Vaccines: where does science end and profit motive begin? Maia Szalavitz argues, and I agree, that these are scientific questions and we need to conduct scientific research – not rely on preconceived views—to answer the questions. – Ilene

Vaccine War: Autism, Flu and Science

By Maia Szalavitz, Courtesy of TIME

Just in time for the national roll-out of the new H1N1 flu vaccine, Wired Magazine and the Atlantic have weighed in on the ongoing vaccine war: Wired has a profile of Paul Offit, a vaccine researcher and pediatrician who has consistently spoken out in favor of vaccination and pointed to the lack of evidence linking vaccines and autism; the Atlantic checks in with a piece questioning the science suggesting that flu vaccines and antiviral drugs prevent people from dying.

Both articles have elicited heated debate all over the Web: Amy Wallace, who wrote Wired’s piece, excerpted below, has received vitriolic criticism and attacks from vaccine opponents, setting records for page views.

Describing death threats and attacks on Offit, Wallace writes:

So what has this award-winning 58-year-old scientist done to elicit such venom? He boldly states — in speeches, in journal articles, and in his 2008 book Autism’s False Prophets — that vaccines do not cause autism or autoimmune disease or any of the other chronic conditions that have been blamed on them. He supports this assertion with meticulous evidence. And he calls to account those who promote bogus treatments for autism — treatments that he says not only don’t work but often cause harm.

While the Wired article has been attacked by advocates, the Atlantic’s article has been slammed by several blogs written by scientists. The authors, Shannon Brownlee and Jeanne Lenzer, reply to their critics here (scroll down). The scientists take issue with their argument that the scientific evidence does not support the use of the flu vaccine and antiviral medications like Tamiflu, detailed below

Brownlee and Lenzer ask:

… what if everything we think we know about fighting influenza is wrong? What if flu vaccines do not protect people from dying—particularly the elderly, who account for 90 percent of deaths from seasonal flu? And what if the expensive antiviral drugs that the government has stockpiled over the past few years also have little, if any, power to reduce the number of people who die or are hospitalized? The U.S. government—with the support of leaders in the public-health and medical communities—has put its faith in the power of vaccines and antiviral drugs to limit the spread and lethality of swine flu. Other plans to contain the pandemic seem anemic by comparison. Yet some top flu researchers are deeply skeptical of both flu vaccines and antivirals.

This debate over vaccination doesn’t seem likely to end any time soon. For critics, vaccines have become a touchstone for cultural anxieties and a not entirely unjustified mistrust of government and big business. No matter what evidence researchers provide supporting the safety of vaccination and its clear benefit to global public health, opponents remain convinced that the vaccine industry is tainted and biased by commercial pressures and that anyone who supports vaccination must have financial motives.

But for those who are concerned about health and safety, these articles and the related discussions offer a fascinating view of the controversy.  If we are to have a rational conversation about the best way to fight flu, infectious disease and autism, we need to recognize that these are scientific questions and use the best research—not the data that supports our preconceived views—to answer them.

Read more here.>>

MORNING MUSINGS – STRONG GDP

Courtesy of The Pragmatic Capitalist

The GDP figure came in better than expected this morning.  Who in their right mind would think that Jan Hatzius and the boys at Goldman could be so wrong?  Perhaps they aren’t infallible after all?  The headline number came in at 3.5% which was better than the 3% consensus.   The bounce in GDP largely reflected the stimulus boost and cash for clunkers, but there were also some encouraging signs in the data.  Cash for clunkers added about 1.66% to the data, but PCE’s and investment were better than expected.  Econoday reports:

PCEs rose an annualized 3.4 percent, led by durables with a 22.3 percent jump. Residential investment made a partial rebound of 23.4 percent-the first gain since a 2.6 percent rise in the second quarter of 2006.

