-- Posted Monday, 12 March 2007 | Digg This Article
US MARKETS
As you know there is now a long line of countries diversifying out of the dollar. This does not bode well for the world’s reserve currency. The current account deficit continues to worsen as foreign buying of US denominated assets continues to lessen. It is not just the dollar; it is all currencies. It just happens that the dollar is the worst of all major currencies. All currencies have been down against gold for 1-1/2 years. Global free trade and globalization has created an interdependency, which will negatively affect all currencies. The move out of dollars began a few years ago when 76% of foreign exchange reserves were in dollars. Now that figure is 65.6%. Fifteen banks that we know of have cut dollar reserves. Central banks and some other investors are reaching for yields and as we have told you before you never, ever chase a yield. It is a losing proposition. Reasons given for cutting dollar reserves is the risks to its value and a higher return elsewhere. As China and Asia diversifies, the dollar has to go down. As we have said over and over again gold and silver are the answer and if you are going to trade currencies be sure you have a managed currency account. Do not, under any circumstances, try to trade currencies on your own. In the final analysis the only safe haven currency is gold.
Fed Chairman Ben Bernanke says, “If the housing sector begins to stabilize and if some of the inventory corrections that are still going on in manufacturing begin to be completed, there is a reasonable possibility of strengthening of the economy during the middle of the year.” That may be so, but what Ben doesn’t want to talk about is the pyramid of leverage in debt markets created by the Fed, commercial banks traders and speculators using cheap money from around the world, particularly from the yen carry trade and the 14% increase in money annually over the past four years. We are looking at contracting credit markets and some of these borrowers could get caught way offside.
When you see a market correction triggered by an untoward event like the break in the Chinese stock market it shows the markets throughout the world were very vulnerable. Credit was stretched like a rubber bank. Commodities and gold and silver normally go up when markets go down, that means in order to meet margin calls and reduce risks there was selling in all markets. Gold, silver and commodities will have to find support, but they should recover quickly, because they are in bull markets. The stock market will find temporary support and rally in the summer, but in the fall the markets will have a big correction. The reason for such a sharp correction in all markets is leverage spread all over the world. As we have pointed out before, some of these speculators are up to 50 times their actual capital. This has been a market where everyone is making the same bet. When the yen starts climbing, speculators start selling positions to buy yen. That is one of the reasons the yen rose 3%. Investors do not change risky behavior, they just insure against it with derivatives. Due to the markets the cost of insurance has just doubled or tripled. Derivative purchases were four times normal volume on 2/27 and 2/28. Due to derivatives we have a long way to go because the specs have not really begun to sell, they just bought more derivatives (insurance). In just those two days about $100 billion in derivatives were sold. We wonder how many of them were sold naked?
The same is happening in the junk bond markets. Banks with exposure to the risk that borrowers will default in larger-than-predicted numbers, are buying derivative insurance to protect against losses. Hedge funds and other banks and some insurance companies have been selling that coverage because they think the banks are overestimating the dangers of default. There you have it – a speculative merry-go-round. When the music stops there is going to be lots of grief.
Fed Chairman Ben Bernanke urged Congress to bolster regulation of mortgage giants Fannie Mae and Freddie Mac, suggesting limiting their massive holding to guard against any danger their debt poses to the overall economy. He said their holdings might be linked to a “measurable public purpose, such as the promotion of affordable housing.” Ben’s too late. We believe they are already on the brink of bankruptcy. Freddie Mac has already said it would no longer buy certain risky, subprime mortgages.
Georgia Gulf has disclosed a change related to the inventory of the building products segment could lead to a potential default under an existing loan agreement. It is seeking waivers from lenders to avoid default and to adjust the financial covenants going forward. S&P has them on credit watch. They have requested delay of their 10k with the SEC.
