Signs of the Economic Apocalypse 8-29-05

From Signs of the Times, 8-29-05:

The Dow Jones Industrial Average of the United States stock market closed at 10,406.20 on Friday, down 1.5% from 10,559.23 a week earlier. The NASDAQ closed at 2123.99, down 0.5% from last week's close of 2135.56. The yield on the ten-year U.S. Treasury Note was 4.18%, down four basis points from 4.22 at the previous week's close. The dollar closed at 0.8140 euros, down 0.9% from 0.8217 euros at the previous week's close. The euro closed at 1.2285 dollars up from 1.2177 a week ago. Oil closed at 66.13 dollars a barrel on Friday, up 1.7% from $65.05 on the previous Friday. In euros, oil would be valued at 53.83 euros a barrel at Friday's close, up 0.8% compared to 53.42 at the previous Friday's close. Gold closed at 441.80 dollars an ounce on Friday, up slightly from the previous week's close of $441.60. That would put gold at 359.63 euros an ounce, down 0.8% from 362.65 a week earlier. Comparing gold to oil, an ounce of gold would buy 6.68 barrels of oil, down 1.6% from 6.79 the week before.

The University of Michigan's Consumer Confidence report for July/August came out Friday and the numbers were worse than expected, which helped drag the stock market down and increase anxiety among economic analysts and players.

With the price of energy rising, with wages falling or stagnating, with the price of health care in the United States rising rapidly, and with the price of college educations rising rapidly, it should be no surprise that everyone outside of the elite think that the economy is in bad shape. Recently there have been attempts by the elite to understand why the rest of us feel that way:

Why a booming economy feels flat

Personal income is one key area where workers have fallen behind, compared with past periods of strong wage growth.

By Mark TrumbullStaff writer of The Christian Science Monitor

Think back to the last time the American economy was rapidly rolling forward: output growing more than 4 percent a year, millions of new jobs were created, and unemployment on a downward slope.

Yes, the 1990s was a golden economic era. But the description refers to the performance that began last year.

Despite continued strong economic growth, this expansion is clouded with enough complications and uncertainties that, for many, it doesn't feel like good times.

The reason? A boom in corporate profits has not yet created a job market that makes workers feel secure, economists say. Hiring hasn't skyrocketed. Worse, wages are stagnant. This paycheck squeeze may prove more worrisome than soaring oil prices and concerns over a housing bubble. Some experts worry that wage stagnation may prove more permanent this time, because of an increasingly global market for labor.

Few economists claim that today's economy matches the late 1990s, when unemployment was lower and job numbers seemed to rise as easily as the Dow Jones Industrial Average.

There are real differences - higher oil prices are just the most obvious. But the current expansion is also occurring against a backdrop of worries.

The pace of job growth, for one thing, was almost imperceptible during two years of concern about a "jobless recovery." Now that the economy has some momentum, the financial press is focused on threats to consumer well-being, such as the burden of energy costs and a soaring real estate market.

"Surveys show that even though the economy is growing reasonably strongly, a lot of households don't feel that," says Nariman Behravesh, chief economist at Global Insight in Lexington, Mass.

He points to two key reasons. First, since the last recession ended in November 2001, job growth has been weak until last year, when the Labor Department's employer survey showed a gain of 2.2 million jobs. Second, wage growth has been lackluster, despite strong gains in worker productivity.

Normally, as employees are able to produce more in each hour of work, the result is greater cash flow that can be divvied up between workers and owners or investors. In the long run, rising productivity means rising wages and living standards.

But in the short run, "most of the gains in the economy have gone into profits rather than wages," says Mr. Behravesh.

The latest numbers from the Labor Department, in fact, show average weekly earnings for US workers have fallen by 0.5 percent in the past year, after adjusting for inflation.