The GDP price index was in at 0.8% and continues to reflect the low inflationary environment. Despite the big miss by Goldman Sachs’ Hatzius he continues to turn a bit more negative on his overall outlook.  In a recent note he says the real economy is probably weaker than the stock market represents:

Beyond the near-term “bean count,” our broader call for a sluggish recovery with falling inflation and continued low interest rates remains unchanged. It is based on two considerations. First, the overall economy is probably weaker at present than suggested by many standard indicators and the strength in the equity market because smaller companies—which are underrepresented in standard indicators and are not publicly traded—are underperforming larger ones. Hence, there is a significant chance that growth in the second half of 2009 will be revised down from whatever preliminary estimates the government statisticians publish over the next few months, once more complete source data become
available.

He is also growing increasingly concerned about the end of the fiscal stimulus.  He expects the headwinds from the labor market, consumer deleveraging, excess housing supply and state and local budget cutbacks to weigh on the markets:

Second, the economy will lose the benefit of the fiscal stimulus and the inventory cycle over the next year. We estimate that these factors are worth a total of 4 percentage points in terms of the impact on annualized real GDP growth in the second half of 2009. If our estimate is correct, growth will slow over the next year unless underlying final demand growth—“organic” growth, if you will—picks up by 4 percentage points or more. While some improvement in organic growth is likely, we expect it to fall well short of 4 percentage points given the continued headwinds from the weakness in the labor market, consumer deleveraging, excess housing supply, and state and local budget cutbacks.

On the jobs front we continue to see extraordinarily high jobless claims data.  This mornings figure came in at 530K with continuing claims falling 148K to 5.8MM.

All in all, the data should be strong enough to provide a near-term lift to equities, but does little to replace our thesis that the economic recovery has been largely built on stimulus as opposed to organic growth.   I think Hatzius will ultimately look more prescient than he did this morning.  This recovery will continue to be below trend and 2010 is shaping up to be quite a disappointment.

THE GREAT LIQUIDITY RACE – WHY GOLD WILL SOAR

Courtesy of The Pragmatic Capitalist

Paul Tudor Jones appears to have shifted from the bear market rally camp to the bull market camp.  As of our last update he was firmly in the position that the market had rallied too much and was due for a downturn.   Late last summer Tudor Jones stated his desire not to chase the 45% rally in stocks and rather, buy into an autumn downturn in anticipation for a year end rally:

While 45% is nothing to ignore, one should take into account that the S&P through July 31 is still down more than 20% on a price basis year-over-year. The bottom line is that we are not inclined to aggressively chase the market here. Rather, we eye a better opportunity to be long equities into year-end on a potential autumnal pullback.

He has changed his tune a bit now and believes the economy has the potential to remain quite robust into Q2 of 2010 as Fed policy remains accommodative, the dollar remains weak and inventory de-stocking continues:

The forceful policy response to avert depression tail risks posed by the financial crisis has likely unleashed a wave of liquidity which is probably greater than that of 2001-2003.  Our job is to identify the best performing assets of this “Great Liquidity Race.”  At present, it appears those assets are gold, emerging market equities denominated in local currencies, and commodity related stocks.

Liquidity is making its way into bond purchases by banks, into equity markets, into capital flows to emerging markets and into international reserve accumulation and related diversification away from the dollar.  This will be the trend over the next quarter—or two—even before discussing potential portfolio shifts within it.

Due to this easy money approach he is becoming heavily invested in gold and other precious metals as he expects metals to win the “great liquidity race”:

“precious metals exposure has been increasing and is currently the largest commodity exposure.  As a result we have included, for this quarter, a separate discussion on gold as an appendix.  I have never been a gold bug.  It is just an asset that, like everything else in life, has its time and place.  And now is that time.”

In the bond market he likes Curve Flatteners as inflation is likely to pick-up in the coming quarters.  Although Julian Robertson does not have the same gold outlook, he does like the same bond trade.

“Curve flatteners also provide tail risk insurance against long gold, short dollar and long equity positions and, as such, marry well with other market views presented here.”

In terms of currencies he sees the dollar falling further on the back of the Fed’s easy monetary approach.  He likes the Brazilian Real and the Australian Dollar.  He also likes the Korean Won and Yuan, but believes their appreciation against the dollar will be slower.  He does not find the Euro intriguing.

