USDOLLAR VULNERABILITY - SEVERE OVERNIGHT CORRECTION
The USDollar has been lifted by queer forces in the last few months. Redemptions of Credit Default Swaps are paid out in US$ terms, as large corporations fail and their asset backed bonds default. CDSwaps are insurance policy contracts. Also, the sale of speculative fund positions often results in debt liquidation, and repayment of heavy credit extended in US$ terms. Another force has been revealed. In the 4Q2008, fully $150 billion in foreign subsidiary assets, funds, and profits were brought home by US corporations, in order to repair the balance sheets and stem disaster. This has garnered little or no publicity. The repatriation flow is not to be expected to repeat each quarter, and is largely completed. The Powerz prefer to formulate false stories about Flight to Dollar Quality, or the US financial sector being the first to emerge from the credit crisis, or foreign financial structures being worse off than the US, or some total nonsense.
The USDollar DX index has more thoroughly filled the gap from 82.5 to 83.5 described in the last article. Watch the stochastix crossover signal, which might be a thinly disguised rebound near its end. The USDollar is a tired soldier here. Almost always a retest of the previous established high occurs, like the 88 registered in November. That is in progress, and probably has run its course. Little talk has come to how US firms have been harmed by rising export prices charged to foreign customers. That is a US$ negative factor. The fast deterioration of the USEconomy is an extremely negative US$ factor. Lastly, as cited over two years ago, the USEconomic trade deficit finally has come down, but mainly due to economic slowdown called recession, finally recognized. My description is of disintegration, since credit devices have been destroyed, borrowers have been rendered insolvent, banks are mostly insolvent, supply chains are locked down, and transportation systems are left idle. Most claims of imminent revival are utterly laughable.
The USTreasury Bond is offering extremely low yields to investors. The short-term Bills are offering near 0% yields in a travesty on wheels. With the US$ elevated from its Death Dance, lifted by powerful prevalent destruction, and the USTBond principal elevated from risk aversion and central bank consolidation into the valueless monolith of worthless debt eventually to suffer default, SOMETHING MUST GIVE FROM POWERFUL FORCES.
ZOMBIES IN BANK SYSTEM - ATTRACTING LAST PUBLIC FUNDS
Most US-based banks are insolvent. The largest banks have been kept afloat in the last decade by the perverse trade in credit derivatives. Rather than melt down the garbage silos called banks, and liquidating their assets, they are kept in a state of moribund animation in order to attract public funds. Such easy pickings from the USCongress, who have no idea what is going on, or else receive bribes. See the vast contributions from Fannie Mae over the years to key players today. The corruption and fraud has never in the history of the nation been easier, largely due to protection and collusion by the regulators themselves, but more importantly, due to the JPMorgan & Goldman Sachs key henchmen operating the Dept of Treasury & USFed. These are the Inside Guys. This is Counterfeit Capitalism, enough to make Jefferson or Keynes shudder. The TARP funds are a great example, gigantic intravenous injections to cadavers. They were not administered by the Paulson syndicate bosses because they knew full well that the banks were dead. So they stole the funds, a practice they have ample experience with from their mortgage fraud enterprise. The TARP is but a climax. Declaration of death would eliminate the opportunity for more rescue funds, relief efforts, and confiscation. With the insolvency, lack of adequate liquidity, the general decrepit state has led to an unsustainable situation. SOMETHING MUST GIVE FROM POWERFUL FORCES.
CHARRING & SMOKE AT CITI - SURELY A FIRE
Where there is smoke, there is fire. Both Citigroup and Bank of America are dead. Heck, so is Deutsche Bank in Germany. So is Royal Bank of Scotland in England. So is CIBC in Canada. So are several others. In the Untied States though, the giant cornerstones of the syndicate are JPMorgan, Goldman Sachs, Citigroup, and Bank of America. They are probably all four dead, if truth be known, if proper accounting be revealed, if their convenient Garbage Can were overturned and emptied. The massive losses to the big banks, Citigroup for example, come from credit market assets like the worthless bonds they hold, from bad loans from the economy (commercials & credit cards & car loans), and from the nightmarish credit derivatives. Rumors are floating that Citigroup was split into two parts so that the entire trash heap of a Rubinesque corporation did not implode. Reports persist that Bank of America and Citigroup are little different, diversified into every conceivable banking acid pit in the last 15 years. Rumors are floating that JPMorgan is dying a slow death, a rapid death without the gargantuan funds shoved down its cancer ridden gullet by the US Federal Reserve. With the insolvency, continued wreckage of its asset base, the forced movement of worthless assets onto the balance sheet has led to an unsustainable situation. SOMETHING MUST GIVE FROM POWERFUL FORCES.