The divergence between productivity has sparked a debate among economists. Some say the gap is temporary, and will narrow as the labor market tightens and workers get more leverage to bargain. Others worry that it's a sign of new realities in the global marketplace that are pushing down US wages as workers compete with increasingly educated rivals in places such as India, China, and South Korea.

Whichever view proves more valid in that debate, many Americans are feeling the combined pinch of slow wage growth, jobs that still aren't as plentiful as many would like, and a stock market that's snorting pretty softly for a bull.

Only 37 percent of the public thinks the national economy is in good shape, according to a June poll by the Pew Research Center poll. That's higher than two years ago, but down from 2004. Perhaps more ominously, the percentage of the public rating their own financial situation positively fell to 44 percent, down from 51 percent in January. Sixty percent say jobs are too scarce in their community.

This analysis exemplifies one of the worst aspects of neo-liberalism: a complete blind spot when it comes to exploitation. Notice the "not-yet" wording: "A boom in corporate profits has not yet created a job market that makes workers feel secure, economists say." Notice also the resort to that old chestnut of economists, the "long run," regarding the contrast between rising productivity and stagnating wages: "Normally, as employees are able to produce more in each hour of work, the result is greater cash flow that can be divvied up between workers and owners or investors. In the long run, rising productivity means rising wages and living standards."

Paul Krugman, under fewer illusions, depicts the situation more clearly than do the experts quoted in articles like the one above:

Summer of Our Discontent

By PAUL KRUGMAN

August 26, 2005

For the last few months there has been a running debate about the U.S. economy, more or less like this:

American families: "We're not doing very well."

Washington officials: "You're wrong - you're doing great. Here, look at these statistics!"

The administration and some political commentators seem genuinely puzzled by polls showing that Americans are unhappy about the economy. After all, they point out, numbers like the growth rate of G.D.P. look pretty good. So why aren't people cheering?

Some blame the negative halo effect of the Iraq debacle. Others complain that the news media aren't properly reporting good economic news. But when your numbers tell you that people should be feeling good, but they aren't, that means you're looking at the wrong numbers.

American families don't care about G.D.P. They care about whether jobs are available, how much those jobs pay and how that pay compares with the cost of living. And recent G.D.P. growth has failed to produce exceptional gains in employment, while wages for most workers haven't kept up with inflation.

About employment: it's true that the economy finally started adding jobs two years ago. But although many people say "four million jobs in the last two years" reverently, as if it were an amazing achievement, it's actually a rise of about 3 percent, not much faster than the growth of the working-age population over the same period. And recent job growth would have been considered subpar in the past: employment grew more slowly during the best two years of the Bush administration than in any two years during the Clinton administration.

It's also true that the unemployment rate looks fairly low by historical standards. But other measures of the job situation, like the average of weekly hours worked (which remains low), and the average duration of unemployment (which remains high), suggest that the demand for labor is still weak compared with the supply.

Employers certainly aren't having trouble finding workers. When Wal-Mart announced that it was hiring at a new store in Northern California, where the unemployment rate is close to the national average, about 11,000 people showed up to apply for 400 jobs.

Because employers don't have to raise wages to get workers, wages are lagging behind the cost of living. According to Labor Department statistics, the purchasing power of an average nonsupervisory worker's wage has fallen about 1.5 percent since the summer of 2003. And this may understate the pressure on many families: the cost of living has risen sharply for those whose work or family situation requires buying a lot of gasoline.

Some commentators dismiss concerns about gasoline prices, because those prices are still below previous peaks when you adjust for inflation. But that misses the point: Americans bought cars and made decisions about where to live when gas was $1.50 or less per gallon, and now suddenly find themselves paying $2.60 or more. That's a rude shock, which I estimate raises the typical family's expenses by more than $900 a year.

You may ask where economic growth is going, if it isn't showing up in wages. That's easy to answer: it's going to corporate profits, to rising health care costs and to a surge in the salaries and other compensation of executives. (Forbes reports that the combined compensation of the chief executives of America's 500 largest companies rose 54 percent last year.)

