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They have to go further and further into forbidden territory
all the time now to keep our bubble economies inflated. Increasingly, and like a junkie,
because the establishment will not allow for a real correction (slow down) in
our fiat currency economy(s), more and more artificial
stimulus must be added into the equation every day now
because the patient is a walking zombie, devoid of natural and sustainable
life. Because if they didn"t do this, the economy would collapse like an
exhausted doper whose been too high for too long, never to be the same again,
if not dead. That"s the way the geniuses in charge of our financial
institutions and their puppet politicians who have been bought and paid for
manage the economy and financial markets today, hoping the party can last
until the next guy is on the hook.
The only problem is if our gambling government gangsters
were ever in a poker game they would be easy to beat. This is because not
only would they likely have a bad poker face, one that tells all to seasoned
players, even worse they also have a tendency to show all their cards up
front, which is a practice sure to doom even the surest of players. Therein,
it"s no secret the Fed is printing more money
and the government is spending more,
because again, our Ponzi economy needs this in order not to collapse. And the
plutocrats are probably to allow an upcoming tax holiday
for corporations in an effort to attract a great deal of money home that
would keep the party going as well, which will have a stimulative but
temporary effect in the end.
The question arises however, 'after this, and aside from
increasingly debasing the currency, what would be done to keep an exhausted
economy going then, where hyperinflation would likely be necessary?" Of
course they would blow the bond market up in the process (along with the death of fiat
currencies), but as pointed out last week,
this process is already likely underway with a buy signal (five-wave advance)
now triggered in the TNX, meaning
far higher interest rates are a real probability. (i.e. because of credit
concerns.) So no matter how it comes down in the end now, the post housing
bubble we call the bailout bubble (which is just another serial bubble) is
already doomed, not to mention any hope of bringing real estate back to any large degree.
What"s more, and something likely not even
contemplated by our price managing bureaucracy, is that pretty soon a
consensus of speculators are going to come to the conclusion that QE will go on forever
(it"s amazing they haven"t already) and stop buying puts on the
market thinking that"s the main variable. (i.e. QE is all that matters
in keeping stocks rising.) And all this is happening as the markets are
showing signs of increasing exhaustion
if you know where to look. Of note, and so far during the present rally
sequence, it should be noted tech stocks, as measured by the NASDAQ 100 (NDX)
is underperforming the blue chips (Dow), meaning the NDX / Dow Ratio (seen here) is divergently below recent
highs despite the fact stocks are vexing new highs. (i.e. this is forecasting
the present advance is intermediate degree terminal.)
And now that interest rates are rising, guess what, the
big picture is beginning to look more and more like an "87 crash
signature by the day, where understandably it won"t take long
for rising rates to do their magic. What is of course most scary about the
present picture is our genius plutocracy has left itself no way of
legitimately dealing with such an occurrence (debt too high, hollowed out economy,
etc.) short of hyperinflation, which these idiots probably couldn"t stop
at this point even if they wanted. So, be sure and maintain your core
positions in precious metals even if volatility picks up, as it surely will
under such circumstances, because it"s not surviving in the present
economy you should be worried about, but how you will come out of this mess
on the other side, where believe it or not, the same geniuses that are about
to level the planet economically will also likely be in charge of reconstructing
the new one as well - again - believe it or not. (i.e. new currency regimes
could see old money traded in at ratios of 5 to 1, or higher, meaning you
could possibly lose 50 % plus of your purchasing power overnight.)
No denying it either, the world"s stock markets are
becoming increasingly unstable
these days, however as usual in the smoke and mirrors environment spawned in
fiat currency economies, you would never know it looking at developed country
(Western) markets as capital flows out of increasingly suspect emerging
markets to safety. Again however, such a trend will only delay the eventual
day of reckoning, where like "87, when the trouble in stocks at home
comes, it will come surprisingly fast, like the currency devaluation
described above. Low volumes,
rising margin debt,
and rising interest rates
are a potent cocktail for stock markets even when they are not as over
extended as they are now, but again, they are very overbought, much like
condition in both 2007 and 1987. So, when bearish speculators are finally
exhausted and stop buying puts the declines should be severe, not the 5 to
10% most are expecting.
In fact, it"s because dip buyers will likely be
active once stocks drop into this range that losses would continue as open
interest put / call ratios on US indexes and ETF"s fall, leaving the
bureaucracy"s price managers insufficient fools to feed on, meaning the
short squeeze perpetuated since the lows in March of 2009 would be done on an
extended basis. (i.e. the four-year cycle calls for a top in financials soon,
matching seasonal timing in 2007 as well.) It should be noted that as can be seen here on
a monthly chart of the BKX (bank index), that bank stocks are in fact running
a negative divergence to new highs in the broads, which is what you would
expect to see if the influence of the four-year cycle is taking hold.
What"s more, and again, this is also consistent with the observation
interest rates are heading higher, possibly right across the entire curve.
(See Figure 1)
Figure 1
 
This is of course why we have been schooling debt is your enemy,
because rates could rise far more than is currently viewed as likely by both
a consensus of speculators, and unsuspecting debtors. So, pay your debt off
if possible. Or hope for a Christian style jubilee
eventually when the time is right (which will be either when it suits the
plutocracy or as a result of revolution). Of course hoping for such an
outcome could be a big mistake, as the bloodsucking parasites in the
financial industry, government, etc. that depend on this usery will fight
tooth and nail to keep the party going as long as possible, which could drain
most before any relief is doled out. Moreover, if equities start to drop like
the post bubble Japanese model (seen here in
Figure 1) then those with unmanageable debt will get squeezed on both sides
of the ledger, squeezed to the point of bankruptcy in far too many cases.
(See Figure 2)
Figure 2
And as you can see above, an important low could be
witnessed quite soon once the CBOE Volatility Index (VIX) vexes the
14"s, which looks to be only days away now, as options expiry approaches
next week. As long time readers of these pages would know, the question then
will be what are post expiry ratios to look like, where like the tops in
stocks both in 2007 and 1987 (and all the significant tops in between),
significant drops in US index open interest put / call ratios were witnessed
once bearish speculators and hedgers had become exhausted, which meant these
ratios were not run up again in subsequent months as these types continued to
attempt picking a top. No, once this occurs what you have left are the dip
buyers, as discussed above, which keep put / call ratios falling and
contained, which in turn plays havoc with stocks that have few underpinnings
past how much currency the moneychangers down at the bank will be printed
today.
Unfortunately we cannot carry on past this point, as the
remainder of this analysis is reserved for our subscribers. Of course if the
above is the kind of analysis you are looking for this is easily remedied by
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Captain Hook
Treasure
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