BANK STOCK INDEX BREAKDOWN - CLEARLY FORECASTED
The bank stock index fell hard, precisely as forecasted, exactly as outlined in the brief technical analysis in the last article. It aint done falling. A price target on the decline in progress right now is hard to determine, since the bearish triangle has no well-defined base. But an 8-10 point plunge seems likely, down to the 27-29 range. All claims that the banks have seen their worst days are marketing ploys at best, and moronic actions at worst. Fresh new rounds of mortgage losses come this year. Watch the RKH regional bank stock index, which is also breaking down. The bank sector destruction is broadening beyond Wall Street.
ELIMINATED OPPORTUNITY - CANNOT KILL ANOTHER WS GIANT
Lehman Brothers was one of their own on Wall Street. It was let go, not so much killed, but surely exploited as an event. JPMorgan was thus able to secure $138 billion in slush money, in a massive reload, to settle Lehman accounts. What a bunch of horse manure for a story! Now, remaining Wall Street firms have consolidated, or have aligned their positions in very similar fashion, surely after much targeted hits against their own client hedge funds. No longer can Wall Street afford to kill another giant investment bank. The CDSwap fallout, or the bond liquidation fallout, or the general ripple effects from others holding corporate stock shares in the killed firm, would cause havoc. The Lehman failure was a test. They learned they cannot kill another. Correlated alignment means if another falls, they are all mortally wounded.
HEIGHT OF INEFFICENT BANKING - MONEY FOR FAILURE & FRAUD
Mentioned before, most newly created money is being directed toward dead bank structures, toward failed executives, toward redemption of failed assets. The Wall Street crowd is full of hogs that domineer at the troughs. Healthy companies are starving for funds, challenged to secure credit. They are often melting down. Good strong businesses are seeing 20% declines, like Marla's law firm, like Henry's math tutoring business, like Steve's custom carpentry business, like Calvin's resort condo business, like Tony's commercial property firm, like Bill's magazine business, all longstanding contacts of mine.
ZEROS CROPPING UP - STRAIN IN MARKETS
Anywhere one can spot a near 0% or near 0 price generally, a ruined wrecked destroyed market can be identified. See the USTreasury Bills. See the car loan deals to sell fields of unsold cars. See the shipping rates for overseas container vessels and their cargo. Businesses and corporations are failing in a grand meltdown. This is a consequence of phony cost of money, and consequent systemic failure.
INTEREST RATE SWAPS - NEXT CREDIT DERIVATIVE MELTDOWN
Related to the Zero Effect is the vast network of credit derivatives. While the CDSwaps have grabbed most headlines in the last several months, the Interest Rate Swaps will possibly next come to the front stage for examination in what is sure to be a post mortem analysis. Some wonder why the Bond Vigilantes are gone, driven away in the last decade. Give credit to the Interest Rate Swap contracts. IRSwaps have permitted the JPMorgan power players (complete with leverage toolbags and propeller hats) to exert control on the long-term USTreasury Bonds by means of explicit control of the short-term USTreasury Bills. Through leverage, USFed monetary policy has brought to bear much control over long-term rates. THE END RESULT IS DESTRUCTION OF THE ENTIRE USURY PRICE SYSTEM, THE COST OF MONEY. That is your primary cause of bubble creation in the Untied States in the last 10 to 15 years. Thank you, JPMorgan.
CONSUMER COLLAPSE - BROADBASED DISINTEGRATION
Retail sales are in fast retreat. Retail chains are not just in fast retreat, but major closings. Car sales are in fast retreat. Restaurants are suffering major slowdowns. Imports are generally suffering major slowdowns. Credit card limits are being pulled down by banks. The description of disintegration is more fitting. The slam to income is palpable, loud, and powerful. Numerous corporate projects are being canceled or suspended. The backlash of the absurd pursuit of low-cost solutions in Asia has been the destruction of the legitimate income sources in the Untied States. Who is talking about low-cost solutions now??
