No Suprise! Russia Annexes South Ossetia

Russia announced today that it will annex part of the territory of Georgia into its own borders. The monster reveals its nefarious motives more every day! Worse yet, Russia also announced that it will build a permanent military base within the conquered territories. It also indicated that it would soon do the same with other Georgian areas.

"The disclosure will expose Russia to accusations that it is annexing land regarded internationally as part of Georgia. Until now, the Kremlin has insisted that its troops intervened solely to protect South Ossetia and Abkhazia from Georgian “aggression”.

Needless to say, Russia's KGB Kings have repeatedly lied over the past month to the international community. This is only the latest revelation of Russia's dark heart that has emerged over the past few years. Tyranny has come once again to Russia, and now, it has begun to bludgeon its neighbors once again also. 1968 is here again. Here is the entire article:

Kremlin Announces that South Ossetia Will Join 'One United Russian State'

Russian Opposition Party Decries Recognition of Georgian Breakaway Regions

Now, human rights organizations are going into the region to catalog atrocities, and they are finding that despite widespread reports of such atrocities by the Georgians, there are no eyewitnesses. They are rumors, and nothing more, apparently planted to turn the hearts of the locals against their Georgian countrymen. One report by a human rights worker explains that while the rockets came from the direction of Georgia, what remains of the rockets themselves are Russian Grad rockets. This same reporter said the following:

For instance, all of a sudden, that maybe it was Russia that bombed everything to spite Georgia.

First a bombardment took place, then, after a massive shelling, the armored vehicles moved in.

And after the armor, the infantry forces walked in.

On the level of the shelling, and the armor, genuinely, the rights of the civilian population were violated.

Weapons were used which in no case can be used.

There were direct tank attacks on residential buildings, and on the building’s basements.

But from the point of view of the atrocities that, supposedly, were committed by individual Georgian soldiers, the infantry, we did not find any information from first-person sources.

It is possible that they were fed fables that the peaceful people had long since left.

This same human rights organization indicated that Russia has grossly overstated the number of civilian casualties in the area. Instead of the thousands that Russia claimed, the human rights workers were only able to document "tens of victims", not hundreds or thousands.

On the other hand, the same human rights worker said that there were decaying corpses of Georgian soldiers widespread throughout the area. These are a grave concern because they raise the likelihood of disease.

More Russian lies?

No Trading 'Til Next Week

Volume has been unusually low this week. I have decided not to trade until after the Holiday.

September is typically a very volatile month for the markets, and especially the stock markets. September and October are historically the worst months of the year for stocks.

Grain Analysts Surprised

Despite higher prices for crude oil, grain analysts have been surprised today to see the price of corn and soybeans plunge instead.

Russia's Medvedev: Itching for New Cold War!

While the West tries to downplay and ignore the idea that a new Cold War has begun between Russia and the West, Russia has embraced the idea. In fact, if Russia's President Medvedev has anything to say in the matter, Russia is eager for it. Russia's once fledgling democracy has now fully evolved into a elitist capitalist dictatorship controlled by a few militant oligarchs. “We are not afraid of anything, including the prospect of a Cold War," he boasted today. Russia troops continue to occupy tiny Georgia, including the port city of Poti, nearly two weeks after Russian leaders agreed to pull out of Russia. In fact, Medvedev said today that Russian forces are continuing to build, not withdraw.

This is important because as I continue to take the pulse of business leaders throughout the United States, we are only now beginning to price into the market the consequences and costs of this new Cold War (using Medvedev's terminology). Finally, we are beginning to wake up, sit up, and take notice that the past is still prologue in our relationship with Russia.

There is one significant difference this time, however. This time, Russia has a wealthy, capitalist economy awash with petrodollars and the confidence and willingness to pick a fight. They have no intention of backing down with the West.

Interestingly, the Founding Fathers of the United States, in their studies of human history, said that democracies have a tendency to do precisely that, evolving into tyrannical dictatorships controlled by a few wealthy elitists. They feared that such would also eventually be the fate of the United States, resulting in tyranny. That's why, when a woman asked what kind of government has been chosen following the Constitutional Convention, Ben Franklin replied, "a republic, if you can keep it". He knew that historically, democracies tend to degrade and destroy themselves, partly because where a majority rules, minorities rights are destroyed. Perhaps this is why Jesse Jackson pines for a day of "democracy of capital", in which the majority will take the property of a wealthy minority by force, if necessary.

On the other hand, a republic operates on the concept of the "rule of law", protecting minority rights and holding the tyranny of the majority at bay. This was also one of the reasons why they provided for United States Senators to be chosen by the states rather than by vote. This was changed, and the United States took a giant step toward democracy (and away from the republic they had given us), with passage of the Seventeenth Amendment. This amendment fundamentally changed the form of government in the United States away from that envisioned by the Founding Fathers.

We are now seeing this devolution of democracy occur in Russia, but also in the United States to a lesser degree. Lest anyone bristle at the suggestion that the United States is descending toward the tyranny of democracy, I would suggest that class warfare is one example of this. The idea that the majority can take the property of a wealthy minority by voting it away, is a form of tyranny that the Founders dreaded. A small, unpopular minority of wealthy people are preyed upon by the majority. Here is a link to a good explanation of the difference between a republic and a democracy:

'A republic, if you can keep it' ...or remember what it means

Gustav Takes Aim at Gulf Oil

Oil prices are jumping higher today as Hurricane Gustav takes aim at the prime Gulf of Mexico oil producing regions. Some computer models predict that Gustav will be a Category 4 or 5 storm by the time it hits the Texas-Louisiana coast. Click on the graphic to go to the latest update at accuweather.com.

