Crash & Burn Dollar

The inimitable Kyle Bass

2011-12-13T13:32:00.000-05:00

Here's a December 2011 snapshot from the inimitable Kyle Bass

http://watch.bnn.ca/the-street/december-2011/the-street-december-13-2011/#clip584882
(sorry no embed for that one)

Here's another treat. Must watch for everyone who enjoys not being lied to. Unlike all other cheap talking heads, and know-nothing pundits who merely need a suit to make an appearance on one of the TV's financial comedy channels, Kyle has been consistent in the most important thing - telling the truth.

Something Big Is Coming... and It's Going to Be BAD

2011-11-18T19:10:00.001-05:00

Something major is occuring in the markets today.

The US economy peaked in 2007. However, throughout much of 2008, the stock market continued to rally despite the economic collapse as well as the financial system imploding.

Throughout this period the credit markets jammed up and implied something VERY BAD was in the system. However, stock investors continued to pile into stocks because, well, frankly stocks always are the last to "get it."

And when stocks finally did get it... it was quite a thing.

This same environment is occurring today. Only this time the collapse is sovereign in nature: entire countries are going bust.

We have been getting MAJOR warning signs of a collapse for months now. No less than the Bank of England, the IMF, and legendary asset management firm Franklin Templeton have warned that we are facing an epic, hellish crisis.

We got the first taste of this in August when the S&P 500 literally wiped out a year's worth of gains in two weeks The only thing that brought us back from the brink at that time was the belief that the EU mess might be solvable and a coordinated intervention from the world Central Banks.

We then had a spirited rally as the Fed and central banks went "all in" to force the stock market above its 200-DMA.

This final "hurrah" has failed and the financial system is literally imploding. The EU will be broken up in the next month or so and it is highly likely Germany will back out of the Euro altogether.

Moreover, the world central banks are now totally out of ammunition. They've spent Trillions of Dollars in bailouts, abandoned accounting standards, and even moved TRILLIONs in garbage debt onto the public's balance sheet.

None of this has worked. The credit markets are jammed up just like in 2008. Italy, the third largest bond market in the world, is on the verge of default. No one wants to fund the EFSF. China is entering a hard landing and economic collapse. The US is in a clear depression.

And on and on.

This is the single most dangerous market environment of our lifetimes. We are entering a period of massive wealth destruction. We will see bank holidays and civil unrest. We will see sovereign defaults. We will see temporary shortages in various goods and services.

So if you have not already taken steps to prepare for systemic failure, you NEED to do so NOW. We're literally at most a few months, and very likely just a few weeks from Europe's banks imploding.

The Entire System Has Been Utterly Destroyed By The MF Global Collapse

2011-11-17T14:22:00.001-05:00

Presented without comment, merely to confirm that the market as we know it, no longer exists.

BCM Has Ceased Operations (source)

Posted by Ann Barnhardt - November 17, AD 2011 10:27 AM MST

Dear Clients, Industry Colleagues and Friends of Barnhardt Capital Management,
It is with regret and unflinching moral certainty that I announce that Barnhardt Capital Management has ceased operations. After six years of operating as an independent introducing brokerage, and eight years of employment as a broker before that, I found myself, this morning, for the first time since I was 20 years old, watching the futures and options markets open not as a participant, but as a mere spectator.

The reason for my decision to pull the plug was excruciatingly simple: I could no longer tell my clients that their monies and positions were safe in the futures and options markets – because they are not. And this goes not just for my clients, but for every futures and options account in the United States. The entire system has been utterly destroyed by the MF Global collapse. Given this sad reality, I could not in good conscience take one more step as a commodity broker, soliciting trades that I knew were unsafe or holding funds that I knew to be in jeopardy.

The futures markets are very highly-leveraged and thus require an exceptionally firm base upon which to function. That base was the sacrosanct segregation of customer funds from clearing firm capital, with additional emergency financial backing provided by the exchanges themselves. Up until a few weeks ago, that base existed, and had worked flawlessly. Firms came and went, with some imploding in spectacular fashion. Whenever a firm failure happened, the customer funds were intact and the exchanges would step in to backstop everything and keep customers 100% liquid – even as their clearing firm collapsed and was quickly replaced by another firm within the system.

Everything changed just a few short weeks ago. A firm, led by a crony of the Obama regime, stole all of the non-margined cash held by customers of his firm. Let’s not sugar-coat this or make this crime seem “complex” and “abstract” by drowning ourselves in six-dollar words and uber-technical jargon. Jon Corzine STOLE the customer cash at MF Global. Knowing Jon Corzine, and knowing the abject lawlessness and contempt for humanity of the Marxist Obama regime and its cronies, this is not really a surprise. What was a surprise was the reaction of the exchanges and regulators. Their reaction has been to take a bad situation and make it orders of magnitude worse. Specifically, they froze customers out of their accounts WHILE THE MARKETS CONTINUED TO TRADE, refusing to even allow them to liquidate. This is unfathomable. The risk exposure precedent that has been set is completely intolerable and has destroyed the entire industry paradigm. No informed person can continue to engage these markets, and no moral person can continue to broker or facilitate customer engagement in what is now a massive game of Russian Roulette.