HOUSING HALF DONE IN DECLINE - SO SAYS GOLDMAN SACHS
Without a sharp break in the pattern of degradation, housing will lose another 20% to 25% nationally in value. The sharp break could come from a national USGovt program to reduce home loan balances. Even Jan Hatzius of Goldman Sachs sees the US housing slump as half done, with up to another 25% in price declines. The real mortgage problem is that perhaps one third to one half of all mortgage bonds are fraud ridden, with little proper securitization linking the bond to property titles. In the case of Fannie Mae, we are dealing with at least $1 trillion in outright counterfeit bonds. So solutions by the Wall Street syndicate are attempted (or sold to Congress) at the aggregate level, to support the fraud. They wish not to embark on a detailed approach loan by loan, since it would expose the fraud and counterfeit. See Counterfeit Capitalism again, the American byline.
SHIPPING PORTS CLOGGED - SUPPLY CHAIN DISRUPTION
Nowhere is the plight of shipping more evident that in the major ports. The Long Beach California port is overridden by inactivity. Below is a snapshot of Singapore. The Baltic Dry Index has fallen by 95%, the measure for overseas shipping rates. China has closed down thousands of small and medium and large factories. Globally, the factories are ratcheting down.
ATTACK OF RUSSIA & SAUDIS - AGAIN IT IS CRUDE OIL
It worked in 1998. Here we go again. The big threat of a Persian Gulf new currency, even gold-backed, sends shudders through the corrupted hearts of USGovt and Wall Street leaders. It should. So they have declared open season on hedge funds, a form of financial genocide in the words of CAFitts. The objective is to bring down energy prices, metals prices, and more in order to ruin the Russian and Saudi economies. If the Russian colossus and Saudi royals can be humbled, weakened, even ruined, then maybe neither will see their new currencies enjoy a launch at all. Putin is too smart to sit quietly and let it happen. So he has embarked on a parade of ruined oligarchs, shifting their assets into the official pockets. Russia is far stronger than people believe, and will control the great prize of Europe, the global centerpiece. The Saudis are too slow, too corrupt, and have over three thousand useless parasites living within the royal family, sucking the nation dry. They are dead, very dead, yet the globe has yet to realize it.
US & UK ECONOMIC FAILURE - RUNNING ON SCHEDULE
The death of the AngloSphere is unstoppable and on course. The two nations suffer from imperial over-reach, from corrupted paper markets in everything conceivable (stocks, bonds, housing, commodities). They both suffer from a devastating backlash related to nationwide dependence upon a housing bubble as an economic foundation. What a very sick concept!
RECOGNITION OF FAILURE - PAIN OF ISOLATION
The year 2009 will be marred by recognition of the Untied States and United Kingdom as failed states, beyond remedy. My description is for the US-UK to have morphed into crime syndicate control of government bodies in a widespread sense. They have strangled their hosts, and sucked them dry. The nations of the world will embark on a mission to protect themselves from the imploding giants. The natural progression in failed nations is from democracy to fascism, from capitalism to the Fascist Business Model, from free societies to martial law. A tragedy has already begun. It will run its full course.
FAILURE SOUTH OF BORDER - OIL FALLOUT IN MEXICO & VENEZUELA
The giant oilfield called Cantarell in Mexico will be totally dry of output by yearend 2009. That is correct, kaput. The decline is accelerating. The PEMEX management and Mexican Govt supervision has been an unmitigated disaster. Drug lords are taking control of the nation. The ugly financial facts are these. Over 40% of the Mexican Govt revenue stream came from the PEMEX oil industry in 2007. That source is running on empty. The national energy surplus will turn to a deficit by 2010, like early next year. The import of refined gasoline doubles the rate of foreign reserve decline, since crude oil not produced means gasoline that must be imported. The US will lose 10% of its crude oil import supply. Texas and Louisiana will struggle to find oil feedstock for gasoline refineries. More importantly, the Mexican Govt will dissolve before our eyes, and drug lords will carve up the nation south of the border.
