Large Sarge
8th July 2010, 04:09 AM
Submitted by Jim Willie on Wed, 7 Jul 2010
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Road to Perdition
Time to awaken to a new dreadful reality. Just like autumn 2008, all over again, the stock market is breaking down in a powerful visible manner, after nothing was fixed with the vast financial structures but much money was spent. If only the USGovt had decided to address the problems instead of funding the myriad liquidity facilities, which by the way serve as a virtual banking system. If only the USGovt had decided to address the problems instead of funding the US Federal Reserve equity reserves, as in excess bank reserve lures. If only the USGovt had decided to address the problems instead of funding the bank preferred stock and bank executive bonuses. If only the USGovt had decided to address the fundamental need for capital formation toward job growth instead of simple extensions of jobless benefits. If only the USGovt had decided to address the dire need to liquidate impaired assets instead of warehousing them, which happens by the way, to produce irreconcilable bank system constipation within the loan processing system. If only the USGovt had decided to address the cancerous large corporations too big to fail that must be permitted to die, instead of letting them seize greater power in USGovt and Wall Street functions. If only the USGovt had decided to address one of the root causes of USEconomic deterioration, namely endless war, so that more funds would be available for that essential capital formation and job growth, not to mention state budget plugs, as the 50 states suffer from massive capital drain through taxation squandered at the federal level, a drain that includes war.
When no solutions are achieved, even no solutions pursued, the sugar high vanishes, the adrenalin rush wears off, and the underlying root causes return as the same symptoms to the sick patient. With no remedy, the symptoms turn much worse!! The symptoms return with a vengeance, like right here, right now. Shocks to the body economic are imminent, assured by lack of required credit for almost two years, compounded by the Gulf of Mexico poison event, sure to result in a killed exterminated appendage.
One of the most pernicious dirty secrets is that the supposedly excess bank reserves parked at the USFed are actually Loan Loss Reserves attracted by the USFed itself, by virtue of interest yield offered. Banks are running naked and insolvent and constipated, hardly a pretty image. The extraordinary measures have worn off, even as the political will to continue them has faded away. Reality has a way of returning to the scene, front & center. A rot has permeated the USEconomy. Personal bankruptcies are up 14% in the first half of 2010, hardly a sign of a recovery. Home sales are down. Foreclosures are unrelenting. Retail sales are down. Factory orders are down. California might look worse than Greece. About one million Americans have dropped out of the jobs market in the last two months. Eight million jobs have been lost in the recession that never actually ended. The rolls of people unemployed but not receiving a jobless insurance check amount to 9.2 million. The USFed has begun to eye the Printing Pre$$ once again. Internal battles within the USFed center upon asset deflation and resumed bond monetization. The august body of hacks who occupy offices at the venerable US Federal Reserve Board is arguing in heated fashion about QE2, a Round #2 of powerful monetary printing, bond purchase, and financial market defecation, with predictably destructive capital formation effects toward which they remain blind.
Urban Bread Line
Beware the new Modern Day Bread Lines. The new bread line is from job fairs, where unemployed workers seek to become the breadwinner again, a desperate struggle for families to survive. People queue for a job fair in New York in this photo. The share of the US population at working age with jobs in June fell from 58.7% to 58.5%, a big drop from 63% just three years ago.
U.S. STOCK MARKET SLIDING OVER THE CLIFF
The S&P500 stock index carries added meaning, since the large swath of US citizens who are not insolvent choose to react strongly to the stock index when drained of wealth. Paper wealth is fast vanishing, while the fiat paper monetary system continues to suffer convulsions better described as a death experience. Denial is rampant. First the US banking system died in autumn 2008, next the global monetary system is dying. Again, denial is rampant. The people react with fear, alarm, and anger when their pension funds suffer significant loss. Those funds suffered significant loss in autumn 2008, and they are on the verge of suffering a similar loss in the next several weeks. My sincere considered opinion is that the stock market breakdown is part of a plan, one to permit or even force a political change toward a powerful grotesque second event of inflation. Fiscal stimulus and monetary accommodation have been withdrawn in the past few weeks, as the mythical recovery is permitted to take root. Its fruit is rotten apples, peaches consumed by insects, grapes dead on the vine, and oranges lying on the ground trampled. A shock to public sentiment will open the flood gates to a new bigger round of monetary inflation. The first one was all for the bankers. The second one will be all for the USEconomy, on the verge of a powerful breakdown, if not collapse, since nothing has even remotely been fixed or even remedy pursued.