I have learned over the last week that MF Global is almost certainly the mere tip of the iceberg. There is massive industry-wide exposure to European sovereign junk debt. While other firms may not be as heavily leveraged as Corzine had MFG leveraged, and it is now thought that MFG’s leverage may have been in excess of 100:1, they are still suicidally leveraged and will likely stand massive, unmeetable collateral calls in the coming days and weeks as Europe inevitably collapses. I now suspect that the reason the Chicago Mercantile Exchange did not immediately step in to backstop the MFG implosion was because they knew and know that if they backstopped MFG, they would then be expected to backstop all of the other firms in the system when the failures began to cascade – and there simply isn’t that much money in the entire system. In short, the problem is a SYSTEMIC problem, not merely isolated to one firm.

Perhaps the most ominous dynamic that I have yet heard of in regards to this mess is that of the risk of potential CLAWBACK actions. For those who do not know, “clawback” is the process by which a bankruptcy trustee is legally permitted to re-seize assets that left a bankrupt entity in the time period immediately preceding the entity’s collapse. So, using the MF Global customers as an example, any funds that were withdrawn from MFG accounts in the run-up to the collapse, either because of suspicions the customer may have had about MFG from, say, watching the company’s bond yields rise sharply, or from purely organic day-to-day withdrawls, the bankruptcy trustee COULD initiate action to “clawback” those funds. As a hedge broker, this makes my blood run cold. Generally, as the markets move in favor of a hedge position and equity builds in a client’s account, that excess equity is sent back to the customer who then uses that equity to offset cash market transactions OR to pay down a revolving line of credit. Even the possibility that a customer could be penalized and additionally raped AGAIN via a clawback action after already having their customer funds stolen is simply villainous. While there has been no open indication of clawback actions being initiated by the MF Global trustee, I have been told that it is a possibility.

And so, to the very unpleasant crux of the matter. The futures and options markets are no longer viable. It is my recommendation that ALL customers withdraw from all of the markets as soon as possible so that they have the best chance of protecting themselves and their equity. The system is no longer functioning with integrity and is suicidally risk-laden. The rule of law is non-existent, instead replaced with godless, criminal political cronyism.

Remember, derivatives contracts are NOT NECESSARY in the commodities markets. The cash commodity itself is the underlying reality and is not dependent on the futures or options markets. Many people seem to have gotten that backwards over the past decades. From Abel the animal husbandman up until the year 1964, there were no cattle futures contracts at all, and no options contracts until 1984, and yet the cash cattle markets got along just fine.

Finally, I will not, under any circumstance, consider reforming and re-opening Barnhardt Capital Management, or any other iteration of a brokerage business, until Barack Obama has been removed from office AND the government of the United States has been sufficiently reformed and repopulated so as to engender my total and complete confidence in the government, its adherence to and enforcement of the rule of law, and in its competent and just regulatory oversight of any commodities markets that may reform. So long as the government remains criminal, it would serve no purpose whatsoever to attempt to rebuild the futures industry or my firm, because in a lawless environment, the same thievery and fraud would simply happen again, and the criminals would go unpunished, sheltered by the criminal oligarchy.

To my clients, who literally TO THE MAN agreed with my assessment of the situation, and were relieved to be exiting the markets, and many whom I now suspect stayed in the markets as long as they did only out of personal loyalty to me, I can only say thank you for the honor and pleasure of serving you over these last years, with some of my clients having been with me for over twelve years. I will continue to blog at Barnhardt.biz, which will be subtly re-skinned soon, and will continue my cattle marketing consultation business. I will still be here in the office, answering my phones, with the same phone numbers. Alas, my retirement came a few years earlier than I had anticipated, but there was no possible way to continue given the inevitability of the collapse of the global financial markets, the overthrow of our government, and the resulting collapse in the rule of law.

As for me, I can only echo the words of David:
“This is the Lord’s doing; and it is wonderful

Words from the great Kyle Bass

2011-11-16T21:09:00.001-05:00

The Next Big Crash is Coming Soon

2011-11-09T15:31:00.002-05:00

We had a major development here in Europe today folks. Yields on the ten year Italian bond soared to over 7%. The 7% hurdle is considered critical because once Greece and Ireland went over 7%, they turned to the EU for a bail out. So the thinking now is that Italy needs a bail out too, but here’s the problem. Italy has two trillion euros of debt. That’s greater than the total amount of debt owned by Greece, Ireland, Portugal and Spain combined.