He continues to like equities into year-end.  Let’s just hope he didn’t just buy at the top:

“the stage should be set for another run of meaningful size into year-end.   Ensuing developments lead us to think that run could continue well into the first quarter of next year.

As for our regional preferences, we continue to favor emerging markets in general, and countries like Brazil and Taiwan, in particular.”

*Thanks to Deal Book for this report.

Crazymaker: Journal of American Media and Lifestyle

Courtesy of Charles Hugh Smith, Of Two Minds

If you wonder why our society is so schizophrenic–look no further than Crazymaker Journal.

I happened upon a fascinating new online publication: Crazymaker, the Journal of American Media and Lifestyle. I have to say the content set me back on my heels; rarely do I see such an honest portrayal of the carefully mixed messages dished out as "news" and "entertainment".

Gregory Bateson addressed how a cognitive "double bind" could create a schizophrenic state of anxiety and dysfunction.

Their findings indicated that the tangles in communication often diagnosed as schizophrenia are not necessarily result of an organic brain dysfunction. Instead, they found that destructive double binds were a frequent pattern of communication among families of patients, and they proposed that growing up amidst perpetual double binds could lead to learned patterns of confusion in thinking and communication.

Human communication is complex; 90% of it is nonverbal (see also Albert Mehrabian) and context is an essential part of it. Communication consists of the words said, tone of voice, and body language. It also includes how these relate to what has been said in the past; what is not said, but is implied; how these are modified by other nonverbal cues, such as the environment in which it is said, and so forth.

For example, if someone says "I love you," one takes into account who is saying it, their tone of voice and body language, and the context in which it is said. It may be a declaration of passion or a serene reaffirmation, insincere and/or manipulative, an implied demand for a response, a joke, its public or private context may affect its meaning, and so forth.

This is an apt description of the craziness created by media/marketing messages every minute of every hour of every day in the USA. Bake a super-rich cake, and oh my, why are you so fat? Now you have to torture yourself with diets which don’t work.

Girls: want to look hot and sexy? if you don’t, you’re a loathesome loser.

Guys: not ripped with bulging muscles? Too bad–you’re a loathesome loser, too. Image and exteriors are everything!

The media profits from selling marketing/adverts. Marketing causes people to become schizophrenic. Adverts’ meta-messages often contain implicit sexual content or domination/submission themes, or the promise of "cures" for everyday living–or for the results of the very behaviors being prompted and encouraged.

Some of the conflicting messages are so painfully obvious, yet consumers are seemingly blind to the paradox of a magazine thick of with adverts for more products being titled Real Simple:

Sadly, as a result we all have quatro-polar disease. Fortunately, there’s a medication cure: zombiestra.

Yes, I am alive to the irony that this site runs adverts selected to match the content of the topic being addressed. Sometimes the "contextualization" is delayed or mismatched, and the irony is heightened.

So I cannot claim some blameless role; I too am part of the machine, accepting money to fund the operation of this site. Should advertising be banned? That might be an ideal for some, but the more realistic solution might be to work on teaching a healthy skepticism based on cui bono–to whose benefit is this advert running? Once that has been established, then the "consumer" is at least grounded in this reality: we are the target/mark of the con.

The other solution is to minimize exposure to the most powerful adverts, which are on TV. Thus minimizing exposure to commercial and cable TV is an excellent start to minimizing the impact of media/marketing crazymaking.

You can also find my work on AOL’s Daily Finance and Seeking Alpha.

If you want more troubling/revolutionary/annoying analysis, please read Free eBook now available: HTML version: Survival+: Structuring Prosperity for Yourself and the Nation     (PDF version (111 pages): Survival+)

The new health care reform bill includes “No child left unimmunized against influenza” program

By Cody Willard

Take a look at the ominous headline and chart from 1929 into 1930. – Ilene

Black Monday: Ancient History Or Imminent Future?

