Archive - 2010 - Blog entry

LA TIMES--[T]he curiosity over what exactly was spotted some 35 miles off the coast was met Tuesday only by a puzzling lack of answers from federal officials.

While QE2 stirs up passions, the truth is nobody really knows how this is going to end. It might turn out to be a disaster, or it might turn out to be a stroke of genius...

It was another lackluster day in the market as investors are still trying to regain their bearings from last week's quadruple news high of elections, QE2, the jobs report, and Kat Dennings nude photos being released. With all of the excitement...

Ouch ...

In these crazy times, all one could ask for is sanity. Yes, sanity – a clear mind, free of noise, with which to face the insanity that the volatile, noisy stock market thrusts upon us. We find ourselves glued to our computer screens or CNBC, waiting to find out what the Dow’s next tick is going to be. What do we get out of it? Only a headache and wasted time.

Here is my advice: read.

Both of Bernanke’s claims (that QE will help housing and spur business investment) are a crock. So what’s the REAL reason he’s frantic to kep interst rates low?

Derivatives.

According to the Office of the Comptroller of the Currency’s Quarterly Report on Bank Trading and Derivatives Activities for the Second Quarter 2010 (most recent), the notional value of derivatives held by U.S. commercial banks is around $223.4 TRILLION.

Five banks account for 95% of this. Can you guess which five?

Banks, insurers and ratings agencies conspired to move junk assets that were guaranteed to implode - and implode they have. They were (Wall)Street hustling, 3 Card Monte style, but what most are dismissing is that the ponzi/hustle collapse has yet to truly happen!

Some say all this insanity is just greed and corruption run amuck. Others claim the political, financial and judicial process has been co-opted in some type of modern day Coup D’état. Might it be both and could it have taken place much earlier in the decade under the cover of some other triggering event?

Ooops

High interest rates aren't a crisis as Ben Bernanke assumes, instead they're a positive symptom of past mistakes which ensure that no more capital will be destroyed supporting what has already failed.

You can see that gold is mainly a negatively correlated trade against the dollar - it's there to protect your cash! You stocks are not cash, your TBills are not cash, your other commodities are not cash so don't make the mistake of over-protecting yourself because gold will crash with the markets - that's something a lot of people did not realize in our last crash as people panicked into the dollar and sent commodities right off a cliff along with equities.

One way this could play out.

What you have is a contest where you are trying to find the proverbial dog with the least flees on it, and at these levels, I am not sure the euro is the winner in this currency contest.

A fundamental restructuring America’s conduct of its foreign policy through the implementation of a quadrennial review is in the works. The US is executing a two pronged military/diplomatic strategy of stepped up bombing, while enticing the Taliban to the negotiating table. Before the US helps Pakistan, it must help itself first, through the raising of domestic taxes. Pushing for a common negotiating forum with Europe to bring Iran to the table on the nuclear issue. The START treaty with Russia on nuclear weapons control may pass in the Senate during the lame duck session. The US supports China’s peaceful rise, but the picture is “complex.”