It’s the fourth largest amount of debt in the world. It’s estimated that over half of this is owned by banks around the world. Four hundred million euros of it is owned by the French banks alone. As I mentioned in a previous interview here, they can no longer kick the can down the road because it’s become a two ton boulder.

Clearly the two percent plus drop today by the euro against the US dollar is a warning sign that a major crisis is brewing. I mentioned before that the Dexia and MF Global collapses are not the Lehman event I’ve been expecting before year end. But the markets are telling us that a major crisis is now brewing. So be prepared for another Lehman type of collapse which will bring the financial structure to its knees.

The media has been portraying these problems as a crisis of capitalism, but they have it completely wrong. What we’re witnessing is a crisis of socialism. Governments have been making far too many promises which have been based on borrowed money coming mainly from the banks.

Who’s Even More Leveraged Than the European Banks?

2011-10-25T15:11:00.002-04:00

While the world is awash in liquidity, no one seems to notice that it’s actually in the form of leverage or cheap debt, NOT real capital or equity.

The US banking system as a whole is leveraged at 13-to-1. While this is not horrible relative to Europe’s banking system (more on this in a moment), these levels still mean that an 8% drop in asset values wipes out ALL equity.

Then you have Europe’s banking system, which is leveraged at 26-to-1. Anecdotally, this is borderline Lehman Brothers (30 to 1). At these levels, even a 4% drop in asset prices wipes out ALL equity.

Japan’s banks are leveraged at 23 to 1. France’s are 26 to 1. Germany is 32 to 1.

You get the idea.

However, worse than any of these the US Federal Reserve. With $2.8 trillion in assets and only $52 billion in capital, the Fed is leveraged at 53 to 1. Yes, 53 to 1.

My question is: if the Fed prints money for itself… is it “raising capital?” More to the point… if that was true why doesn’t the Fed do it? Why maintain these leverage levels?

Only Bernanke can know… but the rest of us should feel a very serious shudder when we consider that THE bank that’s supposed to bailout the world/ fix the problems plaguing the financial system, is in fact even more leveraged that most of the institutions it’s helping.

Yes, stocks are rallying now based on the view that more QE 3 or monetary easing is on the way… but they’re missing the BIG picture here.

The BIG picture is that there is far too much debt in the financial system. Europe’s getting taken to the cleaners today… but these very same issues are going to spread to Japan and the US in short order. Even China, which is considered THE creditor nation of the world, is estimated to post a REAL Debt to GDP ratio of 200%.

Yes, 200%. China.

So the idea that somehow the world’s going to pass through this current chapter in its history without some MAJOR fireworks/ systemic failure, seems a little too optimistic.

Folks, something VERY bad is brewing behind the scenes. The Sarkozy- Merkel talks, the short-selling bans, the halted stocks, the leveraged EFSF, the hints of QE 3, all of this is telling us that the financial system is on DEFCON 1 Red Alert.

Ignore stocks, they’re ALWAYS the last to “get it.” The credit markets are jamming up just like they did in 2008. The banking system is flashing all the same signals as well.

So if you have not already taken steps to prepare for systemic failure, you NEED to do so NOW. We're literally at most a few months, and very likely just a few weeks from Europe's banks imploding.

Debt-Serfdom Is Now The New American Norm

2011-10-18T12:50:00.002-04:00

The typical American household is insolvent: its debts exceed its assets. There is nothing fancy about calculating insolvency: if debts exceed assets, the enterprise is insolvent. By this measure, most American households are insolvent, if their real assets are marked to actual market. The typical American household is thus in service to its debt, not to its assets, and to the holders of that debt. This is debt-serfdom: serfdom in service to the owners of debt, debt that may well always exceed the value of the household's assets. This is debt-serfdom for life. If we look at the American household as an enterprise, then we have to differentiate between unproductive, trapped capital, assets held in a house or retirement account, and productive, free capital which can be moved in and out of productive assets to earn a return which increases free cashflow income in the present....Wealth and income do not flow from servicing debt incurred by trapped assets, it flows from productive free capital. Thus the typical household toils not to increase productive capital that can be deployed to increase household income but to service their crushing debts. How else can we describe this situation other than debt-serfdom?

Five Lessons About The Economy And The Markets From David Rosenberg

2011-10-04T21:22:00.002-04:00

Five simple lessons from one of the original skeptics.