The bottom line, then, is that most Americans have good reason to feel unhappy about the economy, whatever Washington's favorite statistics may say. This is an economic expansion that hasn't trickled down; many people are worse off than they were a year ago. And it will take more than a revamped administration sales pitch to make people feel better.

The missing piece of the puzzle here is exploitation. As Krugman points out, the reason wages are falling (in real terms) while productivity is rising is that the difference has gone to corporate profits, which are divided between the owners and high ranking corporate officers. CEO compensation is still shooting upward. This has been a conscious decision to stiff the average working person. They will claim that, given "global labor competition" it is inevitable, but if the elite truly wanted to avoid increasing exploitation, they could easily do so. Or, as John Cooper put it:

To what extent is organized piracy, theft by taking, deception and illusion, bands of brigands conspiring to take from the general population for their own interests responsible for the income spread? Capitalist economic mythology perpetuates a comfortable rationale for the most unjust behaviors and conditions, allaying the doubts and guilt of the unjust and suppressing the retributive desires of the oppressed. Fair and equal chance plays a miniscule role: that economic success is a lottery is surely a myth. Another is that market economics fairly and equitably distribute the wealth and wellbeing.

Markets and the market place are NOT governed by laws of nature but are a carefully contrived con to cover and justify the transfer of wealth from those with too little to those with already far too much. The invisible hand of the marketplace does not achieve the general good, fairness or balance, but rather the exploitation of the poor, ignorant and gullible by the avaricious, greedy and insensitive. The purpose of markets is to focus and concentrate wealth, not distribute wellbeing: the wealthy get more and better; the impoverished, less and must do without. What would an economic system be like that - rather than transferring wellbeing from the poor to coddle the rich - provided equitably for all?

Meanwhile, anxious working people in the United States are rushing to declare bankruptcy before the new, more stringent personal bankruptcy rules take effect and elites are looking for new ways to park their money outside the U.S. and the dollar before the crash comes. Despite all the free-floating anxiety, most people you meet have a disconnect between what they fear might happen and what future scenarios they base their actions on. In other words, most people still behave as if the situation in the future will be similar to what it is today. That people would cling to the belief that things will be fine is not surprising. Fewer people alive can remember the Great Depression. But it goes deeper than that:

Heavy clouds, no rain

by Doug Wakefield

August 25, 2005

"He looked in the sky but he looked in vain Heavy clouds, but no rain"- Sting

"Because the market has not dropped sharply, it will not drop sharply."

If there is one thought that will cost investors billions in the near future, it is this one. The price action of the major US indices over the last year appears to have anesthetized investors into a lethargic state making it improbable that they will prepare their investments before the next major move. I am not talking about hundred point moves on the Dow, but thousand point moves. Why is this happening? Why is this lethargy so instinctive in our behavior?

First, let's start with the human brain and how we are wired as human beings.

Robert Prechter's book, The Wave Principal of Human Social Behavior and the New Science of Socionomics, allowed me to understand why all investors, including myself, have such a difficult time preparing for future investment opportunities and spend most of their time reviewing the most recent numbers on their quarterly statements. In his book, Prechter notes that "Dr. Paul McLean, former head of the Laboratory for Brain Evolution at the National Institute of Mental Health, has developed a great deal of evidence that suggests we have a 'triune' brain, one that is divided into three basic parts. The primitive part of the brain stem, called the basal ganglia, controls the impulses essential to survival. The limbic system controls emotions, and the neocortex, which is significantly developed only in humans, is the seat of reason. Thus, we actually have three connected minds: primal, emotional, and rational."

The basal ganglia controls the brain functions that are instinctive, such as the desire for security, the reaction to fear, the desire to acquire, the desire for pleasure, being accepted in our social circles, and even choosing our leaders. More pertinently, this area of the brain controls behaviors such as flocking, schooling, and herding. The limbic system is the seat of emotions and guides behavior required for self preservation. It operates independent of our reasoning capabilities, and therefore, has the capacity to generate out-of-context, affective feelings of conviction that we attach to our beliefs regardless of whether they are true or false.