By Nico Isaac, courtesy of Elliott Wave International

The following article includes analysis from Robert Prechter’s Elliott Wave Theorist. For more insights from Robert Prechter, download the 75-page eBook Independent Investor eBook. It’s a compilation of some of the New York Times bestselling author’s writings that challenge conventional financial market assumptions. Visit Elliott Wave International to download the eBook, free.

Once upon a time, the term "Black Monday" was to Wall Street what the name "Lord Voldemort" was to Hogwarts. It turned the air freezing cold and sent traders flinching around every corner in fear of a repeat of the October 19, 1987 or October 28, 1929 meltdown.

Case in point: The 2008 "Black Monday" anniversary. At the time, the U.S. stock market was locked in a ferocious downtrend that included regular, triple-digit daily declines of 400 points and more. Needless to say, when the final two Mondays of October arrived, the least superstitious investors surrounded their portfolios with more good-luck talismans than a Bingo player. See October 19, 2008 AP headline below:

"Black Monday: Stocks Sink As Gloom Seizes Wall Street. Prolonged Economic Turmoil" is seen.

That was then. Today, the usual dread surrounding the back-to-back string of "Black Mondays" is nowhere to be found. In its place, media reports abound of a new, global bull market "shrugging off," "ignoring," and "making a distant memory" of the event.

For one, "gloom" hasn’t "seized" the U.S. stock market in quite a while; from its March 2009 low, the Dow has risen more than 50% to above the psychologically important 10,000 level. For another, the mainstream experts insist that today’s financial animal is unrecognizable to that of 1987, and especially 1929. In their eyes, it’s a completely different — i.e. safer, smarter, and sounder system.

We beg to differ.  

See, while the usual experts want to put as much mental distance between today’s market and those that facilitated the 1987 recession and 1929-1932 Great Depression — the physical similarities are impossible to ignore; more so, in fact, to the latter scenario.

Here, the October 2009 Elliott Wave Financial Forecast presents the following news clip from the October 25, 1929 New York Daily Investment News.

Now, take a look at these headlines from the week of October 12-17, 2009:

"The Great Recession Is Over." (Reuters) — "80% of Economists Say The Worst Is Behind Us." (CNN Money) — "The Bull Is Back" (AP) — "The Economic Recovery Is Well Underway" (Wall Street Journal)

They’re interchangeable — Eighty years later.

Along with a similar extreme in bullish sentiment, the performance of stocks between now and the 1929 situation is cut from the same cloth. After an initial plunge from August 1929 through late October 1929, the US stock market enjoyed a powerful rally well into the following year. NOW: After a steep freefall from its October 2007 peak, the US stock market is once again enjoying the fruits of a powerful rally back to new highs for the year.

Also, on closer examination, the October 19 Elliott Wave Theorist (EWT, for short) uncovers an even deeper parallel between the 2009 rally and the 1929-30 one. Here, EWT presents the following snapshot of the Dow during the Depression-era advance:

As Bob Prechter points out — in 1930, stocks rallied to the level of the preceding year’s gap. Bob then reveals that the same level has been reached now.

So, we all know how the 1930 rally ended. The question is whether the 2009 advance will experience the same fate. As Bob explains in the Theorist, the only way to know for certain is to "look at the reality of the situation."

For more information, download Robert Prechter’s free Independent Investor eBook. The 75-page resource teaches investors to think independently by challenging conventional financial market assumptions.  Robert Prechter, Chartered Market Technician, is an expert on and proponent of the deflationary scenario. Prechter is the founder and CEO of Elliott Wave International, author of Wall Street best-sellers Conquer the Crash and Elliott Wave Principle and editor of The Elliott Wave Theorist monthly market letter since 1979.

So we get the prize for extreme income inequality. The failure of our government – many people, over many years - to prevent the disaster is bad enough.  Now the non-effort to correct the factors leading up to the financial meltdown supports the view that there are few people in government who have any desire to do so. Because, it’s simple, people do what they want to do. – Ilene  

Are You Ready for the Next Crisis?

By PAUL CRAIG ROBERTS at CounterPunch 

Evidence that the US is a failed state is piling up faster than I can record it.

