August 13, 2008
Elaine Meinel Supkis
I encourage readers to visit Seeking Alpha today and add on to my own comment there. Heh. Let's show some muscle here! Chart gazers are trapped in a system whereby they imagine looking at charts allow them to see into the future. This works only in the very long term. Short term, it is more like throwing darts. Successful prognostications are remembered and the faulty ones forgotten. We also look back one year to see how very successful I was in my own analysis of the future! HAHAHA. Then there is the issue of all US corporations madly outsourcing all possible work and my fury that our own stupid government is utterly incapable of hindering this. Welcome to the third world, American white collar workers!
Dollar Party Pooper---by the London Forex Broadsheet:
After having a party last week, the dollar is back to the regular U.S. session routine of failed breaks and consolidation of the European session. It seems as though the markets will now have to absorb three days worth of movement that came on Friday, and now average it out over the coming three days. The net sum gain may not be too different from having three days of average movement, with the main variable being that traders that drank at the party on Thursday and Friday will now be sipping from an empty vessel it seems; there is no momentum to make the next move, whatever that may be, at this time.We saw at the close on Monday a set of reversal pattern candles on most of the daily Forex charts, but as yet have not seen that materialize into sustainable attempts to move prices back from where they just fell. The one dollar weakness move yesterday was seen in the cad, and it came in reaction to the Trade Balance numbers delivered at 08:30 EDT. At the same time oil prices were moving higher from session lows as the Russia/Georgia conflict looked to have been contained, and the threat to crude supplies diminished.
The markets are now going to enter a complex period of trade as new valuations are found on commodities and the dollar. The regional complexities of running into diversifying business cycles will push and pull the dollar in different directions each day, until fair value is found, tested and accepted. Only after a period of consolidation will the markets be set to make a break that mirrors what was seen last week. The party is over for now, but make no mistake, the plans are already afoot for the next one.
Here is my reply:
Culture of Life News--Money Matters here!This sort of 'analysis' is typical of chart watchers who don't understand the business of the floating currency system launched by the mighty USA empire back when Nixon killed the gold peg.
The USA had virtually no trade deficit back then but the dollar was artificially high against the DM and yen. Already, a flood of exports from these two rising industrial giants were flooding into the US. Other central banks like France were raiding Fort Knox and the gold reserves there were drawn down by 74%.
Since the floating currency began, all trade rivals have sought to create advantages vis a vis the dollar. Their tactics shift as the US whines and complains. From the Bretton Woods II Accords through the Plaza Accords and the Louver Agreements, the US has sought to weaken the dollar and demands 'free trade' where by Fortress Japan and Germany both buy more US goods.
After each of these artificial agreements, the status quo is re-started which is for all trade allies to flood the US with exports. Each cycle, the number of nations that figure out how to game this floating currency system increases. Now, the US is besieged by the entire planet. They figured out how to use their FOREX systems to weaken their currencies vis a vis the dollar artificially. They know how to bribe US trade and government officials so they undermine America and boost alien nations.
The US Presidents from Reagan to the Bush clan have been in the hands of Asian financiers, openly taking bribes, openly doing business with trade rivals who constitute most of our trade deficit. The Bush clan, and there are many of them, operate in China to an astonishing extent, for example.
The recent rise in dollar value was FAKE. It was engineered by a very frightened Europe which is seeing a big recession unfolding due to the euro being too strong. They can't drop interest rates to Japanese levels....YET....but they are now using the other tools to buy and hold dollars.
The Japanese are in a panic. Last summer, they boasted they would make the yen 120 to the dollar by October. But other rivals of Japan forced up the yen. Now, China's central bank and Japan's central bank have had a series of emergency meetings. These were focused on keeping and maintaining trade advantages vis a vis the US.
So now they are in concert! Both are weakening their currencies and their combined FOREX holdings are now around or over $3 trillion, an astonishing amount. So the dollar will strengthen against all other currencies as all trading partners conspire to rejigger values for trade advantage with the US and to underbid us when we try to sell stuff like Boeing jets. And to underbid us in the OPEC nations.
It really bemuses me how people childishly cling to 'reading charts'. Guess what? I do better with my Tarot cards! Or reading palms, for that matter. Actually, I do really well with both. Why don't I have customers, you ask? Good question! Unlike Senator Kerry, I won't taser you for asking. No one wants to have a Tarot card or palm reading where the reader chuckles or worse, begins talking about you being doomed. So people tend to avoid this. They want fantasy readings, not real ones.
Chart readers would like to imagine, they are hard-headed and careful. I read lots of charts and graphs. I love them. But I apply to them a huge storehouse of understanding dynamics, human psychology and pure magic [yes, when dealing with money, magic is the key] to figure out where things are headed. Depending on graphs is useful ONLY for seeing the past, not the future. We can guess many things when there is an obvious downturn or swing upwards, or course. But calling these points is the trick.