...And, what about the neocortex? It is in a far inferior position. The neocortex is involved in processing ideas and using reason. However, it is trumped by the limbic system in that the limbic system is faster, controls the amplitude, or intensity of emotions, and unfortunately has no concept of time nor learns from experience. Truly, for the afore mentioned reasons, we are not hard wired to make good investment decisions.

Since herding is a natural instinct, and money decisions are one of the most emotional charged areas to handle, then it only makes since that, without understanding the power of these instincts, investors are not even aware of their incapacity to take action to prepare for a sharply declining market. (As an aside, if you still have a hard time believing that the markets could decline sharply, read my articles, "Surfing the Tsunami" and "An Asset Allocator's Nightmare.")

...While we can all read this article with our minds engaged, away from the distraction and noise of Wall Street and Washington, when we meander back into the milieu of daily life, it becomes very hard to prepare for something that appears as though it will not occur. Since no one desires to see the financial and social changes that accompany a bear market, it becomes even easier to push off until tomorrow what we do not want to address today. The more times we don't make a decision to change, the more we are emotionally rewarded with the fact that so far nothing happened. Fifty point declines are met with fifty point rallies. The sky is blue. The grass is green. No rain comes.

...Dr. [Benoit] Mandelbrot, discoverer of fractal geometry, is known as one of the greatest math minds of the 20th century. While his work was not widely accepted through the 1960s and 1970s, after the crash of 1987, his work on fractals and market risk brought him to the forefront of the financial world. He has contributed greatly to Monte Carlo simulation models, which are used all over the world today.

One aspect of his work was the discovery of what he calls the Joseph and Noah Effects. Sometimes markets, like nature, reveal patterns of movement that stay within a certain range, like Joseph's seven years of preparing for the famine and seven years of living through it, as recounted in Genesis. There are other times when the data moves violently outside its normal range. These violent reactions, much like a tsunami or hurricane, are referred to as the Noah Effect.

While we can all see the Joseph and Noah Effects in weather patterns and other life experiences, amazingly, many in the financial world still espouse theories that focus only on the Joseph Effect. They assume that changes that occur from a Noah Effect cannot be seen ahead of time, and are thus to be ignored. They reason, that since no one can time the day and hour, the season becomes unimportant as well. The focus of all numbers becomes the "average." Unfortunately, historical, real world losses are not as forgiving as the "average."

Traditional asset allocation models deal with portfolio fluctuations only within two to three standard deviations. Traditional economic models hold that for an event to occur within a deviation of two means it occurs 95% of the time while a deviation of three would reflect events that occur 98% of the time. Mandelbrot notes two problems with this line of thinking. Moves beyond 2 and 3 standard deviations occur much more frequently in the historical record than allowed for in traditional models. And additionally, these extreme moves, accounting for large percentage changes in price, occur in miniscule amounts of time. So rather than a steady flow of asset prices, we see jerky action followed by stasis.

So, how frequently have investors seen changes beyond 3 standard deviations?

Since we will more fully expound on the second half of Mandelbrot's work, for the sake of space, please allow this summation: "Prices only rarely follow the predicted normal pattern. The Brownian data shows 98% of the changes in the markets occur within three standard deviations and no changes greater than five. However the historical record shows that changes of more than five deviations happened two thousand times more often than expected. Under normal rules such an event should occur only once every seven thousand years; in fact, it happens once every three or four years. Statisticians call this a "fat tail" and it means the standard model of finance is wrong."

So, how costly has it been to investors who ignored deviations beyond 3%, hoping that the Noah Effect will have not impact on their finances?

