08.21.07
Posted in Financial Charts/Links at 8:34 am by Administrator
Well, normally I only post “3″ things to watch. Today I could stay home and post all day long as it is flying and the fan is not smelling so hot. The biggest thing to watch now is the 13 week Treasury Bill. With the yield at 2.95% and some very unusual activity going on behind the scenes, namely Bernanke calling the Financial institution leaders himself, not the other way around, there must be something very large looming like an ax over the head of our economy. So I say be concerned, don’t panic, but watch all of the Treasuries carefully. If the commercial paper can not be rolled over this week and the money market funds continue to get bombed with cash requests along with the seizing up of the credit markets, there is no possible way for the Fed to inject enough liquidity into the system.
With that being said, the warning signs are there. This is paralleling 1929 and 1987 way to neatly and Helicopter Ben is aware of this. I have the feeling if not today, then maybe tomorrow, we might see a surprise Fed Funds rate cut of .50% to 1.00%. This, of course, would be viewed as a panic move but a wise one. The result might well be an equity snap back rally to the mid-13,000 range but could also result in a total tanking of the U.S. Dollar Index into the mid to upper 70’s. Right now, I’m camping more into silver as it has the longest and most ground to make up and should skyrocket into the upper teens on such a move as big money moves rapidly into safer investments.
Wednesday is going to be a huge day. There is a very high percentage of some earning warnings and I can tell you now, one of the biggest warnings I am looking for is coming from two homebuilders who have huge outlays and liabilities in California and Florida. The whispers are that one of the big boys is no longer paying it’s bills down here (I deal with a lot of subcontractors) and that the cash squeeze is forcing them to slash home prices into a market where their homes can not get financing, even for qualified buyers. If this validates with a public warning, which I expect soon, they will not be long for the world. The one company only builds “luxury” homes which in Florida means an automatic jumbo mortgage which no one seems to able to get at this time. Perhaps if the phone lines ever clear up at a Countrywide office, someone can help these poor souls with 760 FICOs and the ability to put 30-40% down get some money.
There is a lot of fear and what we are witnessing is essentially a millionaire’s bank run. Think about that. The money markets, hedge funds and brokers are all getting pummeled with redemption requests for the uberwealthy to be moved into cash or safe positions.
What do they know, that we are not supposed to know, but all suspect? It doesn’t take a lot to follow what is happening. Read the posting below from Martin Weiss and look at the graph in the posting. Have fun and I shall return later today after my meetings to comment some more. If I get some time, perhaps I’ll visit and old friend (if they were not laid off) at the CFC Full Spectrum offices in Fort Myers. I’ll bet she’s been notified already of her future, but who knows……
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08.16.07
Posted in Financial Charts/Links at 9:39 am by Administrator
August 16, 2007
By John Galt
Twas the night before football
And all through the house,
Most Americans were stirring,
Even the mouse.
As we screamed Go Bucs
While others “go Colts”
The stock markets were crashing
Because of the dolts.
As we chanted and sang,
A terror hit a guy named Chang,
As the something in Shangai
Went Boing and then Bang!
The markets were churning,
But we did not care,
Kudlow was crowing,
”Don’t worry Ben’s there!”
Then all of the sudden,
With a violent thrash,
The speculative bubble
In China did crash.
This horrible poetry sounds like a far fetched story out of a Tim Burton movie, yet tonight it is not. There is an 800 lb. gorilla blocking the America citizen’s view of the television, yet most just figure it’s “summer programming” or Cramer forgot to shave. No, the Shanghai markets have not crashed. And no, the Yuan has not been revalued to par on the dollar either. That gorilla in the room is about to eat millions of people alive and beat the snot out of them, yet few dare to notice it on either Main Street or Wall Street. The thrashing of our markets continues to dominate the media worldwide, as the fears of the credit lockup will spread into a full fledged banking crash. The reality of this lockup should terrify everyone even more, because despite the fraud and Ponzi scheme perpetuated on the general public and most investors by the derivatives and housing fiasco, there is a larger problem ten thousand miles away that is being denied like a Bill Clinton midnight adventure when he was the original Governator.
