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Monday is going to be either one of the biggest UP days in HISTORY or an unmitigated bloodbath.

I bet watch for the Dow to open 500 points up, dollar to go up to 74 and gold down to $850.



The third mode is like the second: A bursting bubble or bad news about future productivity or interest rates drives the fall in asset prices. But the fall is larger. Easing monetary policy won't solve this kind of crisis, because even moderately lower interest rates cannot boost asset prices enough to restore the financial system to solvency. [My note: This mode is the full-fledged deflationary spiral and liquidity trap].


The yapping flapping magic talking monkey Jimmy Jimbo the wonder flying baboon has told us to short. Oh Lord Jesus, save my positions at the open tomorrow, before I go to all cash.

GK, why the hell are you talking like you know what you are talking about, when you have zero idea. Wait, you are going to buy a volatility spread on the futures, right. With the vix at thirty, that's an expensive proposition, no thanks. Actually the markets are befuddled by this new cart of horseshit being peddled by Killer Hank and the bearded chairrat. Gold up sixty points, oil down eighty. USD up less than thirty on the chf, le euro and the Onishi Takijiro. We do not know about the remnimbi, since that is controlled. As the night wears on the q's and the spx futures have been sliding from the peak of hundred twenty point, reached at about the time you wrote your post. This is going to destroy our currency, sooner or later. Elaine got it right again. Don't know how she does it herding goats up on her mountain. Even she won't give the timeframe though, because the manipulators will rule the near term moves. Next.


GK, it takes a specific type of sentiment and certain influences on a huge mass of people in order for there to be a crash. The same is true for a speculative fever (think tulip bulbs). What we have here is over-expansion of credit due to greed of the bankers.

So yes, in the long term things will become very bad due to our debt and inflation. I am wary of a setup in which the central bankers will force us into a new fiat currency (the Amero). Prophets of the past predicted that Canada and Mexico would be part of the U.S. at some point. I don't rule that out either.

In the short term, this is a banking crisis, and the equity markets will trade in a downward trend as it does in all bear markets. Stay calm and protect your money (gold, <100K in FDIC accounts, etc.)


Calvino, have a look at your writing and and implied thought patterns it seems as though you would fall more in the day trader rather than macro economic thinker.

You show a broad understand of everything that is happening right now but a limited curiosity as to why.

Perhaps you enjoy video games more than chess.

Your post proposed to predict my planned trade in tomorrow's market of trading the vix. This is incorrect. My post implies that the BIG BOYS are going to bring out the BIG GUNS tomorrow and me trading in there would be like walking into a fully armored automatic weapon battle with a revolver. Suicide.

I will admit to a small bit of bravado due to closing out my LEH put when the market opened last Friday (had to stay up to 2am) for a gain of one month's salary, but that was just for 'fun'.

In rigged markets like in the US, there are always micro and macro reality as well as micro and macro political power agendas battling for control.

Back 20 years ago on the ivy league economic departments all the cutting edge research was on the impact of EXPECTATIONS on the market. Not reality, just what people thought.

When you have a fiat/financial economy that is slowly diverging from the physical real economy this makes perfect 'sense'.

The other comment in my post is to imply an increasing probability of the long term macro path we are being one of full-fledged deflationary spiral and liquidity trap and requiring further monitoring for evidence.

In a true market without rigging it makes no sense to predict what might happen as all information is priced in immediately.

So the other implication of someone making a 'prediction' of what might happen to a market is essentially the ultimate insult to a market as being so obviously manipulated.

So basically when a human rather than a market is driving the short term, you get someone like Paulson thinking 'who is going to kick me in the nuts this morning, and how and I going to screw the bastard'.

So applying the same thought pattern, it seem obvious that the 'perception' of the positive impact on the USD from the Freddie/Fannie bailout is much more important than the actual impact. And EVERYONE is going to be watching the Asian markets for ANY hint where the herd is going.

An ounce of prevention is worth a pound of intervention.

But it should not be this way. It is totally wrong. The market should be free, with openly available information, and then we can each make our own decisions as to what is best for us. This is insane.

So show some balls and make a prediction like Elaine does so well and put your money where you stream of unconsciousness is.


Sure GK. My money is always running before my mouth. Elaine does not participate in the market, as she has stated. You want my trades? Short aud/usd, nzd/usd, eur/chf, usd/jpy, usd/chf in the overnight. Closed out eur/jpy and eur/chf at a profit. Now go talk theory to someone who wants to hear it, piker. Traders don't talk theory, that's how you get stomped by other traders. We know theory, talking about it like you do is for pikers.


Thanks, Elaine for a wonderful series of articles.I`m a fan since the first read.
What I`d like to know more about is... since the Great Depression of 1929 resulted from the Weimar hyperinflation which nullified reparations payments to England and France, causing them to default on their loans from the USA, can the Marshall Plan be regarded as part of a takeover of Germany in order to recover not only the costs of WW2, but also from WW1?

