Trash Piles and Flash Mobs

Addison Wiggin – July 1, 2011

  • Trash piles up as “flash mobs” attack people at random… Scenes from an America not in the future, but right now
  • Is your state too broke to handle basic services? How to get a state-by-state breakdown
  • After a nasty surprise last month, new ISM manufacturing number delivers Street relief
  • Gold sinks below $1,500, while three U.S. senators seek to lift the capital gains tax on Eagles
  • Loads of readers weigh in: Is Lindsay Lohan’s hyperinflation tweet a good omen or a sign of impending doom?

   It appears God did not answer the prayers of the mayor in Harrisburg, Pa. Either that, or the big guy has a perverse way of teaching financial literacy.

The town hasn’t filed for bankruptcy, yet. But there’s no trash pickup, either.

In some Harrisburg, Pa., neighborhoods, the trash hasn’t been picked up for months.

One reason: There’s a dispute between public works, the sanitation workers union and the folks running a work release program supervising prisoners picking up trash. Or not picking it up, in this case.

On the other hand, “It may be relative to the city trying to downsize and cut corners,” speculates one resident who’s seen a pile of junk outside his front window for the better part of a month.

Our file of economic decline at the margins appears to be growing by the day.

   Trash pickup used to be one of those points of pride even among the most corrupt city governments.

In 1955, a newly inaugurated Mayor Richard J. Daley got some friendly advice from a veteran Chicago alderman: “Put the money where they can see it.” He bought 40 new street sweepers and installed 7,000 wire garbage baskets.

City government wasn’t clean, but the streets generally were. Daley died in office 21 years later.

   The headlines from Chicago these days are about “flash mobs” — dozens of young thugs attacking people and cleaning out stores in broad daylight…

  • 15 people storm a couple of city buses, making off with the passengers’ mobile phones and iPods
  • More than 20 young men attack a guy parking his scooter near the downtown campus of Northwestern University. “It was boom, like a swarm of insects,” the victim recalled. They took his phone
  • Up to 50 people storm a drugstore in the Magnificent Mile shopping district, cleaning out the shelves of merchandise, overwhelming any security that tried to respond.

The city has moved more cops away from desk duty and onto the streets, but they’re overwhelmed.

   On Memorial Day, when mobs started attacking people at a downtown city beach within sight of the luxurious Drake Hotel, police closed the beach. The “official” story from City Hall was that people were overwhelmed by the heat. Heh. It wasn’t even 90 degrees that afternoon.

Similar stories of “flash mobs” — often coordinating their attacks via cell phone — come from Washington, D.C.; Venice Beach, California; Philadelphia; and St. Paul, Minn. The trend is building pace at a time when many cities are cutting back their police departments.

“At the very worst, mobs will erupt in anger and violence,” we say in a new forecast that’s turning into reality even faster than we anticipated. “No longer will chaos in the streets be something you see on the news happening in far-off lands.”

   For another taste of the immediate future here in America, there’s Minnesota. Today is the first day of the new fiscal year in Minnesota and a budget dispute between the governor and the legislature has led to a partial government shutdown.

State-funded road construction has stopped. Highway rest stops are closed. As is the SDVSD, Minnesota’s convoluted version of the division of motor vehicles.

Taxes are still being collected. Naturally. But refund checks are not being mailed. You can’t even buy a lottery ticket today.

“The crisis of money is already hampering the operation of cities,” our friend James Howard Kunstler told Orion magazine, which has been observing the same trend, “and will soon critically impede the repair of water systems, paved streets, electric service and other vital infrastructure.

“We are heading into a major reset of daily life.”

As we’ve monitored this slow-motion depression spreading across the nation, we’ve also developed a four-part solution set you’ll want to review. One of the special reports in the set breaks down your state government’s debt levels, how much it’s on the dole from Washington and what sort of pension obligations it’s saddled with.

The knowledge is vital. We believe you can’t afford to ignore it… as you’ll see right here.

   Wall Street is getting carried away with its late-June rally… bringing it into July. This morning, the Dow is the breadth of a hair away from 12,500.

The few traders who hadn’t already knocked off early for the holiday weekend let out a sigh of relief a half-hour after the open after the Institute for Supply Management issued its monthly report on U.S. manufacturing.

A month ago, the figure took a huge tumble, from over 60 to 53.5. That fueled fears this month’s report would sink below 50 — the dividing line between a growing manufacturing sector and a shrinking one.

The number did indeed recover to 55.3. But within that headline figure, inventories are up and orders are soft.

[Ed. Note: The Dow plunged 165 points during a brief span last week. Since then, it’s up more than 500. There’s a class of stocks immune to the ups and downs of the broad market, stocks that don’t rise and fall on the back of figures like ISM’s manufacturing survey.

They move on buzz, on press releases, on chart patterns few understand. And Greg Guenthner’s Bulletin Board Elite readers profit from them regularly — with gains like 36% in 39 days, or 70% in 12 days.

This weekend only, we’re making this boutique service more accessible than ever… and just in time for Greg’s next recommendation, which you can act on when the market reopens Tuesday morning. Full details on this limited-time offer are right here.]

   Gold has broken below $1,500 again. At $1,487 the spot price is near a six-week low. As usual, silver’s gotten a bigger whacking when measured in percentages — it’s down over 2.5%, to $33.86.