The problem of excessive debt globally was never expunged in the last recession, just as the inflation imbalance was not resolved in the 1980 recession. Hence the need for the 1982 downturn. Ditto for 2012.
It's not ALL about Europe. Remember the S&P 500 peaked this year within 24 hours of that poor U.S. first-quarter GDP report (and downward revisions) was released in late April. The economy was already stagnant heading into the financial spasm, which has been equivalent to four Fed rate hikes. The lags between the financial economy and the real economy are generally four-to-six months so expect to see the not-so-nice stuff hit the GDP fan by November. No bear market ever bottomed ahead of the recession — usually around 30% of the down-move occurs by the time the contraction has arrived. Trade from the short side.
Dividend yields are little better than 2%. The 10-year U.S. Treasury note yield is below 2% and the 5-year south of 1%. In other words, relatively secure yield is scarce. That in turn means that investors should be focussing on income as a critical part of their expected returns.
The equity market will be susceptible to downward EPS revisions in coming months (upside revisions have collapsed in the past two months). But the corporate bond market is already behaving as though the default rate will head above 7% (from just over 2% now). In other words, credit has gone much farther than equities in pricing in a recession. And since the key is to be paid to take on the incremental risk as opposed to paying to take on the risk, bonds are an attractive part of the capital structure right now.
Despite its blemishes (inflation, property bubble), China is not going away and its influence on commodity markets will remain very constructive, notwithstanding the ebbs and flows of the business cycle.

Source: David Rosenberg, Gluskin Sheff

Some Truth from David Stockman

2011-09-30T21:13:00.001-04:00

This Week's Market Forecast

2011-09-26T21:29:00.000-04:00

The market onslaught of the last week is now staging a snap-back rally. As I write this Sunday evening the S&P 500 has pushed to 1,143 in the futures markets. This was to be expected as we’d come up against the neckline for the Head and Shoulders pattern I noted the last two weeks:

From a larger perspective, 1,110 is a line of MAJOR support. The S&P 500 spent a major portion of 2010 at this level. It’s also the level at which the S&P 500 staged its last bounce before entering the 2008 Crash.

So this is THE line to watch in stocks. Once we take it out, we’re going to 1,000 in short order. By the look of things, it won’t be long. Indeed, last week we got a confirmed SELL on my proprietary Crash indicator. This is the SAME indicator that registered before the 1987 Crash, the Tech Crash, and the 2008 collapse.

It's just triggered again... which means that last week’s sell off is JUST the beginning of what's coming.

Yes, the GREAT COLLAPSE has begun. The markets will be going to new lows (below the March 2009 lows) in the coming months.

We're also going to be seeing major banks go under, market crashes, food shortages, government shutdowns, and SYSTEMIC FAILURE. Yes, I believe that before this mess ends, the financial system as a whole will have collapsed. What's coming is going to make 2008 look like a joke.

Many people will lose everything in this mess. Yes, everything. The US is going to be defaulting on its debt, paper currencies around the world will fail. It's going to be a dark dark time.

If you have yet to prepare yourself for what’s coming, my Surviving a Crisis Four Times
Worse Than 2008 report can show you how to turn the unfolding disaster into a time of gains and profits for any investor.

Within its nine pages I explain precisely how the Second Round of the Crisis will unfold, where it will hit hardest, and the best means of profiting from it (the very investments my clients used to make triple digit returns in 2008).

Best of all,
this report is 100% FREE. To pick up your copy today simply go to: http://www.gainspainscapital.com
and click on the OUR FREE REPORTS tab.

Good
Investing!

Graham
Summers

Thanks Fed... The Great Collapse is Here

2011-09-22T08:43:00.001-04:00

I’ve been warning for weeks now that the Fed would disappoint with its September meeting. And boy did it.

As I forecast, the Fed didn’t announce QE 3. In fact, it didn’t announce any new policy of note. Instead it is simply reshuffling its holdings to focus more on the long end of the bond markets.

On top of this, the Fed announced it will only be moving roughly $400 billion of its portfolio around. This is the smallest major intervention the Fed has announced since it began implementing QE in 2009 (QE 1 was $1.25 trillion while QE 2 was $600 billion). Indeed, this move is on par with the Fed’s implementation of QE lite which to date has been about $300 billion give or take in scope.

Even more striking, while announcing this disappointing move, the Fed downgraded its view of the economy stating, “there are significant downside risks to the economic outlook.”

Previously, any admission of economic deterioration from the Fed resulted in the US Dollar selling off sharply as traders expected additional easing/ printing. This time around, the market senses that the Fed has disappointed and that the Fed’s move is largely symbolic more than anything else.

The end result of this: the market is Crashing just as I warned. The S&P 500 has gone from 1,200+ to 1,136, a 6% drop, in the overnight session.

We’re just getting started here. Today we got a confirmed SELL on my proprietary Crash indicator. This is the SAME indicator that registered before the 1987 Crash, the Tech Crash, and the 2008 collapse.