Very Little Trading Today Due to Illness

I hope to be back tomorrow.

Grains Topple From Recent Highs

The Pro Farmer crop tour over the weekend suggested that crop yield expectations of the USDA are about 1% too high. The lower yield estimates were expected to buoy higher prices. However, prices have fallen significantly all morning so far. What gives? Good question! This is one more example why I follow the charts, regardless of what the fundamentals suggest. Falling yield should almost certainly provide ample impetus for higher prices, but we are seeing lower prices instead. Perhaps today's US Dollar strength is a large factor. A stronger Dollar increases the cost to foreign countries to purchase much-needed U.S. grain products. This might cause demand decay, but this is food they are buying, after all.

Bad News Bears In Charge Today

It never ceases to amaze me that on one day, we can see euphoric triple-digit stock market rallies, and the next day, the mood is so melancholy that prices plunge by the same amount. That's why I call these days of stocks "manic markets". Today is no exception. Compare today's charts (above) to those of last Friday. While Friday, it took the entire trading day for the Dow to climb 200 points, today, the plunge of more than 220 points have taken only half the day. It is also interesting to me today that each subsequent plunge today has been large than the prior one!

This Inflation Fudge Don't Taste So Good!

When the news media report US economic data, they typically only report the headlines. When was the last time we heard any of them spend more than a few cursory seconds (and usually no time at all) discussing how the government has fudged those statistics over the years? I have known for years that the government doctors the statistics, misleading the American people. I'm not suggesting that it is intentional, because I really don't know if it is. But whether it is intentional or not is really quite irrelevant. The fact is that it happens. As I have said several time in other posts: reasons are irrelevant. So are intentions.

I even knew how they do it, using hedonics, weightings, and substitutions. However, until now, I didn't know how much. I hadn't seen precise quantification of how much the government fudges the statistics. I ran across an interesting article that discusses the "how much". Here is an excerpt:

"...from 2007 to 2008, CPI showed a 4.1% rise in the price of food. But according to the Farm Bureau, that tracks the same basket (without using substitution, weighting or hedonics), food prices actually rose 11.3%!"

What this short quote is telling us is that while the official inflation statistics released by the Bureau of Labor Statistics reports inflation of only 4.1% (which is still twice the amount the Fed is comfortable with), the true, undoctored statistics, as collected by the Farm Bureau, using historical methods, is much higher -- 11.3%! Ouch!

Perhaps this is why universally around the globe, from the Arabian Peninsula to China, all the countries that have pegged their currencies to the US Dollar, are finding that inflation is out of control. Only the U.S. continues to claim that inflation is "contained" or soon to come down.

Here is the rest of the article:

Government Statistics: Perfecting the Art of Mass Deception

Obama -- Candidate of "Big Corn"

The title of "Big Corn" seems kind of silly, doesn't it? "Big Corn"! But it underscores how we have been brainwashed into thinking of only one industry as the big, evil boogeyman. Big Oil! Oooooh, scary! There is no "Big Software"! There is no "Big Computer Chip"! There is no "Big Healthcare" or "Big Pharma"! Just "Big Oil"! Brainwash complete!

We frequently hear Senator Barack Obama attack the oil companies, as if profitability is evil. Apparently, to him it is! What we never hear, however, is how frequently Senator Obama accepts donations and free airplane rides on the corporate jets of companies that make billions in taxpayer-funded corn subsidies. Companies like Archer Daniels Midland, a huge agriculture multinational that competes on the same level and size with the largest oil companies! And with better profit margins! So why no talk of Big Corn or Big Ag? Brainwash complete!

CFTC Disputes Washington Post Inaccuracies

"Contrary to what has been reported in The Washington Post, it is factually inaccurate, and the CFTC has never reported, that financial firms speculating for their clients or for themselves account for about 81 percent of the oil contracts traded on NYMEX," the CFTC said.

The commission argued that instead, noncommercial traders make up about 50% of both the long and short side open interest in West Texas Intermediate crude oil futures and options.

"The Post's 81% figure seems to assume that all swaps dealers are engaged in speculative trading," the CFTC said, noting that swap dealer activity often involves serving as a counterparty to commercial entities hedging price risk exposure.

It sure makes you wonder what the Washington Post's private agenda is, doesn't it. When one considers that the Posts doesn't have the data (only the CFTC and exchanges do), whey would the publish data to make a point based upon erroneous data? Here is the full article:

CFTC Disputes Washington Post

CME Locks Up Nymex

CME completed its acquisition of the Nymex over the weekend. It will be interesting to see how this impacts the futures markets. We should perhaps ask them to eliminate so many redundant fees. A single fee for users would be more appropriate in a competitive marketplace.

Is Coal King?

"...the U.S. Air Force, some months ago successfully tested coal-derived jet fuel in an in-flight B-52 bomber without altering the engines in any way. And diesel fuel so derived is actually cleaner than conventional petroleum-sourced feedstock."

--Dick Phelps