Archive - May 2010 - Blog entry

If Greece follows in the footsteps of Argentina (which is quite possible) many financial institutions will be in a world of hurt - forced to take 60-70% losses on instruments that they levered up 20x on. We're talking real pain here people, and it is highly unlikely Greece will be the only one. For all of those who may call me a doomsayer, let's walk through the numbers...

Another day, another pension bomb blows up: "The Teamsters' Central States Fund has been woefully underfunded for years. It had only 47 cents on every dollar owed in 2007 and likely is much worse today in light of the recent economic downturn." And guess who wants to draft legislation to bail this mess out?

In response to the bankers and governments’ global rape, pillaging and plundering of people’s assets and freedoms, we are starting a series of essays that we call “The Liberation Essays” in an attempt to educate the masses about the true nature of the global financial system. We will continue to write our essays until we feel we have achieved our goal of education and eventually liberation from the racketeering firms that call themselves Wall Street and Central Banks. Below we grant you essay No. 1.

Thank you, Mr. Market, for finally coming to your senses! It’s about time that you kicked your ecstasy habit. There are now more broken 200 day moving averages than National Rifle Association bumper stickers at a Tea Party rally. Building short lists of your next big trades. It’s way too early to pull the trigger on any of this stuff. (AAPL), (GS), (YCS), (TBT),

Guess who may be exposed to what? We will probably dig a little deeper into this if the market doesn't punish the company before positions can be expanded, in the mean time their is plenty for subscribers to chew on. I have included much food for thought for non-subscribers as well. Oh yeah, as I type this, futures are down 28 as the global markets drop 3 to 5% (again), all due to what I warned about since January yet the pundits said was "contained". Yeah, globally contained!

The end of the welfare state as we know it is near. No doubt this represents a victory for the Chicago Boys and neoliberal economics. But the final chapter has yet to be written, and labor will not go down quietly.

What was David Stevens thinking of? Possibly the truth.

Remember the Bushism, "fool me once, shame on -- shame on you. Fool me -- you can't get fooled again." The National Association For Business Economics just came out with their latest forecasts for the economy. That's what brought up the old saying, "Fool me once, shame on you; fool me twice, shame on me" that George W. so magnificently bumbled.

What happens when we look at all of the costs?

Over the years, I’ve noted that certain subsets of market conditions – occurring together – are associated with very specific outcomes, such as oncoming recessions, abrupt market weakness, strength in precious metals, and so forth. Such indicator subsets, or Aunt Minnies, are essentially “signatures” that often have very specific implications. In medicine, an Aunt Minnie is a particular set of symptoms that is “pathognomonic” (distinctly characteristic) of a specific disease, even if each of the individual symptoms might be fairly common. Last week, we observed an Aunt Minnie featuring a collapse in market internals that has historically been associated with sharply negative market implications.

"With low growth, low birthrates and longer life expectancies, Europe can no longer afford its comfortable lifestyle, at least not without a period of austerity and significant changes. The countries are trying to reassure investors by cutting salaries, raising legal retirement ages, increasing work hours and reducing health benefits and pensions."

What is the latest stock market crash telling us? Why has virtually every category of risk asset melted down in the last two weeks? The implications of a looming “W.” The risk of economic Armageddon is still out there. TARP II, anyone? Please pass the Xanax.

Spain is starting to show its true colors re: the NPAs in its banking system. When the dam bursts, one should expect a mini-daisy chain reaction to kick off due to the contagion effect. The only question is, which of the PIIGS group will come clean first? Or will they all keep sweeping the NPAs under the carpet until there is no more carpet to sweep under? In the mean time, those bank options are up 300% to 400% and counting...

The bigger picture ...

Here we go again .... and again