add workers, which is an overall drag on economic production regionally and thus nationally.

Fast food workers recently went on strike to obtain higher wages, not due to their hard work on the job, but because of the perception that they deserve it and the corporate employer can afford it. In an interview with Business Insider economist, Paul Krugman thinks the overall costs of raising the wage would not cause as many issues as most think.  Krugman fails to recgonize the adminstration he advocates for has no right to direct the capital of private firms through social engineering. Economically, why cause any issues? Why not reduce encumbrances firms face limiting the obstacles faced in advancing growth? 

Unless, of course, you have other objectives.

Common sense would dictate that government intervention in this arena is designed to help the workers and help the economy grow, but that is a farce.  Government mandated wage levels, along with price controls, are impediments to growth.  Therefore, the goals are not economic, but politically driven, with the plans set forth in the Cloward and Piven Strategy the objectives.

Free market capitalism, with limited governmental restrictions on business, is without question the best path to prosperity.  Under the current administration, fees, taxes and government regualtions have increased while freedom and prosperity have decreased.

In the form of the old argument regarding the minimum wage, now you have an example of why.