The effect on the gold price from Round #1 was a push down followed by a powerful boomerang up to new highs. The effect on the gold price from Round #2 will be similar in direction but more powerful in upward movement. Think $2000 gold !!
The S&P stock index decline will be at least as bad as the autumn 2008 decline. Claims of Price/Earnings ratios being low are pure deception, since earnings come from chambers where accounting fraud is permitted in the finance units of broad types of businesses. Claims of cash on the sidelines are more deception, since the funds are escaping a insolvent system suffering from powerful deterioration. The indicators are dire, ugly, strong, and undeniable. The 50-day moving average (in blue line) is soon to cross below the 200-day MA (in red line). About ten thousand technical analysts do indeed notice this vital signal, a reliable one hardly shrouded in mystery or abstruse theory. The 50-day MA used to serve as a support since autumn 2008, but now it is acting as a ceiling of resistance (in green circles). Notice the transition it endured in February 2010. Other similar MA indicators come with the 20-week MA crossing below the 50-week MA, a matching event in progress, but a little slower in developing. The bearish MA crossover is a loud Death Cross signal. A powerful decline is imminent and unavoidable, one to shake the world financial markets, certain to bring it to its knees. It will permit political policy change to come, like a hot knife through butter. Look for the S&P500 index to retest the March low, which reached 666, the signatory number of the Wall Street cabal and code from their spiritual leader.
A queer statistic has emerged that underscores the perversion that is Wall Street and the stock market. High Frequency Trading has not gone away. A couple months ago, when it was exposed during a single day swoon event, such trading was responsible for 83% of the entire New York Stock Exchange trade volume. Somehow the word 'CircleJerk' comes to mind as the Oligarch Banks compete toward a liquidity climax with fewer players of potency remaining each year. A liquidity analysis by Abel-Noser indicates that the US stock market has morphed into a sickly concentrated pool where the top 99 stocks account for 50.1% of total domestic trading volume. In June, the top 20 stocks accounted for 28.9% of all domestic volume, an increase to record level logged each month. The HFT algorithms are forced methodically in a reduced number of only the most liquid stocks. The game actually results in gradual removal of players from the market. The US stock market will eventually develop into a tomb without volume. At that time, large pension and mutual funds will be forced to consider that their vast portfolios might be worth something on par with the volume-less mortgage bonds tucked away in the acid cellars. Their large investment stakes in stocks simply will not be redeemable. The SPX stock index chart should conjure up images of Wiley Coyote legless over the canyon.
GOLD OCCUPIES A DIFFERENT PLACE
The effect will differ from the past, due to the Paradigm Shift in full force. The effect on the gold & silver prices will surely include some initial downside movement. However, this time around, with sovereign debt under absolute siege, the way it plays out will be very different. However, this time around, with gold having taken a reserve currency role, the way it plays out will be very different. However, this time around, with USFed balance sheets wrecked and bloated, the way it plays out will be very different. Imagine a powerful stock market decline panic with a coincident crisis in sovereign debt. USTreasury Bonds might still attract big money, but this time it will be Dumb Money that refuses to recognize the USTBond as the last sovereign debt to be attacked with a vengeance. Usage of new government debt to prevent the disaster in asset prices will force a vicious cycle of ruin, which will infect, corrode, and destroy remaining confidence in all things paper. Gold has in the last several months claimed an important spot at the opposite head of the monetary reserve dinner table. It is a key ingredient in non-Anglo backroom restructure initiatives. The Untied States bankers are trapped in quasi-depression 18 months deep into a Zero Interest Rate Policy climate, after Round #1 of Quantitative Easing is complete, and wasted fiscal stimulus that sent the annual budget deficit above 10% of GDP.