I notice the reliance on 'candlesticks' to do this. But again, these are useful only in giving one a day's notice of reversals. Which is useful. But knowing when to expect these involves understanding the underpinnings of the whole systems. The more one understands all this, the easier it is to call shots here. I have been bouncing back and forth between my own blog a year ago, this summer, to illustrate how very well, I analyzed and predicted events. Throughout all of last year, I was correct more often than virtually any online predictors.
Some, in a limited field such as say, real estate, were also correct. But I view the whole, international scene and try to describe it as best as possible. This is why I have hammered home the idea that the whole financial world is based not on something real or solid but on something mythical and magical. The instant one understands this and how it connects to the Gods and Death, the role of Libra in all this and how the demonic side of human nature operates, it becomes laughably easy to predict the future in the markets.
Now let us visit some stories I wrote last year, this day:
August 13, 2007: World Banking Status Quo Increasingly Expensive And Unstable
As I expected, the hyper-international banking system has been forced to continue flooding the global interbanking system with more funny money in wild and irresponsible attempt at re-establishing the fake low interest rate status quo set by fiat by the top central banking systems. This childish attempt at papering over inflation caused by wild US spending deep in the red will ultimately make things much worse in the long run but it seems no one with responsiblity wants to think in the long run at all. They just want to keep the free-trade, free spending status quo going as long as possible. And today, we must visit the deluded nuts running the IMF yet again.From Bloomberg:They weren't kidding when they said they would spend to infinity to keep the present wacky banking system with chidlishly low interest rates going! It just might reach that number:∞. It is laughably simple: you keep adding zeros to the ledgers and to the currencies and voila! Infinity results. You know, this bank crisis could end swiftly. Without spending a single euro or yen or even one dollar! All the bankers have to do is raise interest rates to reflect accurately, the rate of inflation, the rate of real money creation, the real level of risk.The European Central Bank lent emergency money to banks for a third day, paring the amount and declaring that markets are returning to normal.
The ECB loaned 47.7 billion euros ($65 billion) to banks, down from 61.05 billion euros on Aug. 10. The overnight rate at which banks lend euros to each other fell to as low as 4.03 percent from 4.16 percent earlier today. It spiked to 4.62 percent on Aug. 9, a six-year high. The ECB's benchmark refinancing rate is 4 percent.It may sound really childish to say this but the entire banking system depends on one thing to survive: savers. And to get savers to save, they must attract savers by offering attractive savings rates. The world's #1 and #2 economies refused to do this because they wanted to make the biggest financiers and corporate entities richer and richer so they gave away money for free, far below the real inflation rates. In both Japan and the USA, savings have collapsed due to this scheme. Instead of raising rates to stop the massive rise in debt levels, these entities dropped interest rates and Japan cut wages ruthlessly and ditto the US, both trying to enslave the working class within a cruel depression only the US failed in this effort.
And they did exactly what I said they would do, didn't they? The Fed went into panic mode and dropped rates at a record pace. Planetary hyperinflation took off like a rocket. This was laughably easy to call.
Also from August 13, 2007: Banking Crisis Misunderstood By Mainstream
We just went through a very disconnected monetary moment when the world's biggest banks (except for China, the biggest one of all) had to pump nearly $400 billion in just three sessions to keep the world banking system from collapsing. I notice no stories talked about the collective FOREX reserves of Europe so I thought it is time for lots and lots of interesting numbers. Also, the traders who brought upon us this disaster are getting big fat bonuses even as they lose money. Figures. And more equity funds struggle to exist. And an army of stupid commentators say stupid things which is really a marvel to me.
*snip*
Remember the deluge of take overs and buy-backs? I begged the governments of the West to please strangle the bankers and equity funds doing this garbage. We were told, 'The stock market will go up and up!' and, 'Private funds and banks will revitalize our businesses and make them work better!' This was, as per usual. total bunkum. Lies. Childish fantasies. Fatal falsehoods. Here is what is going to utterly destroy our banking system......From Bloomberg:Oh, oh. Naughty little children playing banker have stolen mommy's purse and daddy's pension and burned it in the oven after running it through the Cusinart. All these deals require rolling over the debts. We are sitting on a volcano filled with debt roll-overs that will not roll over at all. They will keel over dead. Trillions of dollars are going to die this way. Far more than the housing mess. The need for this money is so gross, the US, Europe, Japan and a handful of other nations not named 'China' had to squander half of their FOREX reserves to pour enough liquid into the banking system to keep these ridiculous loans coming. All those 'Look at that $22 billion dollar deal!' deals are now turning into 'Look at empty bank vault!' moments in history.Coventree Inc., the Canadian finance company that went public in November, failed to sell asset-backed commercial paper to replace maturing debt because of the credit crunch caused by U.S. subprime mortgage losses.
The shares tumbled 35 percent after the company extended maturities on C$250 million ($238 million) of commercial paper and sought emergency funding for another C$700 million of debt. Toronto-based Coventree's units have about C$16 billion of asset- backed commercial paper outstanding.