A little background on this story is in order, first and foremost. For over five years now, we’ve been preached to about the “China miracle” which is neither Chinese in origin, nor much of a miracle economically speaking. It does not take a lot of effort to change an agrarian regressively authoritative economic structure into a semi-capitalist turn of the twentieth century robber baron fiefdom. The United States was determined at all costs, including it’s future, to keep labor cost structures down and exploit the larger more populated nation’s prospective future growth. If this meant sacrificing industrial production in our nation to stave off labor inflation and increase profitability, be it in any currency that was on a more solid basing than the dollar, then so be it. Article after article was being produced proclaiming proudly “see, they’ve changed” and of course my favorite line in almost every article “the introduction of capitalism will eventually lead to a democratic society” or words to that effect. The key phrase that pays, as usual, was ignored by the American public because it’s a dirty word which has been translated into meaning you’re a racist or redneck if you use it: Communist.
You see, the “Communist” Chinese Party has never had any intention of reducing it’s power, it’s reach, or it’s desire to have regional if not hemispheric domination at any cost. They attempted to use older methods based on the Soviet model for decades, but when the USSR faded into oblivion, it became painfully obvious that their methodology was flawed. Upon further review, they determined it was more logical to use our own greed as a weapon against us, and of course our banksters and robber barons said “dude, that rocks” and proceeded to outsource millions of jobs to benefit the Rust Belt so that plastic widgets at Chinamart would only cost 89 cents instead of costing 92 cents like they did when Americans made them. This logic of course was so flawed that our banksters could not just stop with widgets and weapon systems being outsourced to a nation which has nuclear missiles pointed at our cities, oh no, we could not stop there. Instead, we thought “let’s teach those good old boys in the Communist Party how to manage a stock market and make a big bubble there so we can all speculate and make a fortune.”
Needless to say, there is a huge Communist Chinese stock market bubble and the banksters made a fortune.
The consequences of their foolishness was not limited to the smog ridden shores of China or India, oh no, the Pirates had to set up hedge funds around the world to move unregulated monies about and pray that nothing went wrong. Well, guess what sparky? It’s gone wrong. The concept of creating a Communist Chinese economic machine at the expense of the American worker finally came home to roost when it was discovered that the former American factory worker now working two jobs, one at an Indian owned franchisee of a 7-11 store and the other stocking Communist Chinese goods at the local Chinamart overnight did not cover the “A” in the A.R.M. Suddenly it was discovered by the banksters that manipulating the government data to say there was not much inflation when there was and people choosing to eat and buy medicine for their children was more important than paying for their homes because in their minds the logic was that there was no way the government would ever let the banksters put them out on the streets. Theory A meet Result B. Whoops, they went on the streets, the cash flow stopped to the banks, and an asset appraised and estimated incorrectly plus all the derivatives on the original paper came crashing down. And now, as if this was not unforeseen, we have a major credit and liquidity crisis in the good old US of A, much like the late 1920’s. The difference this time is that we are the largest debtor nation in the history of capitalism and our currency is based on Ben Bernanke’s and the bankster’s whims as opposed to gold as our Constitution originally mandated.
So what does this have to do with the price of egg rolls in Nanking you may ask? Let’s take a look at the mitigating factors in the Communist Chinese economy which will cause much more pain than a Goldman Sachs hedge fund defaulting someday. The Communist Chinese have had it pointed out in numerous financial publications that they manipulate their stock market and have no clue about proper accounting practices or how to deal with every aspects of banking operations. They are sitting on about $1.3 trillion in their foreign currency reserves which is wonderful if you’re opening up a money laundering operation in the Cayman’s for government treasuries (whoops, did I say that?) but not so hot for the average Chinese citizen to open up dry cleaners on every street corner. The mania that everyone forgot about that is my nightmare scenario is setting up perfectly and Wall Street has less control over that than it does the housing fiasco they helped create here. The average Communist Chinese citizen was forced since birth to accept all edicts and teachings from the government as the gospel thanks to a rigid “this is it or you get shot” education system. Since the average Communist Chinaman has about as much experience running a capitalist economy as my cats do running a Bear Stearns hedge fund, they imported “help” to manage their economy. And it does not take much of a reach to figure out that the banksters were more than eager to create a speculative bubble there in exchange for selling out our industrial heart and soul.