It's just triggered again... which means that today's sell off is JUST the beginning of what's coming. Indeed, I fully believe that the Great Collapse, the time when the Fed completely loses control of the markets, has arrived. We're going to be seeing Market Crashes, Bank holidays, riots, food shortages, and more in the coming months.

Europe is in a state of financial collapse

2011-09-13T19:35:00.002-04:00

In a moment of clarity, Tiger's Julian Robertson educates the money-honey on just how bad things are. Robertson started by trumpeting how bad macro is everywhere, moved on to Europe being in a 'state of financial collapse', likes shorting weak European currencies (Hungarian Forint) and warns of the possibility of a rapid rise in interest rates in the US. He is positive on NOK, thinks Canada is a 'very well run country', is a buyer of US large cap tech (citing GOOG and AAPL specifically), and sees Visa/Mastercard growing at 20%+ per year for some time.

Selected Statistics for 9/11

2011-09-11T14:55:00.002-04:00

Got your precious metals yet?

Things Are Getting Real

2011-09-09T15:42:00.000-04:00

Let’s have a look at the REAL situation in the financial system.

1) Greece is bankrupt. It has been for years. The market has finally stopped being moronic and figure out the obvious (so much for the “efficient” hypothesis).

2) Greece WILL default. This WILL crush German and French banks.

3) The EU in its current form (as well as the Euro) are DONE.

4) The US banking system is similarly fragile and on the verge of collapse.

5) The US economy is in a DE-pression and rolling over in a big way AGAIN. All the economic data is being massaged to look better than it is. Look around you, does the economy look OK to you?

6) The US Government is broke. Obama’s jobs plans is absurd. Where’s the money going to come from?

7) Bank of America (as well as the other TBTFs) is insolvent. The only reason they’re still in business is rampant fraud, lies, and theft. What’s happening in Greece is coming to them soon.

8) The Federal Reserve has lost control of the markets. QE 3, IF it comes, will accomplish nothing. Bernanke will be stepping down within 18 months and possibly facing legal battles.

Those are ALL FACTS. That’s the deal. The claims that all is well and that the market will hold up are lies. The Fed gave TRILLIONS of Dollars from the public to those who perpetuated the biggest theft and fraud in history. And they FIXED NOTHING in the process.

So here we are, the Fed is out of bullets entirely (Operation Twist 2 won’t do anything, low rates haven’t helping the economy OR the mortgage markets… and QE 3 is not going to happen without systemic collapse) and losing control of the markets by the day.

Look at Bernanke’s track record. He’s been wrong about EVERYTHING for years. Do you think he has ANY ideas or solutions to what’s happening NOW? The guy doesn’t even believe inflation is an issue. He’s either stupid or a liar. Neither of those are indicative of someone who can fix things.

In plain terms, we’re heading into the END GAME for the markets. What’s coming will see debt defaults in Europe and the US, a stock market Crash that makes 2008 look like a picnic, civil unrest and more.

Keynesians - Failing since 1936

2011-08-23T17:57:00.000-04:00

The Fed Will Soon Find Itself POWERLESS

2011-08-18T18:01:00.002-04:00

Switzerland’s Got a Problem…

… and that problem is its reputation as a financial safe-haven.

As Europe continues to implode, wealthy Greeks, Italian, Portuguese, and the like are pulling their funds from their domestic banks and funneling them into Switzerland.

Because of this the Swiss Franc has been exploding higher, particularly against the Euro:

As you can see, the Franc rose 18% against the Euro in 2010. It’s up 9% against the Euro this year so far.

Now, over 50% of Switzerland’s economy is exports. And nearly 60% of this is to Europe. Combine the Franc/ Euro dynamic and the economic downturn in Europe and Swiss corporate profits and the Swiss economy are getting KILLED.

Which is why the Swiss National Bank has been doing everything in its power to keep the Swiss franc down. So far its efforts have been completely futile: every intervention pushes the Franc down for a few days at the most.

I raise these points as an example of what happens when a Central Bank goes head to head with the market: each intervention accomplishes less and less until the market completely overrides any and all interventions.

Granted, the Swiss National Bank doesn’t have the same monetary clout as the European Central Bank or US Federal Reserve, which is why the market is taking longer to override these latter two central banks’ monetary interventions.

However, we’re fast approaching a time in which neither the Fed nor the ECB will be able to hold the market together. Indeed, we got our first taste of what it will be like at the end of July when the S&P 500 wiped out nine months’ worth of gains in about two weeks’ time:

The Fed and ECB stepped in to try and prop the markets up (the former may in fact have bought the stock market outright) and they got… FOUR days’ worth of gains.

Indeed, the market has already erased most of the snapback rally’s gains. And we’re on our way to new lows in the near future. In fact, I fully believe we’re now officially in the Second Round of the Great Crisis: the time in which financial system comes undone again.

The only difference is that this time around the Fed won’t be able to stop it.

