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The Bailout Gravy Train is Over

Phoenix Capital Research's picture




 

As I’ve noted in previous articles, Bernanke is finished as Fed Chairman and will be stepping down within 18 months.

 

The reason is simple: he’s become politically toxic (even Obama won’t be backing him) and will be facing legal troubles in the future.

 

Regarding the legal troubles, as the Great Crisis gets underway, the lawsuits are going to come fast and furious. We’ve already seen Goldman Sach’s CEO hire a defense attorney. A lot more of the big shots on Wall Street will be doing the same. And when push comes to shove in the courtroom, they’re going to pin their crimes (the ones committed during the 2008 collapse) on Bernanke with a “the Fed pressured me into doing it,” defense.

 

We’ve already seen one round of this with Ken Lewis of Bank of America. The only reason Bernanke got away on that one was because the political and social landscape still viewed him as the savior of capitalism and the economy.

 

This time around, the Fed is fast becoming politically toxic (see recent GOP presidential candidate’s comments on the Fed), QE 2 caused inflation in the US, and we’re learning that the Fed secretly funneled trillions to Wall Street during the 2008 Crisis.

 

Put another way, the political and social climate are increasingly anti-Fed and Bernanke. So any lawsuit he might face will be far more difficult for him to navigate (also, remember the REAL power at the Fed is the primary dealers like Goldman Sachs, NOT the academics on the Fed’s board).

 

So Bernanke’s going to be in big trouble going forward. And the chances of another QE or major policy being enacted without a systemic collapse grow slimmer by the day.  The days of the Fed acting simply for the sake of it are over. Going forward the Fed will only be reacting to Crisis.

 

Regarding QE, the markets largely rallied/held up over the last few months on the notion that the Fed will enact QE 3 OR that the EU will expand its bailout of Greece and other bankrupt European nations.

 

Neither of these will happen. QE 3 hasn’t been likely for months (at least since July). The Operation Twist move was symbolic and little else. This is why Gold and Silver and other items have collapsed in the last week: they had gotten WAY overbought on hopes for QE 3 hitting.

 

Regarding Europe… Germany is no longer backing up the bailouts. Forget any BS rumor being spread by CNBC, what Germany says is the deal. No German backstop, no bailouts, no EU, end of story.

 

My primary point with all of this is that the bailout/ intervention gravy train has come to an end. Indeed, while the lemmings pile into stocks believing in this nonsense, smart investors are already preparing for the next leg down in the markets. The reason is simple: last week’s sell off is JUST the beginning of what's coming.

 

This is no mere correction nor is it just a brief hiccup for the financial markets. This is the GREAT COLLAPSE and the markets will be going to new lows (below the March 2009 lows) in the coming months.

 

We're also going to be seeing major banks go under, market crashes, food shortages, government shutdowns, and SYSTEMIC FAILURE.

 

Yes, I believe that before this mess ends, the financial system as a whole will have collapsed. What's coming is going to make 2008 look like a joke.

 

If you have yet to prepare yourself for what’s coming, my Surviving a Crisis Four Times Worse Than 2008 report can show you how to turn the unfolding disaster into a time of gains and profits for any investor.

 

Within its nine pages I explain precisely how the Second Round of the Crisis will unfold, where it will hit hardest, and the best means of profiting from it (the very investments my clients used to make triple digit returns in 2008).

 

Best of all, this report is 100% FREE. To pick up your copy today simply go to: http://www.gainspainscapital.com and click on the OUR FREE REPORTS tab.

 

Good Investing!

 

Graham Summers

 

PS. We also feature four other reports ALL devoted to helping you protect yourself, your portfolio, and your loved ones from the Second Round of the Great Crisis. Whether it’s my proprietary Crash Indicator which has caught every crash in the last 25 years or the best most profitable strategy for individual investors looking to profit from the upcoming US Debt Default, my reports covers it.

 

And ALL of this is available for FREE under the OUR FREE REPORTS tab at: http://www.gainspainscapital.com.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Thu, 09/29/2011 - 11:37 | 1722058 Lucius Corneliu...
Lucius Cornelius Sulla's picture

Why there will not be hyperinflation (yet):

In order for the government to survive, it must protect its ability to borrow at low, low rates.  Too much printing will jeopardize its ability to do so.  Therefore, deflation will happen and start on the periphery.  MBS held by banks and hedge funds was first.  Next will probably be munis then GSE paper.  The last bastion will be T-bills.  When they go, hyperinflation is likely.  However, this may take a lot longer than most people on this board are willing to admit.