Recall a Jackass Axiom: The first nations that abandon the USDollar and the US$-based financial system, both with banking and commerce, will be the leaders in the next chapter, part of the Paradigm Shift and its effect. Recall the Sound Money Corollary: The next global reserve currency cannot be paper based, operating by fiat and faith, since no paper currency can replace a fiat paper global reserve currency. Thus the Intl Monetary Fund and their hapless Special Drawing Rights ploy would serve as a mere raft of papyrus reeds, tied together, heading over the cliff waterfall onto the rocks, with a predictable outcome.
Gold lies at the nexus of the systemic vulnerability, the linchpin holding the fiat game together, but with a suppressed hidden basement price mechanism ready to explode. The corrupted illicit actions have done harm to the gold & silver markets, in addition to the stock market, and the bond market, even the housing market, in fact all markets anchored to the USDollar. No US$-based market is fair of equilibrium based anymore. All are distorted beyond recognition. Without the constant props, these markets would all likely collapse of their own weight toward significantly lower price levels, real levels.
OMINOUS COMPARISONS OFFER WARNING
The long list of horrendous realities is soon to force emergency changes to official policy. The telltale summertime distractions are here, like vacations at the beach, in the mountains, at Uncle Ernie's, as well as backyard barbeques. We are about to observe a repeat of the Great Depression stock decline pattern, with pattern recognized broadly, despite all the funny money thrown into the wind, into banker pockets, and into Black Holes. That pattern was identified by a strong recovery off a nasty decline, mislabeled a return of a stock bull by compromised clowns and well paid charlatans, followed by even lower low price levels. A titanic battle is underway. On one side is the political cabal that wishes for decline, breakdown, and wreckage in order to carry out its political agenda of concentrated power, even emergency power like martial law or at least rationed supply. On the other side is the Weimar option of hyper-inflation, as the extreme new money creation leaks into the system and forces prices of everything upward and skyward.
Printer-friendly versionSend to friend
Road to Perdition
Time to awaken to a new dreadful reality. Just like autumn 2008, all over again, the stock market is breaking down in a powerful visible manner, after nothing was fixed with the vast financial structures but much money was spent. If only the USGovt had decided to address the problems instead of funding the myriad liquidity facilities, which by the way serve as a virtual banking system. If only the USGovt had decided to address the problems instead of funding the US Federal Reserve equity reserves, as in excess bank reserve lures. If only the USGovt had decided to address the problems instead of funding the bank preferred stock and bank executive bonuses. If only the USGovt had decided to address the fundamental need for capital formation toward job growth instead of simple extensions of jobless benefits. If only the USGovt had decided to address the dire need to liquidate impaired assets instead of warehousing them, which happens by the way, to produce irreconcilable bank system constipation within the loan processing system. If only the USGovt had decided to address the cancerous large corporations too big to fail that must be permitted to die, instead of letting them seize greater power in USGovt and Wall Street functions. If only the USGovt had decided to address one of the root causes of USEconomic deterioration, namely endless war, so that more funds would be available for that essential capital formation and job growth, not to mention state budget plugs, as the 50 states suffer from massive capital drain through taxation squandered at the federal level, a drain that includes war.
When no solutions are achieved, even no solutions pursued, the sugar high vanishes, the adrenalin rush wears off, and the underlying root causes return as the same symptoms to the sick patient. With no remedy, the symptoms turn much worse!! The symptoms return with a vengeance, like right here, right now. Shocks to the body economic are imminent, assured by lack of required credit for almost two years, compounded by the Gulf of Mexico poison event, sure to result in a killed exterminated appendage.