That these lenders have long memories is shown by the eternal enmity against Iran and Cuba, for example.

Ah, und noch was. How much of this enormous debt to Asia do vou think represents the profits made by US companies which set up shop there during this boom? How can one outsource so many jobs without exporting the profits also(unless they have been repatriating them dutifuly in order that they may be appropriately taxed)!

I`m not an expert of course,- just another learner.

Elaine Meinel Supkis

Wall Street is just the Temple of Worship run by gnomes. The central Banking systems are various Vaticans set up to regulate the Bourse Temples of Money Worship.

The Goddess these guys love is the Triple Goddess of yore: Miss Risky, Lady Luck and Kali, the death dealer, who is the queen of spades.

Only they all got sidetracked in this worship and ended up believing in the three male gods, Jesus, Mohammed and Moses. They are mere men! Unlike the elemental goddesses.

This leads to the present schizophrenic situation: the guys running in circles today trying to figure out how to escape the clutches of the three Goddesses can't directly talk to them even when they sleep with the priestesses of these Goddesses, their trophy wives. Actually, they are NOT sleeping with these priestesses who are kicking them out of the marriage bed due to losing money.


How's that for an economic analysis?

To continue: these poor gnomes now must grub up some sort of money and the only way they can do this is to go to the Dragons at the Cave of Wealth who happen to be Asian people with a long record of working their people very hard to accumulate wealth. 'Please give us more credit, we need more credit', wail the gnomes.

The Dragons smile. 'So long as you sign the bottom line and give us your souls.'

I know for a fact, since I lived with the Chinese officials who were sent to the US to figure out capitalism and banking, I saw up close their wonder and astonishment when they figured out how money works and how capitalism functions. 'I be BANK!' said one fine ambitious lad when he learned how the rising Chinese empire could best the US.

So I watch from the sidelines as China relentlessly follows their 50 year plan of displacing the dollar and becoming the world's banking center. This year, Japan announced THEY would be the world's banking center and would do this via the 0.5% interest rate.

See? This is why it is easy to call the shots.

About bear markets: ALL bears who try to get rich shorting dying markets eventually get hammered to death by the struggles of the rulers trying to keep markets artificially up. If we understand this process it is like being a hunter avoiding the thrashings of a great elephant as it dies. Or a great white whale: avoiding being crushed and patiently watching and tracking the dying beast is how one survives to slice up the carcass. Get too close to grab a bite and you get rolled on and crushed.


I'll keep that one in mind Elaine. Although I know the mundane name for this being short squeezes, engineered by Lex Luther at the Treasury and the bearded chairrat.

Elaine Meinel Supkis

Names are not as good as mental images. This is why I tell stories here. I am seeking useful imagery to describe technical processes. This makes negotiating around events much, much easier.


Cover the shorts I gave you piker, now, and take another month off from work.

Royal Dutch

I enjoy everyones comments, I am more into history than financials, but the two go hand in hand it would seem.

Buffalo Ken

Royal Dutch, I suspect so many things go hand-n-hand that we are only just now starting to appreciate. But I think the quicker we learn how connected everything is, the quicker we will be able to find solutions to the current apparent "quagmire" that could really be nothing more than a grand opportunity for humanity to show its merit (or perhaps lack thereof) to the rest of the planet (so to speak).

Elaine Meinel Supkis

We can't have any solutions without understanding basic human nature, how it creates things and how we trip ourselves up.

Royal Dutch

To quote Johnny Depp from his last pirates movie, "The world hasn't gotten any smaller, there is just less in it."


Piker might have been correct many years ago when I did indeed arrive in California with no money...but I think a net worth of 230 pounds of gold (not your silly floating fiat currencies) bumps one out of that category.


"Possibly from Piker, a poor migrant to California, after Pike County in eastern Missouri."

And Hmmm, I wonder how many currency traders there were during the Bretton-Woods era?

Oh yah, right, there were NONE. Exchange rates were fixed.

But perhaps currency trading produces something of real value, like a bike, an almond or an airplane.

Uh, no. It is just glorified gambling.

Those who can concentrate on something for more than 2 minutes at a time and can understand big words might want to have a read of this.


"Wealth measured in terms of gambling successes, is the form of mass-insanity which has done the most to prompt our population to accept the lunatic changes in policies of national economic and related practice since the U.S. Nixon Administration’s installation."

Elaine Meinel Supkis

You are correct, GK. The Bretton Woods II Accords with the floating dollar was supposed to be TEMPORARY. Both Burns and Nixon were adamant about this. But instantly, the investing community figured out this was a potential source of instability that could allow them to create vast fortunes for themselves.

So it became extremely popular with bankers and then traders in Japan figured out the other angle: it can lead to huge export market profits. Now, we can't get rid of this totally toxic system.


Prevention is the best answer on it.

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