Remember, the only thing that held the markets together in 2008-2009 was the belief that the Fed could backstop the financial system. We now know that the Fed didn’t actually fix anything. In fact, the Fed’s made things worse by allowing the very same issues that nearly took down private banks in 2008 (namely toxic debt and excess leverage) to spread to the public’s balance sheet.

Which means that this time around, it will be the US as well as the banks which go bust. Put another way, we’ve entered the END GAME for the Fed and its policies. So if you thought the first Round of the Financial Crisis was bad, wait until you see the next one. Indeed, I fully expect that what’s coming is going to be 2008 on STEROIDS. I’m talking about market crashes, civil unrest, riots, bank holidays and more.

Many people will lose everything in this mess. Yes, everything. However, you don’t have to be one of them. Indeed, my Surviving a Crisis Four Times Worse Than 2008 report can show you how to turn the unfolding disaster into a time of gains and profits for any investor.

Best of all, this report is 100% FREE. To pick up your copy today simply go to: http://www.gainspainscapital.com and click on the OUR FREE REPORTS tab.

Good Investing!

Graham Summers

Graham Summers’ Weekly Market Forecast (The Points Edition)

2011-08-15T21:33:00.000-04:00

The Euro situation is coming to a point… literally: we’ve entered a triangle pattern. In fact, we have a second triangle forming within this larger pattern.

We’ve got just a little more room to run before we reach the apex of this pattern. However, given how things are going over there, we could see the breakout come at any minute now.

Indeed, the European debt drama was always about Spain and Italy: Greece, Ireland, and Portugal were the minor players (Portugal did pose something of a threat in that Spanish banks were massively exposed to its debt). However, when Spain or Italy go down, they’re taking France and Germany (the two most solvent EU members) with them.

And that’s when the Eurozone will crumble.

However, if you’re looking for the REAL situation in the EU, don’t pay attention to the Euro. There is simply too much intervention and political drama at work for it to truly represent the mess.

So keep your eyes on the French market, not the Euro. While the US markets may have exceeded their May 10 high, France is coming up to test it.

Watch this situation closely. The US is being pumped higher courtesy of the PPT. France is where the real action is. A breakdown there means the next round of the collapse is here. Remember, Italy’s collapse is already expected. France is a AAA-rated country.

Speaking of the S&P 500, that index is forming something of a bearish rising wedge pattern. Given how weak things got towards the end of last week, we could see a breakdown as early as today). However, the pattern does allow for a final thrust to 1,200 or so.

Big picture: I warned to get defensive several weeks ago. Stay defensive now. This snapback rally is not the start of a new bull market rally. If anything, the volatility of the last week has made it evident that we’re back in a 2008 environment: you simply don’t see 3-4% price swings on a daily basis in a healthy market.

In plain terms, the rally of the last four days is very likely not the start of something major, but a combination of short-covering and manipulation with the Fed very likely buying on the open market. This will end soon. And when it does, the markets will be hitting new lows and the Second Round of the Great Crisis takes hold again.

On that note, if you haven’t already taken steps to prepare yourself and your portfolio for the next leg down, I’ve just published Five Reports devoted to detailing precisely what will unfold during the Second Round of the Great Crisis and how to profit from it.

Combined, these reports cover…

§ The best, easiest way to turn market collapses into triple digit gains.

§ My proprietary Crash indicator which caught the 1987 Crash, the Tech Bust, the 2008 Collapse, and this most recent Crash.

§ Which two inflationary investments will perform best as the US Dollar implodes (one of them handpicked by an investing legend).

§ How to prepare and profit during the coming US debt default, and…

§ How to prepare you family and loved ones for the coming civil unrest, food shortages, and more (including what supplies to buy, where to buy them, and what prices you should pay).

All in all we’re talking about over 30 pages of in depth analysis and investment strategies for surviving the Second Round of the Great Crisis. And it’s all 100% FREE.

To pick up your copies, go to http:www.gainspainscapital.com and click on Free Special Reports.

Good Investing!

Graham Summers

The Black Swan is on the Wing

2011-08-15T13:31:00.000-04:00

Monday is here but I am six hours ahead of the US and it is morning here, so there's no news to speak of yet. There will be. This is a little dated, by about a week, Max Keiser nails the situation; a little mellower than he has been of late. It's clear as crystal that the root of all evil is exactly that and those in whom it is blooming are the enemy of humanity. The bankers are the problem. The bankers manufacture recessions and depressions to exert a greater control over social and political structures. The bankers create and finance the wars on both sides of the conflicts. The bankers orchestrate famine, poverty and want. The bankers control the policies that control the media and the education system that is operated to maintain ignorance in the public so that they can be shorn like sheep. The bankers launder the drug money and keep drugs illegal. The bankers are the problem.