“So get to the nightmare John” you scream futilely at your computer screen. Time, grasshopper, in good time. The problem is the same problem America experienced and in short order we can all discuss if this is a dangerous or correct assumption on my part. The banksters were so successful modeling the Chinese economy after the American 1920’s economic miracle that the nation has experienced huge growth if you can believe the figures published by a Communist Chinese government who learned how to calculate and publish government data from the same nation which has been publishing faulty and in some cases fraudulent government data for the last fifteen years (gulp!). The figures were so good, so beyond belief, that the average Chinese citizen decided that stocks were the only casino really worth playing because the Communist Party would never lie to it’s citizens and if you caught them in the lie, so what because if you talked about it, you would get a fair, speedy trial and hung like the Director of Quality Control for the Communist Chinese food exporting companies. The average citizen in Communist China discovered that what we did in the 1920’s was brilliant so they started taking out second and third mortgages on their homes, pawn loans on their vehicles and selling family members if they could get that burden off their backs and buy some more shares in companies who like to paint Barbie with lead based paints to poison those evil capitalist Americans. The perception created thanks to such brilliant souls that have brought you the Dot Com bubble and the Housing Bubble was the same one sold to Americans in 1928, 1986 and 1998; that markets can never go down as long as there is a “report” of economic growth coming from the government. Since our government is laden with the same rocket scientists who created the hedge fund Ponzi scheme, why should we doubt any reports coming from them, right? The Communist Chinese happily allowed their economy to be bubbled up and now are humming right along posting figures to make everyone happy, keep our banksters smiling, and our industrialists fleeing here for there without thought of the consequences here in America to their actions. So what could go wrong, right?
As with all Ponzi schemes, they eventually unwind. The greatest danger facing our markets right now, our economy, is not just the current credit crunch, that’s small potatoes compared to what could be on the horizon. The Communist Chinese speculative bubble is showing signs of bursting, but nobody wants to mention the thought. The shuddering in fear you here is in the back rooms of Wall Street where already they are trying to figure out how their Quant funds could possibly be in trouble when they hired the best video gamers in the world to insure that they would never lose money in their programs. The proverbial “whoops” is right around the corner. Assuming the Communist Chinese experience a correction in their markets of twenty-five percent, that would rattle our markets even further to the down side for several reasons, the least of which is that our hedge fund morons invested in a Communist country thinking they can manipulate people who have nuclear warheads pointed at their own offices. This correction could easily snowball into a full blown crash which would be a logical leap since the only way the Communists know how to control bad events is to shoot people or run them over with tanks. This would create a liquidity crisis at home as the average citizen in China would want their money immediately and almost all of them would try to sell all of their holdings at the same time. The safeguards that worked so well here in 1929 and 1987 will fail there as usual, and create a liquidity crisis in Communist China that will crash the U.S. Treasury market almost instantly. How? Simple. The Communists will not care what our banksters say and will insist that the Communist Chinese re-inflate their economy even though inflation is pretty rampant now. As opposed to that, they will dump their U.S. assets on to the world markets to raise cash and bring their Yuans home as they have seen what a wonderful job the hedge fund managers have done here and after watching our markets have figured out that our banksters are absolutely clueless. Once our Treasury market collapses, the nightmare crash there, will result in our markets tanking completely. And the stock market aspect is the small potatoes; my concerns are more with the debt markets imploding totally, bringing our entire economy to a grinding halt and into a full blown depression within twelve months.
The motto of this story? For the intelligent soul, I would have several months of salary set aside outside of the banking system. I would have several months more of salary in precious metals like gold or silver just in case it is finally revealed just how worthless our U.S. Dollar really is. This nightmare before kickoff does not have to happen, but every indication that the education we gave the Communist Chinese was too good. Unfortunately, we failed to educate them on how to manage the downside risks, as apparently everyone here has forgotten the consequences of speculative credit and equity bubbles that we have created throughout history also.