Thu, 09/29/2011 - 09:44 | 1721735 66Sexy
66Sexy's picture

No revolution or pressure from the american people yet; yet an coordinated effort to target the fed politically. Sounds like opposition control. 

This is all just part of the plan.

You wont be safe in dollars either if the fed sees possible dissolution; it could be their excuse to move from the dollar into a new currency.

Gold and silver, no matter what the price does. Assets priced in dollars are abstracted values because if you can imagine it, the dollar doesnt exist anymore as value determinate.  

Thu, 09/29/2011 - 09:40 | 1721727 Zola
Zola's picture

Graham - the ultimate contrarian indicator ?

Thu, 09/29/2011 - 08:24 | 1721454 anony
anony's picture

Borrow every cent you can, put up every asset you own, if any, and all the cash you have access to, including anything hidden in Zambia, Swisherland, and Caymans.

I'll do the same.

The bet is that not one single Jewish banker will be indicted or prosecuted for any of the crimes they have committed and are committing still.  Those crooks will instead get more billions in bonuses and those who are in a position to do something about it will be bought off.

Deal?

Thu, 09/29/2011 - 08:14 | 1721430 NuYawkFrankie
NuYawkFrankie's picture

As I've noted in a previuos reply to one of your missives, you say:

1) The system itself is collapsing

2) Benanke will be around ANOTHER 18 months!

Something doesnt seem to add-up here - what am I missing?

 

 

Thu, 09/29/2011 - 08:08 | 1721417 whirlybird rules
whirlybird rules's picture

"Twist" was political appeasement. Given B's options, it was a good move!  I said then and reiterate now, the m.o. is to make them beg for QE3.   Unfortunately more QE will do nothing to help the middle class.

Thu, 09/29/2011 - 07:59 | 1721394 Motley Fool
Motley Fool's picture

Haha. You ain't seen nothing yet. People will be screaming for more printing soon.

Thu, 09/29/2011 - 09:09 | 1721619 SheepDog-One
SheepDog-One's picture

I dont know, markets seem to refuse to close red hardly any day, and if they did close red its recovered by next opening pop.

I keep hearing about the big pain coming and people will beg, but when?

Thu, 09/29/2011 - 07:52 | 1721378 New_Meat
New_Meat's picture

"And when push comes to shove in the courtroom, they’re going to pin their crimes (the ones committed during the 2008 collapse) on Bernanke with a “the Fed pressured me into doing it,” defense."

... er ..., that would have been Big Hank, not Big Ben.  But why let facts interfere?

- Ned

Thu, 09/29/2011 - 06:45 | 1721250 The Swedish Chef
The Swedish Chef's picture

The gravy train over? EFSF begs to differ...

 

Tyler, why do you let this guy run his adds here? If he´s paying for it you should have a disclaimer for credibility´s sake.

Thu, 09/29/2011 - 08:19 | 1721441 richard in norway
richard in norway's picture

i cant read your comment cs your avater takes all my attention, really WTF its not appropite in a publiic place

 

but if you have a link to the vid id be grateful

Thu, 09/29/2011 - 06:35 | 1721234 yabs
yabs's picture

not so fast the germans just voted in an expansion of the bailout fund and Bernanke is alreadsy creating wispers of more QE
I admire your work but you are a little too cock sure about your predictions
youcannot say we will go to new lows and it will crash
we cannot be sure if it will be meltup crash or a defaltionary crash
its too unsure

Thu, 09/29/2011 - 00:51 | 1720901 Reptil
Reptil's picture

Of course Bernanke as a political figure is compromised, but he's just one man, and expendable. IMHO do not underestimate the forces behind the FED. They're not done yet, will make a play in this round.

Wed, 09/28/2011 - 21:34 | 1720548 MiningJunkie
MiningJunkie's picture

Fuck I'm sick of this clown just SCREAMING about FINANCIAL COLLAPSE for how many months now since I joined ZH? I have been hearing the same pitch since the gas lines in the 70's. They were used to get subscribers back then with the same shit I am reading today. Remember the robot in "Lost in Space"?

"Danger! Danger! Warning! Warning! Dr. Smith is jerking off in the closet!"

I'm not buying your financial scaremongering rag!

Wed, 09/28/2011 - 22:26 | 1720619 Everyman
Everyman's picture

How can you type with your head buried so far up your rectal orifice?

Wed, 09/28/2011 - 21:20 | 1720523 jomama
jomama's picture

exactly four times worse than 2008, huh?

interesting.