   Folks in Utah no longer have to pay state capital gains tax when they unload their U.S. Gold and Silver Eagles… and if three U.S. senators get their way, the tax will be waived on the federal level too.

Utah Sen. Mike Lee has joined with Kentucky’s Rand Paul and South Carolina’s Jim DeMint to introduce a Utah-like bill affirming Eagles’ status as legal tender… and of more practical consequence, removing the 28% capital gains tax.

“This bill is an important step toward a stable and sound currency whose value is protected from the Fed’s printing press,” says Sen. Lee. We’ll keep you posted on its progress.

   After getting whacked most of the week on a rising euro, the dollar index is drifting sideways at 74.4. The euro, which makes up more than half of the dollar index, broke above $1.45 this morning.

Readers of Strategic Currency Trader don’t mind. Those who followed Abe’s advice on Monday this week made money on three trades:

  • Rising euro play: Half a position closed for 100% gain Wednesday, and the other half is in line for 143% by the end of today
  • Rising German stocks play: Half a position closed for 132% on Wednesday, the remaining half looking like a 233% gain today
  • Rising S&P 500 play: Good for 109% on Tuesday.

Even those risking small amounts of money are happy. If you bought only two positions in each play, you’d have put up a total of $175 Monday… and, by the end of today, likely walked away with $420.50.

Don’t feel bad if you missed out. There’s a new round of plays every week.

   Hmmmn… in February, readers brought to our attention Glenn Beck’s liberal use of one of our charts on his show. But this is really taking the cake:

Readers can be forgiven for doing a double take if they stumbled onto this headline at The New York Times media blog.

Unlike our fine publication of wannabe newsletter editors and documentary filmmakers, the Fox version of the Five is going to be like a bad reality show. After canning Beck, the producers have assembled a round table of five wannabe cable news gasbags… they’ll be auditioning daily for a permanent gig.

   “Leave Lindsay Lohan alone,” a reader implores. “We have enough clowns in Washington to talk about. Just print the picture without the superior comments. At least she’s not destroying our Beloved Country.”

The 5: Hmmn…

   “If LiLo can recognize Bad Juju, it’s the Apocalypse,” writes another. “Kiss your financial butt goodbye.”

“All I know,” says another, “is that if she starts suggesting that people buy gold… I am selling all of mine.”

“Being contrarians,” chimes a fourth, “I can see why this may make us pause and question our stance or our investments. However, isn’t this what many of us have been wanting for so long? For the mainstream to wake up?”

“I wouldn’t get too excited yet,” writes a fifth “we still have a long way to go before people really understand our situation. But I welcome the trend.”

   “This is not just a good sign, it is a great sign. I sincerely hope that more of mainstream America, including the younger generation, picks up on this lead. It can do nothing but help if people learn more about what the federal government and the Federal Reserve have been doing.

“I applaud Ms. Lohan for taking the initiative to read something that will actually improve our country and hope others follow her lead. I am sure that once they read End the Fed, they will start asking many questions, and perhaps they may even start to study basic economics.

“Who knows, maybe this will start an ‘intellectual revolution’ that we so desperately need in this country right now.”

The 5: Lindsay Lohan at the heart of an intellectual revolution… we didn’t see that coming.

   “LiLo does reach out to a crowd not likely familiar with the topics covered by your publications. I can see only good coming from exposing them to the dark side of government finance, fiscal debauchery and the banksters that have sodomized our financial system to their own squealing delight.

“Interesting, too, that it was apparently a paid promotion. Keep up the great investigative work you’re so well–known for.”

   “If you are asking if LiLo really read the Ron Paul book, not on your life! If you are asking if your message is finally getting through to your average Hollywood paper cutout star, I don’t think so!”

“If you are asking if we, your gentle readers, are enamored of your candid writing style and great advice, give us more of the same, please!”

The 5: Sure. Get a copy of The Idea of America and read it over the holiday weekend. The second edition goes live today.

Enjoy the Fourth,

Addison Wiggin
Agora Financial’s 5 Min. Forecast

P.S. “A very good example,” writes a reader who doesn’t have Lohan on the brain, “of who sits on the economic cart and who pulls this cart is a Bloomberg story about unpaid State of Illinois bills.”

“The state owes over $11,000 to a pizzeria. How much does pizza cost that taxpayers have to feed state employees? If the lunch is on taxpayers, what else could be? Please don’t answer — this enslavement is already boiling blood.”

We’re compelled to answer anyway. Illinois is now $4 billion in arrears to 8,000 businesses, charities and even some of its own state agencies. “The list of debts,” reports Businessweek, “has been growing for three years and amounts to more than 10% of the state’s general budget for the coming fiscal year.”

“Banks have refused us a line of credit because of the state,” says the head of a nonprofit rehab center that’s owed $880,000. “We’ve had a longtime relationship with bankers, but now they wonder, ‘What if the state never pays you?’”

That’s what the cool kids call ‘default’…

Still, some places are in better shape than others — and we identify those places in the new special report, American Oases. It’s part of a package of reports we’re prepared to help you gear up for whatever economic storms are coming our way. They’re ready for your review now. Learn how to get your copies right here.

rspertzel

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