Heretic Productions present: Les Visible From His Reflections in a Petri Dish Blog: The Black Swan Is On The Wing: http://zippittydodah.blogspot.com/

Ratigan delivers wake-up call to Congress

2011-08-10T09:24:00.000-04:00

Listen to this. We need more of this, and damn soon.

Visit msnbc.com for breaking news, world news, and news about the economy

David Rosenberg Breaks Down "The End Game"

2011-08-09T14:02:00.000-04:00

As always, just as the market is about to set off on yet another dead cat bounce courtesy of vapor volume and the lack of concerted selling (after all the Fed is front and center today which means nothing can possibly go wrong... at least until someone actually does some Mark to Market accounting on the left side of Bank of America's balance sheet), here comes David Rosenberg with a cup of very cold water, thrown right in the face of the misguided optimists who carry the deluded idea that this story could possibly have a Hollywood ending..

The End Game

Well, all the major averages have sliced through their respective 50- and 200- day moving averages and have radically undercut the June lows. And recall, QE2 started November 10, 2010. All the gains from QE2 are now gone. In fact, as it now stands, 20 months of hard earned capital appreciation in the S&P 500 has been wiped out in just three weeks ... bear markets are merciless; malevolent beasts. Global growth prospects are clearly being marked down — the action in the once-hot BRICs say it all as these areas are in full-fledged bear mode:

Brazil: -33%

Russia: -21.6%

India: -20%

China: -27%

The bond market also clearly has recession in its sights — none of this namby- pamby "35% odds" stuff out of Wall Street. The 10-year U.S. note yield closed at 2.31% in yesterday's session, undercutting last October's QE2-related low; dead air all the way down to 2%, which would be a test of the December 2008 trough.

In terms of the end game, it seems obvious now. If we can agree that the problem is excessive indebtedness at a whole bunch of levels (each country seems to have its own unique situation, for example the nonfinancial private sector credit outstanding relative to GDP in Spain is around 200%!) in many countries then there is really only one answer. This is not really about the EFSF, which helps reduce debt servicing costs but does not help alleviate the problem of overall debt burdens — that is just a swap. I think the ECB and the Fed (watch for some big changes in the press statement today), but especially the ECB, has to buy bonds en masse and reduce the amount of European debt outstanding and sharply boost the money supply. I believe that is the only way out right now. The central banks have to be the ones to absorb the debt and bring debt ratios down to more comfortable levels.

As for the Fed, when Ben Bernanke gave his testimony to Congress back on July 13th, the Dow was sitting at 12,492 (10,809 at yesterday's close), the 10-year was at 2.92% (2.31%) and oil was at $98/bbl ($81.21). Recall that back then, he did not shut the door on more Fed easing policy if the situation called for it. The only question is whatever it is the Fed decides to do, will it bolster aggregate demand any more than taking rates to 0% and embarking on two rounds of quantitative easing programs. These are the vagaries of a central bank burdened with the task of stimulating an economy saddled with so much debt and so many scars from years of real estate deflation and lingering joblessness.

The gold price seems to understand the end game, since it will involve an explosion in the monetary pace. The bond market is doing what it's doing— and now equities with a lag— because this asset class doesn't believe the next reflation wave will really do much to ignite confidence and spending, even if it manages to save the euro and the region's undercapitalized banks.

A Special Alert from Peter Schiff

2011-08-08T17:49:00.001-04:00

URGENT MESSAGE FROM PETER SCHIFF:
Friday’s downgrade of US debt has enormous implications for every American investor. I expect the decline of the dollar will accelerate, and gold – the most probable beneficiary of the rating cut – will soar.
If you’ve been waiting for a significant pullback in prices to buy metals, or add to your position, I think you’ve missed it. We saw the short-lived pullback a few weeks ago. I believe metals prices will go sharply higher from here.
Global markets got clobbered last week, and as I write this early Monday morning, the devastation looks like it is continuing. However, unlike in 2008, there is no flight to the perceived safety of the dollar. Instead, money is stampeding into precious metals and stable currencies like the Swiss Franc and Japanese Yen. Only intervention by the Japanese and Swiss central banks has prevented their respective currencies from soaring much higher against the dollar.
As investors, this tells us two things:

A) The dollar is being kept on life support by other world governments.

B) Until that support is withdrawn, only gold and silver will be able to rise as fast as the dollar falls.