Wed, 09/28/2011 - 21:05 | 1720472 Dingleberry
Dingleberry's picture

The Fed did what was maybe technically legal b/c we were is a supposed "emergency" situation, and "normal" rules were suspended. The Fed has never put $3 trillion on its balance sheets, (note: the stuff is supposed to be as safe as treasuries-but we know it's MBS dogshit), swapped foreign CBs the amount it has recently, opened discount windows to investment banks overnite (Goldman is a "bank holding company"?), ZIRP, and on and on and on....I believe that the Fed dramatically overstepped its legal bounds, but Congress went along b/c otherwise they would have to find a way to print or backstop the dogshit banks in trouble.  Shit, the Congress even suspended mark to market accounting, and then passed cash for clunkers and housing tax credits bribes.  Bernanke belongs in jail for fraud and perjury, as we are now on the hook for the shit he allowed on the Feds balance sheet. (Yes Virginia, that's eventual taxpayer losses).  And he blatantly misled Congress during his testimony.  But he won't go to the slammer.  Congress doesn't seem to care. Only presidential candidates seem to.  But I would just like to see him gone. Period.

Wed, 09/28/2011 - 21:36 | 1720551 Bicycle Repairman
Bicycle Repairman's picture

Forget about the prosecution of any of these guys.  The laws won't be applied and we are on "double secret probation" anyway.

Wed, 09/28/2011 - 21:01 | 1720470 aerial view
aerial view's picture

Big Picture:

The clowns that run our country have been talking about fiscal discipline since the debt first hit 1 trillion and now it's over 16 trillion. Please people, don't you know a con man when you see one? Uncle Sam talks tough but keeps borrowing in order to increase spending resulting in a higher cost of living for everyone (except the elites).

Wed, 09/28/2011 - 19:52 | 1720264 Pitchman
Pitchman's picture

END THE FED or It will take us all down with it.

The Founding Fathers fought the revolution to free us from this model of DEBT SLAVERY ECONOMICS!  Their clear intent, as set forth in the Constitution was; the nations currency is to be issued by the government with no interest attached?  The governments issuance of currency is the very definition of sovereignty.   To do otherwise is to relinquish our rights as a free people.  Is it any wonder we find ourselves where we are today?

"One only needs to look into the foundation of the Federal Reserve to see what these men plotted to do.  Without our current debt based money system, collectivism and World Wars would not be possible.  This is the root of power and we must hack at it." - Chris Duane

- CA STATE BANK: NORTH DAKOTA & DECENTRALIZATION vs EUROPEAN UNION

 

Wed, 09/28/2011 - 19:34 | 1720233 BlackStar
BlackStar's picture

edit: dub post

Wed, 09/28/2011 - 19:33 | 1720232 BlackStar
BlackStar's picture

The "political deadlock" is fake and it's going to be used a selling point for why democracy, capitalism, and the free market doesn't work and why we should just shift the wealth from imperialist U.S., Europe, and the other "democratic" debt slave countries to the socialist/communist emerging economies.

Wed, 09/28/2011 - 19:35 | 1720231 snakehead
snakehead's picture

OUR FREE REPORTS!  To convince you pay for our REAL reports!  That's our plan to survive the end of the world.  You can even pay in fiat currency!

 


Wed, 09/28/2011 - 19:58 | 1720281 TyIer Durden
TyIer Durden's picture

Awww.... you're salty because your jealous.... stop being a hater.

Thu, 09/29/2011 - 09:48 | 1721750 IrritableBowels
IrritableBowels's picture

Fuck off, fake Tyler.

Wed, 09/28/2011 - 19:32 | 1720228 long_and_short
long_and_short's picture

They cant let the Euro fail.  This end of the world shit is getting tiresome.  They will sacrifice future generations to maintain the status quo

Wed, 09/28/2011 - 22:29 | 1720623 Everyman
Everyman's picture

Until you see real revolution, and that is entirely possible.  Look at the rioting in Greece.  Don't t you think the German Citizens will Riot if they are required to pay for that shit?  You people with the rose colored shades calling this market and economy "healed" are freaking morons.

Wed, 09/28/2011 - 19:01 | 1720142 Reese Bobby
Reese Bobby's picture

GO AWAY!  PLEASE!

Wed, 09/28/2011 - 18:38 | 1720088 Hedgetard55
Hedgetard55's picture

Bernanke will wind up hiding in the NTYC sewer system after being found guilty of crimes aganst humanity.