One of the most pernicious dirty secrets is that the supposedly excess bank reserves parked at the USFed are actually Loan Loss Reserves attracted by the USFed itself, by virtue of interest yield offered. Banks are running naked and insolvent and constipated, hardly a pretty image. The extraordinary measures have worn off, even as the political will to continue them has faded away. Reality has a way of returning to the scene, front & center. A rot has permeated the USEconomy. Personal bankruptcies are up 14% in the first half of 2010, hardly a sign of a recovery. Home sales are down. Foreclosures are unrelenting. Retail sales are down. Factory orders are down. California might look worse than Greece. About one million Americans have dropped out of the jobs market in the last two months. Eight million jobs have been lost in the recession that never actually ended. The rolls of people unemployed but not receiving a jobless insurance check amount to 9.2 million. The USFed has begun to eye the Printing Pre$$ once again. Internal battles within the USFed center upon asset deflation and resumed bond monetization. The august body of hacks who occupy offices at the venerable US Federal Reserve Board is arguing in heated fashion about QE2, a Round #2 of powerful monetary printing, bond purchase, and financial market defecation, with predictably destructive capital formation effects toward which they remain blind.
Urban Bread Line
Beware the new Modern Day Bread Lines. The new bread line is from job fairs, where unemployed workers seek to become the breadwinner again, a desperate struggle for families to survive. People queue for a job fair in New York in this photo. The share of the US population at working age with jobs in June fell from 58.7% to 58.5%, a big drop from 63% just three years ago.
U.S. STOCK MARKET SLIDING OVER THE CLIFF
The S&P500 stock index carries added meaning, since the large swath of US citizens who are not insolvent choose to react strongly to the stock index when drained of wealth. Paper wealth is fast vanishing, while the fiat paper monetary system continues to suffer convulsions better described as a death experience. Denial is rampant. First the US banking system died in autumn 2008, next the global monetary system is dying. Again, denial is rampant. The people react with fear, alarm, and anger when their pension funds suffer significant loss. Those funds suffered significant loss in autumn 2008, and they are on the verge of suffering a similar loss in the next several weeks. My sincere considered opinion is that the stock market breakdown is part of a plan, one to permit or even force a political change toward a powerful grotesque second event of inflation. Fiscal stimulus and monetary accommodation have been withdrawn in the past few weeks, as the mythical recovery is permitted to take root. Its fruit is rotten apples, peaches consumed by insects, grapes dead on the vine, and oranges lying on the ground trampled. A shock to public sentiment will open the flood gates to a new bigger round of monetary inflation. The first one was all for the bankers. The second one will be all for the USEconomy, on the verge of a powerful breakdown, if not collapse, since nothing has even remotely been fixed or even remedy pursued.
The effect on the gold price from Round #1 was a push down followed by a powerful boomerang up to new highs. The effect on the gold price from Round #2 will be similar in direction but more powerful in upward movement. Think $2000 gold !!
The S&P stock index decline will be at least as bad as the autumn 2008 decline. Claims of Price/Earnings ratios being low are pure deception, since earnings come from chambers where accounting fraud is permitted in the finance units of broad types of businesses. Claims of cash on the sidelines are more deception, since the funds are escaping a insolvent system suffering from powerful deterioration. The indicators are dire, ugly, strong, and undeniable. The 50-day moving average (in blue line) is soon to cross below the 200-day MA (in red line). About ten thousand technical analysts do indeed notice this vital signal, a reliable one hardly shrouded in mystery or abstruse theory. The 50-day MA used to serve as a support since autumn 2008, but now it is acting as a ceiling of resistance (in green circles). Notice the transition it endured in February 2010. Other similar MA indicators come with the 20-week MA crossing below the 50-week MA, a matching event in progress, but a little slower in developing. The bearish MA crossover is a loud Death Cross signal. A powerful decline is imminent and unavoidable, one to shake the world financial markets, certain to bring it to its knees. It will permit political policy change to come, like a hot knife through butter. Look for the S&P500 index to retest the March low, which reached 666, the signatory number of the Wall Street cabal and code from their spiritual leader.