Let's look at three examples. First, a currency study by Citigroup in 2002 revealed a deviation of 10.7. This equated to a one-day drop of 7.92%. Traditional finance would say the odds of this happening were the equivalent of one day out of 15 billion years. To make this even more compelling, consider another study on currencies that revealed that in the 4,695 trading days from 1986 to 2003 half the decline of the dollar to the yen occurred in just ten (10) days. Put another way, half the losses occurred in .21% of the trading days. My last illustration reflects the S&P 500 during the secular bull market of the 1980's. Fully 40 percent of the positive returns from that ten year period occurred in ten days, or .5% of the time. And for the curious, let's look at the Crash of '87. This one-day event took markets to a deviation of 22. Remember, standard asset allocation models only address 2 to 3 deviations.

Are we as investors condemned to be blind sided by these Noah Effects? Is the safest way to invest in these periods to follow the crowd and buy an index or basket of indices? History and science does not support this "random walk" mentality.

If there are hundreds of logical arguments for the Noah Effect occurring in the markets today, why is it so hard to make changes now to address this issue?

The Journal of Behavioral Finance had a great article recently called "Self is not Neutral". In this piece Gao and Schmidt write, "Rationalization doesn't mean, 'acting rationally.' It means attaching desirable motives to what we have done so that we seem to act rationally. In other words, people seek justification for their behavior. Rationalization makes people feel good."

With the millions of marketing dollars spent on teaching advisors how to help their clients "feel comfortable," is it any wonder that so many investors and advisors, surrounded by the emotional comfort of the herd and blinded by what we want to see, would ignore all the warning signs of a Noah effect until after the event costs them dearly.

...In our current placid market environment, it may be tempting to dismiss this article for its "extreme views." However, a study of history and science suggests that the longer the Joseph Effect continues, the more violent the Noah Effect will be when it occurs.

As you put down this article and go back to your day-to-day life, I hope you will force yourself to override your emotions and logically consider your surroundings. Make sure you are thinking and preparing for future events and not rationalizing your ways to the "comfortable" music emanating from the Wall Street and Washington rhetoric.

It is hard for most of us to act on the basis of future disasters, though. While many people can see future declines in, say, stock prices, housing prices or the value of the dollar, most cannot foresee severe drops. In other words, many people would not be surprised to see housing prices drop 10% to 20% in the next couple of years, but few people expect an 80% drop.

Some people do manage, however, to act on a clear view of what is to come economically and politically: the people who are most responsible for making those future disasters! For these people, herd instincts and a clear-eyed view of what's in store for the rest of us work together seamlessly. They just expect that their herd will prevail. Al Martin has been tracking where the top 10% wealthiest Americans have been putting their money. As he points out, they are more than 70% Republican and have good connections with the ruling regime. In other words, they are in the know. Following the money in this case might give us a good idea of what's in store for the near future. Not surprisingly, the conclusions are disturbing.

In the last 12 months there have been some significant changes in the investing patterns of the top 10% of the nation. ...As we have reported since 2003, when we started the AlMartinRaw.com Smart Republican Money Index, the top 10% of the nation, continue to be heavily invested in gold. They continue to be net sellers of gold stocks. In other words, what they're doing is increasing the percentage of their holdings in gold. How they are doing that, however, is what is more important.

They have been, and continue to be, net sellers of gold stocks and buyers of the new gold ETF, or electronically traded fund, which we have mentioned before, which trades under the symbol GLD.

...ETF or electronically traded funds has several meanings. In this case, what we are talking about is a fund that actually holds and trades the direct metal. It's not a company that digs it out of the ground then refines it and sells it, as in a mining company. The only thing the gold ETF does is simply hold and trade the metal.

...Metal stocks in general pay a tiny dividend. We've noted this before that, for instance, the dividend of the Philadelphia XAU (gold and silver index) is now less than .6% per annum.

In other words, what the top 10% are saying is that "We are prepared to sacrifice this small dividend to eliminate political, economic, military risks, etc. We now want to own the bullion directly."