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08.15.07
Posted in Financial Charts/Links at 12:39 am by Administrator
1. Watch the big investment banksters. Tomorrow is the deadline for redemptions of hedge funds in the 3rd quarter and if we see a sudden spike in put activity and shorts on any of them (especially GS and BSC) then start watching gold and silver. There is a play there and if the September and October puts that are out of the money suddenly skyrocket with activity, someone in the Caymans may well be telegraphing something as that’s how derivatives work; to cover their tails at the little guys expense.
2. Watch INVEST_91L probably soon to become Tropical Depression #5 overnight. Recon is in there now and it is basically stalled but pressures are dropping and that could indicate an intensifying system. Impact on anything forming that hints at Texas or Louisiana means the oil markets start to go nuts.
3. Watch the Fed. There is a major pickle forming for them right now and it’s called the reality of the real estate crash hitting home. First they had the idiocy of the banksters, then the greed of Wall Street to pile on top of it. Now they are recalculating the methodology of the FICO scoring system (Link to Story ) . If the Fed hints at an interest rate move in this environment it might be viewed as a panic move and cause more problems. If they do nothing, they will be compared to the 1929 Fed. And if they do cut and the markets rally, China starts to liquidate in earnest.
The 15th shall indeed be an interesting day…..
John Galt
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08.03.07
Posted in Financial Charts/Links at 8:48 pm by Administrator
Well, today’s “STOP THE TRADING” was one of the greatest videos I have ever seen on Bubblevision. Folks, enjoy the show until the Department of Economic Propaganda yanks it down…
Cramer: Bernanke, Wake Up
For the not “if” but when the Bubblevisionistas remove the Armageddon comments by order of the DEP…here is the You tube link:
Cramer: Bernake, Wake Up(You tube link)
Just when I couldn’t split a gut enough, the gang at www.iTulip.com have their own “educational” version of Cramer’s blow up. Once again, Must See TV….
Cramer goes Nuclear (iTulip.com Educational Series)
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Posted in Financial Charts/Links at 12:14 am by Administrator
Just an observation that Bubblevision was kind enough to point out on one of the stocks I view as a warning sign for the fall market.
Check out the data on the newly issued Put Option for CFC
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08.02.07
Posted in Financial Charts/Links at 9:17 am by Administrator
By John Galt
Despite the Fantasyland tickets being issued by the Bubblevisionistas, there is an extremely harsh reality sinking in to many war rooms across the other amusement park known as “Realityland” which is slowly hitting Mainstreetland. That harsh reality is that credit bubbles do actually go “pop” and can actually impact the day to day operations of the financial markets. The recent announcement that Bear Stearns has stopped redemptions on a third hedge fund is only one more indication that the game is almost up. It’s only a matter of when, not if until one of the major houses announces a cessation of all redemptions on all funds and operations, including day to day brokerage business, which will trigger the “big one” that everyone speculates about. The proclamations from the pompous propagandistic hucksters that “Goldilocks” is alive and well will soon be seen for what they are: Reminders of a bygone era when the elections created they hybrid socialist monster under the leadership of a President named Roosevelt.
Larry, you are entertaining as an infomercial on any of the two hundred cable channels being broadcast at 3 a.m. but I think I shall pass on your version of reality. If Goldilocks is alive and well, then what’s that smell being emitted from the autopsy table? I don’t think it’s just the flavor of Tobasco sauce the bears used to flavor their snack. It was not enough for the bears to just eat Goldilocks, now they are eating the creators of the myth. The credit markets are being declared in “turmoil” by many members of the mainstream economic media. The blame for every failure, every major individual real estate stock price or credit price decline is now all the fault of “subprime” and the various evil purveyors of the related instruments. The sad part is their proclamations do nothing to address those of us responding by pointing out those terrifying “facts” which indicate that the problems now are coming from financial instruments directly related to the Alt-A, prime lending and commercial real estate markets. The other shoe is in the process of falling, this time not to the floor but through it. The input I am getting from friends in the markets is that the commercial market is plummeting as banksters withdraw financing for projects that were set over a year ago and the impact of that problem has not even been recognized at this time. In many cases, where the projects are nearing completion in Florida, you can set up bowling pins at either end of these projects and start a new league as they resonate with the echo of poor planning. The buildings are up but activity, as long predicted, is non-existent. The worse part of this new phenomenon is that when these projects fail, they become nothing more than shelters for the newly homeless former real estate speculators that just lost all their homes and of course the rodent populations of our communities, which appreciate the storm shelters.
