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Saturday, March 28, 2009

The Great Flaw in the Geithner Plan Explained

This is going to be the single largest heist in history.

We need more people like Bob Basso. He has now made the powers that be 'uncomfortable'.

YouTube Star Summoned to White House?

The Second American Revolution:

We The People Stiumulus Package:

Wednesday, March 25, 2009

Debt Monetization, Money Printing, Dollar Weakness AND Gold Weakness!

Despite a move by the Fed to monetize debt (print money) Gold (GLD) has "only" managed to move up to about $95... even as the USD came under significant pressure.


Gold, Silver Fall as Bank-Asset Plan May Curb Demand for Metals: “Gold fell the most in almost a week on speculation that a U.S. government plan to rid banks of toxic assets will revive lending and the economy, eroding the appeal of the precious metal. Silver also declined.

Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, dropped from a record yesterday for the first time since March 6. The U.S. Treasury’s latest bid to help banks boosted optimism that the economy will recover from the biggest recession since the Great Depression, spurring gold sales. Before today, gold rose 7.7 percent this year.

“Let’s not forget that gold is one of the best barometers of pessimism still out there,” said Jon Nadler, an analyst at Kitco Inc. in Montreal. Gold gained this year as investors bought the metal as a store of value against financial turmoil, analysts said.

Gold futures for April delivery fell $28.70, or 3 percent, to $923.80 an ounce on the Comex division of the New York Mercantile Exchange, the biggest decline for a most-active contract since March 18.

Silver futures for May delivery dropped 51.8 cents, or 3.7 percent, to $13.357 an ounce on the Comex. Silver still has gained 18 percent this year while gold is up 4.5 percent.

The precious metals fell as equities climbed in Europe and Asia, while in New York the Standard & Poor’s 500 Index pulled back from yesterday’s 7.1 percent gain. Still, the S&P pared an earlier drop of as much as 1.6 percent. Yesterday’s rally in U.S. equities was the biggest in five months.”
Fed to Start Purchasing Treasuries to Unfreeze Credit (Update1): “The Federal Reserve starts purchasing long-term Treasuries today, aiming to bring down borrowing costs by employing tools last used in the 1960s.

The first operation in the $300 billion effort is targeted on notes maturing from February 2016 to February 2019, the New York Fed Bank said in a statement yesterday. In the coming eight days, the central bank plans to buy debt maturing between March 2011 and February 2039, according to the tentative schedule.

The Fed joins central banks in the U.K. and Japan in extraordinary purchases of government debt, broadening efforts to unfreeze credit and end the recession after cutting the benchmark interest rate close to zero. The Fed’s purchases may ultimately be overwhelmed by new government borrowing to finance a budget deficit projected at $1.5 trillion this year.

“Over the short-term, the Fed purchases of Treasuries will lower rates, but the need to issue over $2 trillion in securities over the next 18 months will make this less than effective,” said Mark MacQueen, who helps oversee $7 billion as co-founder of Sage Advisory Services Ltd. in Austin, Texas.

Policy makers, led by Chairman Ben S. Bernanke, announced the Treasury-purchase decision last week along with a plan to more than double purchases of housing debt to $1.45 trillion, hoping to reduce rates on home loans.”

Debt Auctions: Failures Rising

The first UK debt auction has failed under the avalanche of supply. Expect more frequent and more severe auction failures. Back in January a German Bund auction failed. Then in February it failed a second time.

January’s TIC data was an unmitigated disaster. Ben Bernanke has seen the writing on the wall, and panicked last week into monetizing debt in a desperate bid to stall the inevitable. He knows that when a US Treasury auction finally does fail, the maw of the Abyss will open up and swallow up the entire global financial system.

U.K. Gilts Slump After First ‘Failed’ Bond Auction Since 1995: “U.K. gilts slumped after demand at an auction of bonds fell short of the amount offered, the first time the Treasury failed to attract enough bids at a sale of regular debt in 14 years.