This crisis was sparked when Congress raised the debt ceiling without making significant spending cuts. Once again, the politicians kicked the can down the road, and avoided make the hard decisions.
Markets are now realizing that the US government doesn't have any tricks up its sleeve to make good on its debts. Washington is just plain broke. Late Friday night, the Standard & Poor's (S&P) rating house made this judgment official by stripping the US of its AAA rating – for the first time ever.
Many investors are wondering: what comes next?
I believe that currency markets will dump dollars at an even faster rate in the coming weeks and months, as the full implications of this downgrade are absorbed.
As this happens, it will tip off a vicious cycle: US Treasuries will decline in value, interest rates will rise, the cost of financing the deficit will rise, and Treasuries will decline further as a result. As the federal government spends more and more on interest, it will be unable to finance more stimuli and the recession will deepen. This will make the financial position of the US even worse, threatening further downgrades.
Respected figures like Warren Buffett and Alan Greenspan are now saying that S&P was wrong in their downgrade because the Fed can simply print money indefinitely to avoid default. But any country can print money to pay its bills, it's the value of its currency that determines its credit rating. After all, what's the point of paying bondholders the amount printed on their coupon if it takes $100 to buy a quart of milk? This is what S&P is rightfully worried about, and why this is really a downgrade of US dollar.
Meanwhile, while money-printing is creating the illusion of solvency for the US, it is also creating a global tidal wave of inflation. Many foreign governments are wary of hurting their export industries by allowing the dollar to fall too quickly. So, they are printing money to keep pace with the Fed, blunting some of the deserved return from investing in healthier overseas markets.
There is only one form of money that cannot be printed: precious metals. Since the US seems dead-set on a hyperinflationary solution to this crisis, I think gold and silver are are headed higher – and fast.
Today's gains are just the beginning. I urge you to build a position in physical precious metals now. It will be the lifeboat that carries you away from the sinking US ship of state.
I have long advocated that investors hold at least 5-10% of their assets in physical precious metals, as the ultimate safe haven. In these perilous times, a larger position may be appropriate.

How to take immediate action

Call 1-888-GOLD160 (1-888-465-3160).
Talk to a precious metals specialist who can help you place an order.

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If you are interested in precious metals, you should not risk timing the market. Protect your savings before they're printed away.
Cordially,

Peter Schiff
Chief Executive Officer
Euro Pacific Precious Metals

For more on the economics behind the current market meltdown, CLICK HERE for Peter's latest video blog.

Market Forecast

2011-08-08T12:56:00.000-04:00

Given their technical set-up and oversold conditions last week, stocks should have staged a bounce of some sorts. Instead, they went into full-scale Crisis mode falling over 7% as the US was downgraded and global debt collapse went into hyperdrive.

This brought the S&P 500 up against the critical support level of 1,200. However, we’ve already taken this line out in the overnight futures sessions. As I write this, the S&P 500 is around 1,172 or so.

The bulls have only one hope to cling to and that is for the Fed to mention QE 3 in its FOMC meeting tomorrow. The Fed will absolutely HAVE to actually mention QE 3 given that its previous hints of additional stimulus resulted in meager, short-lived rallies.

However, the fact remains that the market is on Red Alert mode. The financial system is more leveraged than it was during the Tech Bubble. Mutual funds are more heavily invested in stocks than at any other time in the last 50 years.

And the cause of the 2008 Crisis (derivatives) still hasn’t been reined in.

As I warned a few weeks ago, now is the time to be getting defensive and shifting to cash. We will see some sharp bear market rallies in the near future, but the End Game is now in motion. Even if the Fed does announce QE 3, the effects will be muted.

Consider that in just two weeks the market has wiped out ALL of the gains of the last 9 months and you’ll see what I mean: the Ponzi scheme that is our current financial system requires money constantly for it not to collapse (not correct, but COLLAPSE).

The whole world now knows that QE 1 and QE 2 were failures. Which is why QE 3 won’t do much. Which means the REAL Crisis is now here.

Two Experts.

2011-08-07T22:18:00.000-04:00

Here are two of the world's leading experts on where we are going right now.

Nothing to see here

2011-08-07T21:37:00.001-04:00

Debt Ceiling Hike Will Unleash A Gold Price Surge

2011-08-01T19:55:00.000-04:00

Recently, ZeroHedge presented a chart that shows the uncanny correlation between the debt ceiling and the price of gold. Now that we know the final amount of the next debt ceiling hike, somewhere in the $2.5 trillion ballpark, it allows us to extrapolate where gold will end up as a result of the debt ceiling hike which will likely be voted into law at 7pm PDT. A simple correlation rule of thumb allows us to predict that gold will be at $1,950 by the end of the year if it simply retains it close correlation to the debt ceiling. Should Bernanke announce that he will additionally need to monetize some or all of this incremental debt amount, we anticipate that gold will be well over $2,000 by the end of the year, courtesy of yet another round of accelerated dollar debasement, which also means that real gains in US stocks will be negated courtesy of the devaluation of the currency in which they are priced. The same, however, does not apply for gold, which with every passing day is priced in nothing but itself.

The Bloomberg chart of the day first presented on July 20.

And our revised version including the projected gold price.