Update 6/12

Equities have had a nice week.. no major drama, nice upswing, a few nice economic reports. CNBC wants you to just keep believing.. and buying. But as I reiterated last week, the signs of deflation are creeping in and I continue to believe something will have to be done at some point; May's retail sales report was brutal, confirming that people have less and less to spend. Whilst Wall Street continues to rally and profits impress, life out here in Main Street is still tough, with parts of the country in an outright Depression. The Senate passed yet another extension of unemployment benefits, and well they should.

The state of New York, faced with a severe budget crisis and finding itself having to pay into pension funds that had taken severe losses, came to a conclusion yesterday to the pension funding problem: "ALBANY — Gov. David A. Paterson and legislative leaders have tentatively agreed to allow the state and municipalities to borrow nearly $6 billion to help them make their required annual payments to the state pension fund" Who are they borrowing from you ask ? They will borrow the money to make the payments to the pension fund — from the same pension fund. This should tell you all you need to know about the state of New York's finances. Local and state governments are doing this sort of shell game nationwide. Part of the problem is government employee unions, which have ensured that all government employees get lavish healthcare and retirement plans.. all guaranteed by your tax money. These healthcare and pension plans are a big reason why city, county and state governments are in such catastrophic shape. Call me a paranoid, but these kind of shell games can only have one ending. Two measures were introduced recently in this area.. one was a bill that would make the Federal Government guarantee all Union employee pension plans (the Casey Bill).. Obama has been silent on this one as he realizes the moment it's signed, most Unions will immediately ask for pension bailouts. The other was in California, where a measure calling on the State of California to guarantee these overly generous pension and healthcare benefits from county and city employees in case the city or county declares bankruptcy. The Governator last I heard opposes this measure, but he will be out of office if and/or when it reaches the Governator's desk. Democratic Gov candidate Jerry "Moonbeam" Brown supports this lunacy; I'm not sure on GOP governatorial candidate Carly Fiorina's stance, though I imagine she opposes it. A huge number of cities and counties nationwide made grandiose promises to it's employees and citizens, believing that tax revenues would never go downwards. Then property prices (and thus tax revenues) plunged in 2008/2009. Whoops. Then throw in the massive increases needed in social programs like food stamps and welfare. This "Muni Debacle" is just getting started, folks.. and somethin's gotta give.

Onto the Gulf oil spill.. it looks like BP is making progress on stopping the leak and is catching more and more of the oil that is already spilled. While good news, the damage already done is going to be enormous. The gulf stream is going to carry this blob past the Florida Keys and around to the east coast. Miami's South Beach will, in a month or two, become TarBlob Beach, doing enormous damage to the tourist industry and property values, both residential and commercial. It'll reach Tampa within a few weeks. This will creep up the Carolina's coasts and possibly into Chesapeake Bay, very near Washington DC itself. In Britain, BP's demise will hit the English hard; many pension funds and investors are going to take a big hit when BP goes under, which it will. In the little town next to mine, the local BP station has graffiti on the building and the green sign showing the prices and I'd wager that the other local gas stations are seeing upturns in business as pissed locals avoid BP.. and I'm in Minnesota, 1500 miles away from this mess. The environmental damage will be incalculable. But at this point there is no alternative.. fossil fuels are used for everything these days, agriculture especially. For the leftist green nutcases who are screaming the loudest, please lead the way and ditch your car, get a bike, and quit eating anything with grains and get back to me. This time in history will be remembered as the Age of Oil. At some point, we will have to make a transition, which can be done. In Michael Ruppert's film "Collapse" (which I think is a tad paranoid) it does mention the case of Cuba, which was entirely dependent on the Soviet Union for it's gas and energy needs.. and then the Soviet Union collapsed and the gas stopped flowing. The Cuban govenrment and people, faced with a catastrophic economic situation, enacted a plan whereby everyone was asked to grow their own food and stock seed; seed was handed out; even rooftops in Havana were used. After a few very tough years, the Cubans actually began to eat much healthier food and even began exporting excess foods. It can be done, and in time it will have to be.

9am: Well well.. something gave on the Muni Debacle front: "President Obama urged reluctant lawmakers Saturday to quickly approve nearly $50 billion in emergency aid to state and local governments, saying the money is needed to avoid "massive layoffs of teachers, police and firefighters" and to support the still-fragile economic recovery". In regards to my trades, I'm going to remove all stops on my short copper trade; this will be the trade I hold until I'm filthy rich (or bankrupt).