So with Goldilocks dead, gone, zero, zippo, nada, it would be appreciated that the mainstream media start doing the required autopsy on her remains. The obvious information is there for everyone to see but the doctors of doom are the only ones announcing the true cause of death. For those who think we are going to revive her and parade her around the world to show the American economy is still strong, pretty and vibrant, fawgetaboutit! The mannequin they will be parading around may look pretty but it’s stuffed full of worthless U.S. dollars and will only spew a pre-recorded message when you press her buttons:
“Please mail the delinquent payments to your bankster or else we will turn your account over to our legal department.”
That phrase could become the new national mantra or part of the NAU national anthem once they finish destroying our economy.
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08.01.07
Posted in Financial Charts/Links at 9:28 am by Administrator
Courtesy of Yahoo Finance and www.markit.com
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Posted in Financial Charts/Links at 9:20 am by Administrator
By John Galt
You might as well.
The news last night that BSC was blocking redemptions on one of the hedge funds should be a wake up call to the average person out there but of course it will not be. The banksters are in trouble and their creative accounting and financing is finally coming home to roost. If you or I had managed our affairs in the manner that they did, we would be spending time in Leavenworth right now. It pays though to own the politicians when you are stealing the public’s hard earned money.
This disaster is just beginning to unwind with the news that two more Australian funds went into the swirling porcelain throne last night. When Joe Six-Pack starts to open their 401K and brokerage statements at the end of August the sea of red will cause them to start looking at “getting safe” and bailing out of a lot of the creative fund options that the brokers conned them into. This will exacerbate the night mare even worse in September but the next big wave, the threat no one wants to talk about hits that month also.
When the ARM’s reset on the trillions in loans outstanding, mutual funds are going to see a wave of redemption requests. Since they are huge players in the derivative’s casino and have been discreetly using the MBS markets to increase their yields, they will be forced to sell into a diving market. This means that there will be few assets worth holding other than government bonds, gold or silver. Of course I like the NZD and Swiss Franc also, but that’s for another discussion. Today’s crash in the dollar versus the yen should be a wake up call also, but the average soul thinks this means more Japanese tourists. Wake up sparky. It means everything you buy in the superstores just got more expensive. Inflation is real, is hurting and will continue to spike up.
My last comments on today’s markets are to watch the insurance companies. Not just those like MGIC which offer re-insurance and mortgage insurance to the hedgies and their risky MBS ventures. Watch the property and casualty insurers, life insurance companies, etc; they all invested in the MBS markets to increase their yields and now are being discovered to hold some rather large positions in some of these hedge funds. If a major natural disaster were to hit and they were blocked from redemptions to raise cash, you’re talking a huge crisis which could unfold over night.
Needless to say, today’s markets will not be dull. My advice: No, not just “never try to catch a falling knife”, that’s the old adage.
For today’s markets, especially today’s markets my advice is:
“Never stick your hand in a garbage disposal looking for diamonds”
You never know when BSC or Merrill might hit the on switch…….
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07.31.07
Posted in Financial Charts/Links at 11:00 pm by Administrator
Pay attention gang…this is about to get very interesting…
Bear Stearns Halts Redemptions on Third Hedge Fund After Losses
I would consider this a DOT!
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Posted in Financial Charts/Links at 10:00 pm by Administrator
Sorry, I know that a million other blogs have posted this, but this one is just too good to pass up….
Jimmy “where did my pretty bubble go” Cramer let’s it rip
God Bless you James. You must have really gotten taken to the cleaners in the past two weeks……
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