Wed, 09/28/2011 - 18:13 | 1720002 Troublehoff
Troublehoff's picture

They will print

 

They have no choice

Wed, 09/28/2011 - 18:06 | 1719984 Bastiat
Bastiat's picture

Could be Bernanke (and his bosses) are holding QE^oo  hostage in a play for immunity from prosecution.

Wed, 09/28/2011 - 17:46 | 1719908 TyIer Durden
TyIer Durden's picture

GRAVY GRAVY GRAVY GRAVY GRAVY!!!!!!!!

Wed, 09/28/2011 - 17:45 | 1719903 SwingForce
SwingForce's picture

Buy Stocks Bitchez: The world is coming to an end, but not before QE4 comes.

http://www.youtube.com/watch?v=UI2FolId6CA

Wed, 09/28/2011 - 17:32 | 1719843 virgilcaine
virgilcaine's picture

Vix is  ready to launch..'trade the fear, fear has a price and can be measured. Based on this its June 2008  all over again.

Wed, 09/28/2011 - 17:27 | 1719842 The4thStooge
The4thStooge's picture

"The end is near, we're all doomed."

And he wraps it all up with "Good Investing!"

Wed, 09/28/2011 - 17:15 | 1719803 Andy_Jackson_Jihad
Andy_Jackson_Jihad's picture

Why would anyone expect a full court press by the law and media establishment against a Jew?

 When was the last time you saw a movie with Stalin or any other communist as a vilian but Hitler as the most evil villian imaginable?  Why did Bernie Madoff get so much media attention when the amount he swindled was so low relatively (hint: look at who he swindled).

There's a better probability of getting a fair trial and media coverage in Iran or from Pravda in the 50s.

Wed, 09/28/2011 - 19:18 | 1720193 long_and_short
long_and_short's picture

andy you are a retard period

Wed, 09/28/2011 - 23:33 | 1720764 Andy_Jackson_Jihad
Andy_Jackson_Jihad's picture

I'm a bad little goyim.  I was when I took out the 2nd incarnation of the vampire squid and I am now too.   More folks are waking up to the fact that you're still using the same old playbook now as you were then.  Geesh, can't you guys come up with something more original?  Your overlords really didn't think this internet thing through, did they?  Trying to counter hundreds of millions of independent pairs of eyeballs with a few troll-shills?

Thu, 09/29/2011 - 03:38 | 1721038 Andy Lewis
Andy Lewis's picture

Actually yer just a piece of shit.

Wed, 09/28/2011 - 17:02 | 1719733 solgundy
solgundy's picture

Obama will flee the US within 24 months

Wed, 09/28/2011 - 22:03 | 1720583 masterinchancery
masterinchancery's picture

Switzerland gets a new citizen.

Wed, 09/28/2011 - 21:32 | 1720545 Bicycle Repairman
Bicycle Repairman's picture

Then he will return from his vacation fully refreshed.

Thu, 09/29/2011 - 00:33 | 1720874 captain_menace
captain_menace's picture

And just in time to roll out a new jobs bill.  Yippee!

Wed, 09/28/2011 - 17:01 | 1719731 Cycle
Cycle's picture

I agree we are seeing a secular change in the overall markets driven by the evolving and self-revealing "Minsky Moment"

The ongoing denouement also serves to validate what a few months ago would have been termed a pessimistic prediction.

 

Wed, 09/28/2011 - 16:58 | 1719718 Dumpster Fire
Dumpster Fire's picture

Buy fear bitchez.

Wed, 09/28/2011 - 18:14 | 1720005 TJ00
TJ00's picture

... and sell love.

Wed, 09/28/2011 - 16:56 | 1719709 Seasmoke
Seasmoke's picture

i think his final downfall will be written as when people realized/learned that the bailout money went to FOREIGN banks......those who are still fraudclosing, robosigning, forging assignments, etc against the american homeowners/taxpayers.......

Thu, 09/29/2011 - 09:52 | 1721760 66Sexy
66Sexy's picture

I have lost faith in the american people, and the american legal system. corrupted top bottom. Hell, the bankers even own China and Russia. They won. Game over. The rest is just actors on the stage; pretending. reality is prepare for digital implants at birth and a cashless, non annonymous soceity.

You have to wonder why a CEO of Facebook would of held a high level executive position at the US Treasury? Do the math.

Wed, 09/28/2011 - 21:31 | 1720541 Bicycle Repairman
Bicycle Repairman's picture

"i think his final downfall will be written as when people realized/learned that the bailout money went to FOREIGN banks."

We already know this.  Are you outraged?  So what.  He did as he was told by TPTB.  He'll leave when he's ready.  And when he does it will be to collect a big pension and speakers fees.

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