... What's important for the average investor to understand is that the top 10% have said that the dividend that gold and silver, etc. stocks pay no longer compensates the investor for the risk.

Also, what the top 10% of the nation are saying is that: Since these ETF's, although they trade in the United States, are all formed as offshore entities in jurisdictions, which have not signed on to any collateral Patriot Act restriction or potential confiscation vis-a-vis the government and the U.S. Treasury, they are also a way to hold bullion and be immune from any potential confiscation in the United States in the future.

You can ultimately take delivery of the bullion if you wish to do so. And you can take delivery of it offshore – outside the jurisdiction of the United States, in other words. And those are the primary advantages.

Why has this become an advantage? Because if you know that the Bush Cheney Regime has set the nation on a path of no return, not in an economic sense, but in a political sense, then you know what's coming. Whatever regimes follow, they're going to follow, effectively, the same path because Bushonomics has precluded any other option. Whatever subsequent regimes may follow, they, too, are going to become increasingly more hostile to citizens holding gold. They, too, will become ever more hostile to citizens expatriating assets.

...Therefore what the top 10% is saying -- We are prepared to accept a potentially lower return for the security of owning the underlying metal. But we also want to own the metal in such a fashion where A), we do not have to report direct ownership of the physical metal, B) where we can take delivery of the physical metal in a jurisdiction outside the United States, and C) the metal is not potentially confiscatable even if we remain U.S. citizens with a primary residence in the United States, so long as we maintain a 'secondary domiciliary' in the jurisdiction in which we are going to take delivery.

...Hence, we would note, the top 10% of the nation, what are their favorite places to maintain second residence and/or some sort of corporate, and/or trust domiciliaries. They are the Cayman Islands, the Netherland Antilles, Switzerland and Tahiti – all jurisdictions which have absolutely no collateral agreements with the United States Treasury.

What is more important are the changes that have occurred in the last 12 months within the AlMartinRaw.com Smart Republican Money Index. We are seeing, for the first time ever new publicly traded corporations, new publicly traded master limited partnerships, publicly traded pools and funds, etc. are becoming available wherein they were not available before.

But we are seeing now a substantial flow of money, which had been previously negligible, wherein the top 10% of the nation are now having as much as 20% of their portfolios invested in non-renewable and/or semi-renewable resources, principally food production, water production, other non-precious, non-industrial, but nonetheless valuable and necessary metal and mineral production, forest production, etc.

We would note that, for years, the top 10% of the nation was not heavily invested into this area, for two reasons.

The first reason is that publicly traded corporations who dealt in these areas, resource-related stocks, never paid very much of a dividend. And they were also price-sensitive to the underlying value of the commodities. In other words, in times of inflation and a declining dollar, resource-related stocks did well, but in other times, they did not. You could not point to a 20-year period wherein you could say there was a reliable return of X.

And this is what's different in the last two years. First, it is the realization that the planet is falling apart. The realization that the people living on this planet have already used up 95% of its non-renewable resources and the likelihood that semi-renewable resources, for a variety of reasons, including changing climate, pollution, changing governmental attitudes, etc., are going to become more uncertain in the future.

Furthermore, the planet is facing, as the World Resource Council has pointed out, a water crisis starting in the 2020's. Also the World Food Council had a study done in concert with the governments of Sweden and the Netherlands, which financed the research study. They found that the planet is going to undergo a shift, starting in the 2020's, wherein food production in the northern hemisphere of the planet will fall sharply, as much as 80%, over a period of 20 years, and food production in the southern hemisphere of the planet, which is where most of the Third World nations are located, is going to increase.

This has spurred, in recent years a variety of new publicly traded corporations that didn't exist two years ago. These are new publicly traded master limited partnerships, pools, funds, etc. that have now purchased agriculture production and water production in south-of-the-border countries, particularly the case in South America, where the largest purchasers of Brazilian agricultural land are US-based pools and funds.