One conclusive hallmark of a failed state is that the crooks are inside the government, using government to protect and to advance their private interests.

Another conclusive hallmark is rising income inequality as the insiders manipulate economic policy for their enrichment at the expense of everyone else.

Income inequality in the US is now the most extreme of all countries. The 2008 OECD report, “Income Distribution and Poverty in OECD Countries,” concludes that the US is the country with the highest inequality and poverty rate across the OECD and that since 2000 nowhere has there been such a stark rise in income inequality as in the US. The OECD finds that in the US the distribution of wealth is even more unequal than the distribution of income.

On October 21, 2009, Business Week highlighted a new report from the United Nations Development Program concluded that the US ranked third among states with the worst income inequality. As number one and number two, Hong Kong and Singapore, are both essentially city states, not countries, the US actually has the shame of being the country with the most inequality in the distribution of income.

The stark increase in US income inequality in the 21st century coincides with the offshoring of US jobs, which enriched executives with “performance bonuses” while impoverishing the middle class, and with the rapid rise of unregulated OTC derivatives, which enriched Wall Street and the financial sector at the expense of everyone else.

Millions of Americans have lost their homes and half of their retirement savings while being loaded up with government debt to bail out the banksters who created the derivative crisis.

Frontline’s October 21 broadcast, “The Warning,” documents how Federal Reserve Chairman Alan Greenspan, Treasury Secretary Robert Rubin, Deputy Treasury Secretary Larry Summers, and Securities and Exchange Commission Chairman Arthur Levitt blocked Brooksley Born, head of the Commodity Futures Trading Commission, from performing her statutory duties and regulating OTC derivatives.

After the worst crisis in US financial history struck, just as Brooksley Born said it would, a disgraced Alan Greenspan was summoned out of retirement to explain to Congress his unequivocal assurances that no regulation of derivatives was necessary. Greenspan had even told Congress that regulation of derivatives would be harmful. A pathetic Greenspan had to admit that the free market ideology on which he had relied turned out to have a flaw.

Greenspan may have bet our country on his free market ideology, but does anyone believe that Rubin and Summers were doing anything other than protecting the enormous fraud-based profits that derivatives were bringing Wall Street? As Brooksley Born stressed, OTC derivatives are a “dark market.” There is no transparency. Regulators have no information on them and neither do purchasers.

Even after Long Term Capital Management blew up in 1998 and had to be bailed out, Greenspan, Rubin, and Summers stuck to their guns. Greenspan, Rubin and Summers, and a roped-in gullible Arthur Levitt who now regrets that he was the banksters’ dupe, succeeded in manipulating a totally ignorant Congress into blocking the CFTC from doing its mandated job. Brooksley Born, prevented by the public’s elected representatives from protecting the public, resigned. Wall Street money simply shoved facts and honest regulators aside, guaranteeing government inaction and the financial crisis that hit in 2008 and continues to plague our economy today.

The financial insiders running the Treasury, White House, and Federal Reserve shifted to taxpayers the cost of the catastrophe that they had created. When the crisis hit, Henry Paulson, appointed by President Bush as Rubin’s replacement as the Goldman Sachs representative running the US Treasury, hyped fear to obtain from “our” representatives in Congress with no questions asked hundreds of billions of taxpayers’ dollars (TARP money) to bail out Goldman Sachs and the other malefactors of unregulated derivatives.

When Goldman Sachs recently announced that it was paying massive six and seven figure bonuses to every employee, public outrage erupted. In defense of banksters, saved with the public’s money, paying themselves bonuses in excess of most people’s life-time earnings, Lord Griffiths, Vice Chairman of Goldman Sachs International, said that the public must learn to “tolerate the inequality as a way to achieve greater prosperity for all.”

In other words, “Let them eat cake.”

According to the UN report cited above, Great Britain has the 7th most unequal income distribution in the world. After the Goldman Sachs bonuses, the British will move up in distinction, perhaps rivaling Israel for the fourth spot in the hierarchy.