COMEX INVENTORY - BACK DOOR INTERRUPTIONS
While many observers have been busily gauging and tracking the Open Interest and Demands for Delivery by COMEX participants, they have focused on the wrong things. Robbery and gutting of a giant KMart does not occur in broad daylight through the front door, removing items on shelves by a pack of kerchiefed men brandishing shotguns and escaping in Chevy Econoline vans. That is what the observers seem to expect by their tracking. No! The COMEX default will come from removal of inventory by means of denial by the powerful billionaires who have targeted the corrupted exchange. Sales of large blocks of gold & silver take place outside the COMEX in private transactions at prices 20% to 30% above the corrupt COMEX prices. The sold bullion does NOT find its way back to the COMEX. Furthermore, many large gold & silver mining firms have reduced sharply their actual mine projects, enough to reduce new supply to the COMEX. The big lie is the stated COMEX inventory, half probably pure fiction. Some is likely 'Deep Storage' bullion, as in unmined mountain deposits, the major ore bodies. The cracks have formed in the December gold & silver contract month. The breakdown should occur in 1Q2009 here, like by the end of March. All is on schedule, if only the observers knew what to monitor. They are errantly focused on the front windows, ignoring the back doors and loading docks.
USMILITARY SHUN - AIRBASES THREATENED
A series of maneuvers has begun. Last week, the nation of Kyrgyzstan in central Asia just cut a deal with Mighty Russia, its neighbor. In return for a big trade deal, Kyrgyzstan might be required to deny renewal of its lease to the USMilitary for airbase usage. The tiny nation is a key supply route connection point for the Afghan War. Russia is applying the screws, angry beyond words at the Georgia & Osettia invasions. Also, while not hosting airbases, Ukraine will suffer mightily for its adoption as a US puppet regime, and likely be carved up into managed territories. Also, Poland will suffer mightily for its installation of ballistic missiles aimed at Russia by its US master. Eastern Europe will be reorganized soon, according to Russia designs, replete with retribution. With Russian energy supply comes total control from above, the US puppets swept aside, and the US strings cut. Closer to home, the Russian Navy is working very closely with Venezuela. China has had for years the contract to defend the Panama Canal. The 2010 decade will be identified by the retreat of the USMilitary machine, after its isolation. Word has come to me that foreign parties are actively working to cut off the commodity supply chain to the USMilitary defense contractors. This is the exposed artery.
LACK OF TREASURY HEAD THIS WEEK - SHOCK WAVES
The USDept Treasury has no head. After inauguration day on Tuesday the 20th of January, look for possible volatility, disruptions, and fast moving markets. Such is a possible climate for a powerful USDollar decline overnight. Few realize that financial market interventions of numerous types can only be executed by the hand of the Treasury Secretary. That post is vacant tomorrow, as the Geithner confirmation has hit a snag. The real reasons for the snag are concealed in my opinion, as attention focus on nonsense like tax returns. His involvement at the center of the great Wall Street fraud episode is the likely reason. Without the potential for market intervention, the gold price might enjoy a strange upward lift, much like the lift seen in September immediately before the $138 billion JPMorgan reload. The gold lift was around $100 in a single week. Watch for some possible unbridled moments for a few horses free to run wild.
VP Biden has warned to the Council on Foreign Relations of expected disruptive events this week, the warnings made over a month ago strangely, like he already knows details. Former Secy State Colin Powell has a YouTube clip confirming the claim. He managed to provide a warning that has been altered to remove the forewarned incident on Jan 21-22 mentioned by Biden. See the story and video (CLICK HERE). Powell resigned his post within a year after delivering his error-ridden speech before the United Nations on non-existent weapons of mass destruction in Iraq under the Saddam Hussein regime. He retired $40 million richer than when he begun his short stint as Secy State.
AFTER THE SHOCK WAVES AND FURTHER FINANCIAL DESTRUCTION, GOLD & SILVER & PLATINUM WILL BE LEFT STANDING. So much internal pressure, such forces to create powerful differentials, that lightning should hit all winter and spring and into the summer. The gigantic funding needs will expose cracks, produce lightning, and reshape the global system.