The Federal debt is now over $8.8 trillion and Congress will soon have to raise the dent ceiling again. The acceleration of debt is being complicated because Social Security surpluses are drying up ahead of previously predicted dates. For about two years Japan has bought few US Treasuries and now China says they will no longer purchase Treasuries. Readers our Treasury is headed for serious trouble.
Commerce Bank Corp is under investigation by the SEC. Neither party has divulged what the problem is, but we believe it could be self-dealing. Three years of financials have to be restated. We see a scam like this almost every day. Corporate America just can’t stay clean.
The MBA Index of mortgage applications rose to the highest level in three months, up 7.3%. The average 30-year fixed rate mortgage fell to 6.04%. The purchase index rose from 401.3 to 405.3. The refinancing index jumped 15% and it’s up 38% yoy. Refi apps rose to 46.1% of all applications. The S&P/Case-Shiller Index for last week showed home prices fell 0.7% in the fourth quarter. Fewer Americans signed purchase agreements, which fell 4.1% moth-on-month.
Gasoline prices in some parts of California and Hawaii are already over $3.00 gallon for regular unleaded gasoline. AAA says prices are $2.50 a gallon nationwide.
The dollar decreased in value 0.210 in February on a trade-weighted dollar index of the average value of 15 currencies.
US overall consumer confidence was unchanged last week says ABC News – Washington Post. The consumer comfort index was unchanged at -1 – the same as a week earlier.
An Eastern European crime ring netted at least $733,000 in illegal profit using trading accounts at TD Ameritrade, and six other firms in the biggest fraud yet uncovered by a probe of Online stock manipulation. Overall they are responsible for $22 million. The SEC will have a hard time apprehending culprits in Russia, Latvia, Lithuania and the British Virgin Islands.
US colleges must increase the rate at which they graduate students by more than a third each year or fall 16 million behind the number needed to compete economically with other countries in 2025.
About 55% of the working age population in Canada, Japan and South Korea will have at least a college degree in 2025, the US will have 46%. Colleges and universities would have to increase the annual rate at which they graduate students by 37%.
As you can see the dumbing down process and teaching to the lowest common denominator has ruined our educational system.
The yen carry trade is part of what is holding the world financial system together. As Japanese interest rates and the value of the yen rose it led to the beginning of an unwinding of the carry trade. We have only seen the beginning – there is quite some way to go. After the initial onslaught $1.5 trillion was lost. Since then markets have made a small recovery. The culprits were the hedge funds dumping their highly leveraged long positions, although the Chinese government pulled the trigger by forcing their stock market down. They couldn’t have picked a worse time to do it. It is now clear to us that this fall in the markets is just the first of many over the next few years that will drive the financial system further into systemic breakdown.
Out of 9,800 hedge funds 8,282 were registered in the Cayman Islands, which is run by the Queen of England. The Cayman Islands Monetary Authority is supposed to regulate the hedge funds, but instead they run a protection racket for their derivatives trading and tax sheltering. These funds are allowed to operate in secrecy with little or no regulation by Cayman authorities and no regulation by any other country. Those funds not registered in the Caymans are in other British Overseas Territories and satrapies, such as the Bahamas, Bermuda, the British Virgin Islands and the Isle of Man.
Since last year the German government has bitterly complained about hedge funds, calling them “locust” as has Senator Carl Levin (D-MA) who wants regulation of the funds. These fund have become heavy political contributors, so they can purchase politicians, so that no regulations get passed. These funds are the largest profit centers for big Wall Street firms, such as Goldman Sachs, JP Morgan Chase, Citicorp, etc. That is besides their trading operations where they profit by using inside information.
These hedge funds are instruments of power used to control today’s financial system by which they loot and devastate companies and nations. It will be extremely difficult to regulate entities out of the jurisdiction of other countries short of invading and occupying them. The European Illuminist oligarchies wouldn’t let this happen. These funds are so important to keeping the system going that they would resort to nuclear war rather than lose control of these fountains of profit.
