Guest Post: Lessons From The 80s: Nothing New Under The Sun

Does anyone here remember the Latin American debt crisis in 1982? It was a lot like Greece....

In the FDIC’s own words: “The crisis began on August 12, 1982, when Mexico’s minister of finance informed the Federal Reserve chairman, the secretary of the treasury, and the International Monetary Fund (IMF) managing director that Mexico would be unable to meet its August 16 obligation to service an $80 billion debt (mainly dollar denominated). The situation continued to worsen, and by October 1983, 27 countries owing $239 billion had rescheduled their debts to banks or were in the process of doing so...

EURUSD Breaks Down, Hits 1.2572

And so the EURUSD plunges to new lows. Yesterday, we expected the euro would hit a 1.25 handle by the end of the day. Alas, we were off by 4 hours. US banks are now rumored to be joining European banks in taking on the ECB directly and shorting the living daylights out of the doomed currency expecting another several hundred billion in bank bailout funds to be added shortly. Last time we were here a week ago in the EURUSD, the Dow was crashing in the four digit range. Now, we know that the machines have decoupled from the EURUSD and EURJPY signals, as the EUR is no longer a part of any correlation trade, As such we expect the euro to hit parity at about the time the S&P hits 1,500, on yet another no volume melt up, just in time for Gold to hit a 3x multiple of the S&P. Although, that won't be today: gold is currently being pushed down the LBMA. JPMorgan can not imagine a world where gold is $1,250 or higher. Alas, we give this last ditch attempt at most 24 hours. In other news, the EURUSD has buyer support in the 1.2550 area. As for stocks: look at volume. If it abysmal as it tends to be whent he Primary Dealers, the Fed and the quant community collude to push it up double digit handles, we expect S&P 1,200 today. If volume picks up the market will tank. Guaranteed.

Rigged-Market Theory Scores a Perfect Quarter

In a feat that would seem to defy the odds, Goldman Sachs, JPMorgan Chase and Bank of America this week each said its trading desk made money every day of the first quarter. Goldman said its daily net trading revenue topped $100 million 35 times last quarter out of 63 trading days. JPMorgan and Bank of America disclosed similar eye-popping stats. Citigroup, too, recorded a profit on each trading day, Bloomberg News reported, citing unnamed people who knew the results. The intrigue is high. If a too-big-to-fail bank’s traders were able to make money every day of a quarter, were they really trading in any normal sense of the word? Or would vacuuming be a more accurate term? What kinds of risks do such incredible profits entail, for the banks and the rest of us taxpayers? And are results such as these too good to be true? - Jonathan Weil, Bloomberg

Presenting Western District Of North Carolina Case 10-cv-200

All we can hope for is for this to get to trial. And any case which in its brief says: "As American citizens, the Plaintiffs allege the financial and banking system imposed on them by the Federal Reserve Banking sytem is a violation of their Constitutional and Human Rights. That the banking system practiced by the New York Federal Reserve Bank, owned and controlled by the Defendant Wall Street Banks, is the most sinful and evil PONZI scheme man is capable of devising" deserves a hearing.The ratings for C-Span will blow the Superbowl away. A 30 second ad slot will cost exponentially more as the case progresses adversely for the Federal Reserve, and the dollar gets increasingly devalued.

Retail Investors Flee From Market Even Before Record Market Crash, YTD Domestic Flows Into Stocks Are Negative

The weekly ICI number for long-term domestic mutual fund flows is out, and not surprisingly, retail investors were bailing out in droves from the stock market even before the massive flash crash of May 6. In fact, in the week ended May 5, retail investors had pulled a massive $2.235 billion out of the market, after the S&P had dropped a mere 5% or so from the prior week. We are positive that when the number for the current week comes out, the outflows will be stunning now that investors have no faith left in the rigged casino "capital markets." Of course, this is simple to explain: with everyone and their grandmother habituated to a market that can only go up, at the first sign of jitteriness everyone and their grandmother bails, although only the big institutions really get to exit: everyone else has to hope the SEC will not cancel their trades the next day. And now that the market has been thoroughly discredited, the primary dealers have no choice but to ramp it up on no volume yet again, in hopes of pulling in the momos and the housewives into it as usual, courtesy of the CNBC cheerleaders, just to pull the rug a few days before the next trillion dollar bail out is needed and "justified." Oh, and whoever cares, retail domestic flows into stocks year to date are negative by $1.5 billion. Tells you all you need to know about who is buying this "market" - momo emptor.

First Gold, Now Europe Running Out Of Silver

Earlier we noted that the Austrian mint was on its way to depleting its gold reserves following "panicked buying" from Europeans, who now openly fear the demise of their currency. Now, courtesy of Slim Beleggen, we understand that the situation in the silver market is just as bad and has also spilled over to Germany: the contagion is no longer one of sovereign debt, but of precious metal physical inventory. The primarily silver focused (but holding gold as well) Kronwitter precious metal online retailer is not only not accepting any orders, but has entirely taken down its website. The only message left for visitors is (translated from German) as follows: "Dear customers, due to the enormous number of orders we can take at the moment no new orders via the Internet, email or fax."