Investors bid for 1.63 billion pounds ($2.4 billion) of the 40-year securities, less than the 1.75 billion pounds of 4.25 percent notes slated for sale, the U.K. Debt Management Office said today in a statement from London.

“Basically it’s the first failed auction,” said John Wraith, head of sterling interest-rate strategy at RBC Capital Markets in London. “They didn’t receive enough to cover it all so the market has obviously sold off extremely heavily.”

The yield on the 10-year gilt jumped 10 basis points to 3.43 percent by 11:45 a.m. in London. The 4.5 percent security due March 2019 slipped 0.84, or 8.4 pounds per 1,000-pound face amount, to 109.02. The yield on the two-year note rose six basis points to 1.30 percent. Yields move inversely to bond prices.

Prime Minister Gordon Brown’s government plans to sell an unprecedented 146.4 billion pounds of debt this fiscal year as Europe’s second-largest economy grapples with its first recession since 1991. Demand hasn’t fallen short at a sale of regular U.K. government bonds since 1995.

The U.K. had two failed auctions in the past 10 years, the most recent in September 2002 when the Treasury received bids for 95 percent of the 900 million pounds of 30-year inflation- protected bonds offered, according to the DMO’s Web site. The other failure was in 1999, when it tried to sell 500 million pounds of inflation-protected bonds.”

The People Are Slowly Catching On…

Tuesday, March 24, 2009

The People Are Slowly Catching On...

[ HT UK Bubble ]

Couldn't have said it better myself.

When the rage and despair finally boils over, the outburst of violence will be sudden.

Related Posts:
EIU Special Report: Manning the Barricades
There Will Be Blood
Global Protests, Riots, Violence as Economies Unravel
Global Violence, Gold: But Not Yet
Hyperinflation First, Then Global War

Baltic Dry Index Falls, Again... Even as Equities Rally

In Baltic Dry, Global Trade: The Rally in Equities Isn't Real, I wrote: "The Baltic Dry Index (BDI) has been losing steam during this rally in equities. A sustainable trend changing rally in equities would be accompanied by an increase in BDI."

Well, despite a parabolic move in equities yesterday, the BDI actually DROPPED. AGAIN.

I will re-iterate: The shorts got squeezed. Hard. Yesterday the last of them panicked and hit the eject button. Don't mistake this for a new Bull market.

Everything is Overbought

Major Accumulation Day: Down Trend Broken, Resistance Broken

Posting has been weak. I've been extremely busy.

Helluva day yesterday. The evil shorts finally capitulated... and pushed prices thru the declining trendline and passed important resistance in a mad dash for the exits. For such a massive up day volume was rather anemic.

It was an impressive Major Accumulation Day and the fifth consecutive one. However, I belive that short covering has distorted this indicator and 'weakened' it. Real money longs just don't push an entire index up this much. Only hot money getting squeezed acts this way.

How the market reacts on this next pullback will determine the validity of this apparent 'breakout'. Currently, I suspect it may be a 'false' breakout... and for now I'm sticking to my call that this is nothing more than a 'rip your face off' Bear market rally.

Monday, March 23, 2009

EIU Special Report: Manning the Barricades

[ HT Displaced EMA ]

EIU (Economist Intelligence Unit) has issued a Special Report called Manning the Barricades. (Download the full PDF or view it on Scribd) The report details the political instability and violence that is about to sweep the globe.

I've been warning of violence on a grand scale as the global economy continues to deteriorate. (Most recently in the post There Will Be Blood.)

In Hyperinflation First, Then Global War I first presented the theory that global economic instability will lead to the sudden unraveling of even advanced ethnic assimilation and that internal ethnic unrest is likely to rapidly escalate into full-scale external conflict between nation states. In Global Violence, Gold: But Not Yet I got more specific. Then in Global Protests, Riots, Violence as Economies Unravel I explained some of the more ominous signs in Western and Eastern Europe.

I based my expectations of global violence on the theories and writings of Niall Ferguson.

AIG: Corporate Security