The Cayman Islands is an epicenter for globalization and financial warfare. On the Cayman Island Monetary Authority are Brits Stuart Duncan Jack and Timothy Ridley. Of more interest are the two Americans on the board, Warren Coats, who served for 26 years with the IMF and was a monetary advisor to Iraq and Afghanistan, which has resulted in a disaster. On the authority as well is Richard Rahn, a member of the Mont Pčlerin Society, which is the oligarchy’s coordinating center for deregulation and elimination of all sovereignty and the nation state with a resultant world government. He is also the Head of the Center for Economic Growth, an offshoot of Freedom Works Foundation, run by C. Boyden Gray, heir to the Reynolds Tobacco Fortune and by former House Majority leader Dick Armey (R-TX). Rahn’s buddy and intelligence operative Gray helped arrange the European Savings Directive, which permitted the Cayman Islands’ government to exempt the hedge funds there from reporting to European countries their cross border income.”
The Japanese yen and the Swiss franc carry trades have provided an enormous source of liquidity for some of the most risky derivatives and leveraged financial games in the world. During 2005, hedge funds were responsible for 50% of the transactions on the London and New York Stock Exchanges. The hedge funds are a center for circulating hundreds of billions of dollar in hot money flows, tax shelters and laundered drug money. They are also some of the biggest speculators in the world in some of the most precarious derivatives, such as credit derivatives and collateralized debt obligations (CDOS), which are adding instability to the shaking world financial system.
They are also leading a mad wave of mergers and acquisitions, to create transnational monopolies, which reached $4 trillion last year. These consolidations have led to the layoffs of millions of workers in the US, UK, Europe and Canada. These antics and others have pushed the derivative bubble past $600 trillion of nominal value, up from $360 trillion just eight months ago. This has put the world on the path of the biggest financial disintegration in modern history. It is no wonder gold is so attractive for anyone who is privy to what is really going on, such as you readers. The only time of opportunity, that window of opportunity, to take down the Illuminists is when they are forced to take the system down. That is when they will be the most vulnerable and that is when we have to strike. Incidentally, they are well aware of that and it won’t be an easy victory.
From a fellow subscriber
The Conundrum Fad In Market Manipulation
Goldbugs have long had to endure the fact that gold and silver are now manipulated near 24/7 and especially during speeches by the leaders of our fascist government or Federal Reserve, during "access market" periods and, prior to and immediately after any negative report where gold and silver have been pushed in the opposite directions they should be going. This also applies to any crisis situation where gold's role as a safe haven is brutally attacked by the cartel.
Lately the "Conundrum Manipulation" has extended throughout the markets. Bad real estate reports result in elevated home builder stocks, oil shortfalls result in at least temporarily lower oil prices, etc.
The latest off-shoot of this fad relates to currency manipulation. In the "old days" currencies would tend to be supported by central bank rate hikes, especially when those hikes were not in the consensus or when the hikes were accompanied by a "hawkish" statement. The last three major central banks to rise interest rates (Japan, New Zealand, and the ECB) have all resulted in the immediate "weakening" of their currencies against the dollar.
Anyone doubting the manipulation of world markets need only to pay minimum attention to reports or events and the reactions of the markets. Although many believe the United States is the mastermind and central figure in market manipulation, this is not the case. The World Government is clearly calling all the shots at this point in time. It is becoming more and more clear that very little of the manipulation results in benefits to the economy or people of the United States, in fact, just the opposite. The objective is clearly to destroy the economic power and independence of the United States and all other once sovereign nations.
The effects of this planned economic destruction is becoming more and more evident - to unemployed workers, to the debt-ridden consumer and to holders of sub-prime loans. Very soon now the markets will be allowed to collapse and the world will plunge into the deepest, most severe depression in history. This is a mandatory and crucial phase of the transition to a world government. In the meantime, we must accept that bad news is good news, black is white and evil is good.
Regards,
Chuck
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