A queer statistic has emerged that underscores the perversion that is Wall Street and the stock market. High Frequency Trading has not gone away. A couple months ago, when it was exposed during a single day swoon event, such trading was responsible for 83% of the entire New York Stock Exchange trade volume. Somehow the word 'CircleJerk' comes to mind as the Oligarch Banks compete toward a liquidity climax with fewer players of potency remaining each year. A liquidity analysis by Abel-Noser indicates that the US stock market has morphed into a sickly concentrated pool where the top 99 stocks account for 50.1% of total domestic trading volume. In June, the top 20 stocks accounted for 28.9% of all domestic volume, an increase to record level logged each month. The HFT algorithms are forced methodically in a reduced number of only the most liquid stocks. The game actually results in gradual removal of players from the market. The US stock market will eventually develop into a tomb without volume. At that time, large pension and mutual funds will be forced to consider that their vast portfolios might be worth something on par with the volume-less mortgage bonds tucked away in the acid cellars. Their large investment stakes in stocks simply will not be redeemable. The SPX stock index chart should conjure up images of Wiley Coyote legless over the canyon.
GOLD OCCUPIES A DIFFERENT PLACE
The effect will differ from the past, due to the Paradigm Shift in full force. The effect on the gold & silver prices will surely include some initial downside movement. However, this time around, with sovereign debt under absolute siege, the way it plays out will be very different. However, this time around, with gold having taken a reserve currency role, the way it plays out will be very different. However, this time around, with USFed balance sheets wrecked and bloated, the way it plays out will be very different. Imagine a powerful stock market decline panic with a coincident crisis in sovereign debt. USTreasury Bonds might still attract big money, but this time it will be Dumb Money that refuses to recognize the USTBond as the last sovereign debt to be attacked with a vengeance. Usage of new government debt to prevent the disaster in asset prices will force a vicious cycle of ruin, which will infect, corrode, and destroy remaining confidence in all things paper. Gold has in the last several months claimed an important spot at the opposite head of the monetary reserve dinner table. It is a key ingredient in non-Anglo backroom restructure initiatives. The Untied States bankers are trapped in quasi-depression 18 months deep into a Zero Interest Rate Policy climate, after Round #1 of Quantitative Easing is complete, and wasted fiscal stimulus that sent the annual budget deficit above 10% of GDP.
Recall a Jackass Axiom: The first nations that abandon the USDollar and the US$-based financial system, both with banking and commerce, will be the leaders in the next chapter, part of the Paradigm Shift and its effect. Recall the Sound Money Corollary: The next global reserve currency cannot be paper based, operating by fiat and faith, since no paper currency can replace a fiat paper global reserve currency. Thus the Intl Monetary Fund and their hapless Special Drawing Rights ploy would serve as a mere raft of papyrus reeds, tied together, heading over the cliff waterfall onto the rocks, with a predictable outcome.
Gold lies at the nexus of the systemic vulnerability, the linchpin holding the fiat game together, but with a suppressed hidden basement price mechanism ready to explode. The corrupted illicit actions have done harm to the gold & silver markets, in addition to the stock market, and the bond market, even the housing market, in fact all markets anchored to the USDollar. No US$-based market is fair of equilibrium based anymore. All are distorted beyond recognition. Without the constant props, these markets would all likely collapse of their own weight toward significantly lower price levels, real levels.
OMINOUS COMPARISONS OFFER WARNING
The long list of horrendous realities is soon to force emergency changes to official policy. The telltale summertime distractions are here, like vacations at the beach, in the mountains, at Uncle Ernie's, as well as backyard barbeques. We are about to observe a repeat of the Great Depression stock decline pattern, with pattern recognized broadly, despite all the funny money thrown into the wind, into banker pockets, and into Black Holes. That pattern was identified by a strong recovery off a nasty decline, mislabeled a return of a stock bull by compromised clowns and well paid charlatans, followed by even lower low price levels. A titanic battle is underway. On one side is the political cabal that wishes for decline, breakdown, and wreckage in order to carry out its political agenda of concentrated power, even emergency power like martial law or at least rationed supply. On the other side is the Weimar option of hyper-inflation, as the extreme new money creation leaks into the system and forces prices of everything upward and skyward.