And again, while the top media pundits were assuring us that all was well, all was dying. Since 7/17/7, the entire international G7 system ran right off this cliff. And is still in free fall. All attempts at fixing this have failed. But there is still room for more 'fixes'. And they will struggle to deny reality for as long as possible. But the Gorgons are out hunting. Libra is trying desperately to balance her books. And the hag, Inflation, is flying back to her rock in the misty, mystical seas to rearm Herself for another assault. And Depression is collapsing onto our living room couches, muttering, 'I think I will crash here for a few years.'
The dollar will probably continue to decline against all other currencies due to the simple fact, our trade deficit is gigantic even as we reduce it by dropping the value of the dollar, they won't let us do this, they ALL desperately want the dollar to be as strong as possible. The OPEC nations desperately want a strong dollar, too. They get paid in dollars and being a commodity system, they need these dollars to be strong to pay for Japanese and European imports into OPEC nations! So everyone is united in wishing for a strong dollar.
Despite this, the dollar must weaken. Libra insists on this. If it doesn't happen, Her hideous sisters will fly forth to ravage everyone and steal or crush all wealth.
Cost-Cutting in New York, but a Boom in India
On the top floor of a seven-story building in this dusty aspiring metropolis, Copal Partners churns out equity, fixed income and trading research for big name analysts and banks. It is a long way from the well-cooled corridors of Wall Street, and quarters are tight; business is up about 40 percent this year alone.“This is one bulge-bracket bank,” said Joel Perlman, president of Copal, pointing toward a team behind an opaque glass wall. “And this,” he said, motioning across a narrow corridor “is another.”
The banks edit and add to what they get from Copal, a research provider, then repackage the information under their own names as research reports, pitch books and trading recommendations.
Wall Street’s losses are fast becoming India’s gain. After outsourcing much of their back-office work to India, banks are now exporting data-intensive jobs from higher up the food chain to cities that cost less than New York, London and Hong Kong, either at their own offices or to third parties.
I remember how the US and UK both boasted that we didn't need to fear outsourcing all industry. We would be the financial centers of the planet. We would lose 'lousy' factory jobs but get great office work! Well, the need to kill the hag, Inflation, dictates all US industries and businesses outsource to cheaper locations such as China and India. Both were first-rate empires before 1600. Both were destroyed by the European invaders. Now, both are resurgent. The US is helping this along greatly by enabling everyone seeking to cut wages and costs, to relocate overseas. I will be writing much more about this tonight when I rake through the latest government report about taxes and outsourcing.
Trust me when I say, the US system is set up to destroy US jobs. And this is due to treason, pure and simple treason. Our powerful citizens go to Bilderberger meetings to conspire to keep the US locked in this ridiculous system that is destroying all our infrastructure and wealth.
Naked Short Ban Returns SEC 19 to Bear Monday:
(Bloomberg) -- The U.S. Securities and Exchange Commission's emergency ban on short sales in shares of financial stocks, which expires today, has failed to raise the share prices any higher than they were the day Bear Stearns Cos. collapsed.The U.S. regulator's order banned so-called naked short- selling of Fannie Mae, Freddie Mac and 17 investment banks, whose collapse might expose the U.S. government to losses.
The CHART OF THE DAY shows the market value of the 19 SEC- protected companies soaring 26 percent, or $270 billion, since the July 15 announcement. Still, that gain only returned the banks to their valuation on Monday, March 17, the day of JPMorgan Chase & Co.'s buyout of Bear Stearns, which was facing bankruptcy after billions of subprime-mortgage linked losses.
The whole point was to stop the bears. Like in that bear video I posted the other day, the bears jumped out of the dark woods as Bernanke was walking with his bucket of fish. So he pulled a gun on them and the bears retreated. Unlike the video, the two men there finally got to their car and escaped the bears. But Bernanke is still in the woods with his bucket of goodies. He hopes the bears are now gone, destroyed by the wild gyrations of the markets. But I am predicting more bear attacks. This is because bears know that Bernanke doesn't have just a bucket of fish, he is dragging along a huge whale. They will eat it.
At the root of the problems in the US economy is the collapse of the housing market as foreclosed properties and unsold new build homes flood the market.
Nationwide, US house prices are dropping for the first time since the Great Depression, and the rate of contraction is still accelerating.
And with people unable to borrow more against the value of their homes, it also has an impact on the real economy.
Wow. That graph is nasty. I lost $100,000 in the 1991 downturn. So I am betting people will and are losing much more this cycle. This is a 'bloodbath'. When I lost my $100,000, it was my own cash. I owed no one anything. But the present bloodbath is from people who owe everyone every penny. This is very bad. This cannot unwind in some easy, simple way. I paid dearly for my losses. This is why I ended up stubbornly living in a tent for ten years while building my house. I couldn't use my cash which had vanished.
And so it is with us: we must all live less while preparing the ground for living more in the future. It is very possible to do this if we do it. But right now, we are trying to evade this fate. We desperately want the old status quo back. To let in more exports, to outsource more jobs and to have our cakes and eat them, too. While our rulers sputter, 'Let them eat cake.'
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