These are unlike the huge agri-business firms like ConAgra or Archer Daniels Midland. This is what confuses some investors. These are not companies that are formed to profit or to have a business based on the processing, storage, transportation of grain, etc. In other words, they are purchasing the actual land. They are having the land cleared. They are having it planted and they are building their own processing, storage, transportation facilities in partnership with the Brazilian government.

The reason you would want to buy these companies is because they actually control the food. The value is not even necessarily in the land. The value is what the land can produce; namely, the actual food, the cereal grain, etc. that the land can produce. They're not looking to profit in other ways. In other words, they are at the very beginning of the so-called agricultural pipeline. This is being done because of the belief, that in 20 years' time, we are going to be looking at potentially $100/bushel for soybeans, and potentially $30/bushel for corn. That's the reason this is being done.

Then there will be a softer dollar and world paper currencies will be effectively declining in value relative to the amount of commodities they can buy. We're not talking now about paper currencies fluctuating in value amongst themselves or against each other. But there is a general decline now in what the global paper currencies will buy in terms of hard commodities.

Who's going to buy it? People are still going to eat, and they're still going to buy it, and they're not going to care how much they have to pay for it.

...Not only are the top 10% of the nation now investing more than ever before in newly created public companies, partnerships, pools, funds, etc. that are now direct producers of agriculture; not processors, not transporters, but the direct producers of agriculture, but you can find this also true in the water business, where the top 10% of the nation is now investing in companies, and these are reasonably recently formed companies, through the same vehicles–partnerships, pools, etc.–that have purchased the direct water. Privatization of water is also in the plan.

...So, this is the second track: the purchase of direct food and water production.

The third track that we have seen through the AlMartinRaw.com Smart Republican Money Index is a dramatic reduction in the number of shares owned of defense contractors.

We have seen the top 10% being large net sellers of what we tend to think of as the traditional large-system defense contractors– Boeing, Martin Marietta, Northrop Grumman, Lockheed Martin etc.

This is an interesting shift. The money they have been raising out of the sale of large-system defense contractors has largely been reinvested in small publicly traded so-called specialty military police and defense subcontractors.

These are small companies which produce highly specialized weaponry and/or high-technology, specifically aimed for the government market – the identification of citizens with microchip technology, surveillance technology, as well as companies that produce small non-lethal or so-called semi-lethal higher-technology weapons systems which are specifically used to control protests and riots.

These companies are involved in manufacturing products for high-tech surveillance, law enforcement, specialty firearms and weapons, etc.

This also includes the new genre of prison construction, which really isn't even prison construction anymore. They're moving away from that old Correction Corp. of America model into a newer, high-tech, or third generation model of modular prison building, which isn't prison but detainment centers.

In other words, they're meant to house a specific category of so-called non-categorized detainees that can now be held forever under the Patriot Acts. These are what could be termed seditious or treasonous population segments.

The construction methods use modular construction, which is cheap and can be put together quickly and lasts virtually forever. Much more high technology in terms of control and management. And these are facilities that are purposely meant to be built very discreetly.

So we are seeing a shift by the top 10%, interestingly enough, out of large-system defense industries into what is called quasi-military population control management stocks. If you put this all together, it gives you an idea of the future. The top 10% already know what the future's going to look like. Why? Because they're making it happen.

...The top 10%, by their investments and the changes in those investments, are telling you what the future of this planet is going to look like. Gradual destabilization of governments and economies. Increasingly destabilized currency bases. Collapses in future governmental programs because they can't be funded and they're not being funded now. Disruption and shortages in food and water production. Rising civil unrest that will need to be controlled. Potential confiscation of hard assets. This is what the future looks like.

These bets placed by the most well-connected people in the power hierarchy provide the best insight into the real plans of the world's elite as well as a counterargument to those who think that things are fine economically, and that free-market economics are all we need to ensure future growth and prosperity. If that were the case, why would they need all those detention centers?