Despite the total insanity of unregulated derivatives, the high level of public anger, and Greenspan’s confession to Congress, still nothing has been done to regulate derivatives. One of Rubin’s Assistant Treasury Secretaries, Gary Gensler, has replaced Brooksley Born as head of the CFTC. Larry Summers is the head of President Obama’s National Economic Council. Former Federal Reserve official Timothy Geithner, a Paulson protege, runs the Obama Treasury. A Goldman Sachs vice president, Adam Storch, has been appointed the chief operating officer of the Securities and Exchange Commission. The Banksters are still in charge.

Is there another country in which in full public view so few so blatantly use government for the enrichment of private interests, with a coterie of “free market” economists available to justify plunder on the grounds that “the market knows best”? A narco-state is bad enough. The US surpasses this horror with its financo-state.

As Brooksley Born says, if nothing is done “it’ll happen again.”

But nothing can be done. The crooks have the government.

Note: The OECD report shows that despite the Reagan tax rate reduction, the rate of increase in US income inequality declined during the Reagan years. During the mid-1990s the Gini coefficient (the measure of income inequality) actually fell. Beginning in 2000 with the New Economy (essentially financial fraud and offshoring of US jobs), the Gini coefficient shot up sharply.

Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. He is coauthor of The Tyranny of Good Intentions. He can be reached at: PaulCraigRoberts@yahoo.com

Actually, Case-Shiller Shows That The Housing Crash Has Already Resumed

Courtesy of Henry Blodget at Clusterstock

Andy Xie: Central bank “arsonists have been asked to put out the fire”

Courtesy of Edward Harrison at Credit Writedowns

Here’s an interesting update on George Soros’s outlook on the market. – Ilene

THE GURU OUTLOOK: GEORGE SOROS SAYS MARKET AT RISK OF DOWNTURN

Courtesy of The Pragmatic Capitalist

This week’s Guru Outlook takes a look inside the mind of George Soros – one of the original masters of the global macro hedge fund universe.   Soros, of course, became famous for breaking the Bank of England.  Soros made a spectacularly leveraged bet against the British Pound which netted him over $1B in a day.

Soros rose to recent notoriety for predicting the financial crisis.  He was far more bearish than most others and appeared to have a crystal ball with a play-by-play for each step of the crisis.  Like some of the guru’s we’ve spoken of lately, he wasn’t bearish all the way up.  Soros saw the decline in markets as a buying opportunity and has taken the liberty to make billions for his investors on both the way down and the way up.

Although Soros has turned more bullish over the course of the last 6 months he has not lost sight of the forest for the trees.  Much like Jeremy Grantham, Soros believes we are confronted with massive structural long-term problems – particularly in the United States. He believes U.S. consumers are in the middle of a long-term deleveraging process and earlier this month he described the U.S. banking system as “bankrupt”.  He sees very weak consumer spending and a drag from the banking sector holding down global growth for years to come.

In a recent interview, he said the market is now very overextended and at substantial risk of another downturn.   But that doesn’t mean the market will turn down immediately.  Soros says the market is likely to remain buoyant throughout the remainder of 2009 and will likely face its reality of weak global growth in 2010.  He says the rally has been driven by the government stimulus and little else.  Soros says the recent uptick in bank earnings is essentially a fraud:

“Those earnings are not the achievement of risk-takers.  These are gifts, hidden gifts, from the government.”

Soros recently said the move down in the dollar was unsustainable (he obviously reads too much TPC) and that its link to the Renminbi would reduce the overall decline.  Despite this, Soros is betting big on all things “real”.   In particular, Soros is betting big on oil related names.  Soros has over 33% of his funds invested in energy related names.  He recently announced large positions in Interoil (IOC) and Headwaters (HW).  Soros’ largest positions remain PetroBasiliero (PBR) and Hess (HES) which both represent over 5% of his portfolio.

Soros was also a heavy investor in convertible bonds in recent quarters.  Of particular interest were semiconductor names.  Soros bought large bond stakes in RF Micro Devices (RFMD), LSI, and Linear Tech (LLTC).

You can see his latest 13-f filing here for more details on specific positions.