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What an interesting time we live in! By now,
anyone who feels burned by the establishment, whether the Wall Street
banksters (fraud kings) or USCongressional representatives (paid lobbyist clients),
or USCongress banking committees (bribed Wall Street tools), or a private
hedge fund conman (protected by regulators), or financial markets (victims of
naked shorting), or an employer (from foreign plant & equipment
investments), beware. More deception and betrayal and smokescreens and
outright lies lie directly ahead. The next TARP disbursal will be much better
disguised, more of the same welfare for the elite. The next stimulus plan
will be loaded down by pork, earmarks, and clever disguises to enable
continued bank aid with unenforceable clauses to protect the public, and
namby pamby thin oversight. The tragedy is that Jack Daniels cannot take a
handoff in any reconstruction from a strawman dressed as John Maynard Keynes.
The other tragedy is that the US does not have adequate labor workforce to do reconstruction, nor does the US have factory capacity to fill orders on reconstruction.
OIL CONTRACT DISPARITY
Texas crude oil (44+)
versus Brent crude (41+) oil prices show a vast distortion, the biggest ever
recorded. The authorities would like you to believe that oil demand has
fallen considerably in the USEconomy, more so than in the European Union. That
is not the overriding factor to explain the discrepancy. The real reason is
that the Wall Street firms have amplified their attacks against US-based
hedge funds that hold commodity contracts of all types, mainly crude oil. The
oil price is artificially low therefore in the US markets. The motive is to make energy cheaper inside
the Untied States, but in disguised fashion to undermine both the
Saudis and Russians who are pursuing a USDollar alternative.
PAIN FROM HIGH USDOLLAR
The parade finally has begun. The
multi-national firms one by one have mentioned the impact of the higher
USDollar on their foreign operations. That is, in translating its foreign
business into US$ terms for accounting on the quarter and fiscal year. So as
exports slip, imports will slip even more, sure to cause a lower national
trade gap. That is hardly great news! A narrower trade gap is a positive
factor for the USDollar, but more like the least harmful insult.
GOLD & SILVER STEALTH
REVERSAL
The gold chart looks tremendous,
the best of any commodity. Its long-term uptrend channel is clear, with base
support, parallel upper rail, notable middle beltline. All cyclicals are in
bullish mode, with relative strength gathering steam since November, with
stochastix strong, as the MACD remains in up mode. The Head & Shoulders
inverse pattern is a clear reversal with an actual upward bias tilt. The 870
level is key, since it is the shoulder support line. It seems gold reacts to
900 like a magnet, unwilling to remain much below 900. Watch for the next
signal of a continued crossover of the 20-week moving average above the
50-week MA, which is in progress. The lower end of the channel has been
tested. Next is a penetration on the upper end. No greater motive for
investing in gold & silver can be found than the global initiatives to
pull the many economies out of the stagnation, disruption, breakdowns, and
insolvency.
THE COLOR CHANGE FOR OBAMA TEAM
The Obama team is more of the same,
with blue jackets instead of red jackets, whose bow ties to the corrupt power
centers are just as firm as the last team. To their credit, they do deliver
public addresses with better command of the English language and far less
contempt for the unwashed masses. The utterly stupid message made by
Geithner before Congressional questioners about Chinese Govt manipulation of
their yuan currency is added proof of no changes to failed policy, and
ratcheting toward full-blown trade war. The Chinese are really angry, and
have heaped insults across the Pacific in return. Can anyone in a position of
authority recall that the USGovt needs good relations from creditor nations,
since absolute and total recklessness is required to purchase USTreasury
Bonds in the current climate of failed systems. The US suffers from failure of an extraordinarily complex
system. It needs an overhaul, not greater pressure applied to the same broken
connections, channels, and imbalances. The Obama moves so far are more of the
same with a banner of hope attached. Hope is a device used by failures who
had no plan.
The Ethics Guidelines are a
public relations stunt, visible already, akin to promises by pedophile
priests not to touch the children. Note the exemption for William Lynn,
appointed to be deputy Defense Secretary. Lynn was the Pentagon comptroller who oversaw $2
trillion in missing defense contractor funds years back, but is now a
registered Raytheon lobbyist. He is the selection? He is on the rear
pages of the news. And also Mark Patterson runs aground, appointed as chief
of staff to Treasury Secy Geithner, but a high level Goldman Sachs lobbyist. Patterson
will continue in his newly named post as long as he pledges to avoid all
conflicts of interest. Whew! What a relief! This reminds me of the Microsoft
Chinese Wall between application developers and operating system wonks, where
the Sherman Antitrust Act forbids all communications. The Obama Admin is
showing some peculiar exceptions, all certain favors to the Powerz. Recall
that Defense Secy Gates is the first ever to continue during a transition of
presidents. That is how important the clandestine war revenues are to the big
banks and syndicates. Nothing changes. If real meaningful change was desired,
then 90% of the lobbyist organizations would be forcibly disbanded, tax
structures would be overhauled, manufacturing would return to US shores, and
much more.
THE HIGH COST OF HOPE
The maxim goes “burn me
once, shame on you, burn me twice, shame on me” applies. The public
is about to be burned again, then later in the spring, burned a third time. They
do not learn. They prefer, as many friends and family of mine do, to continue
to give the benefit of the doubt to the bank officials and Congressional
leaders, and to cling to hope.
The Hat Trick Letter has not
granted any trust to such charlatans, elite syndicate heads, and compromised
public reps for years. Correct forecasts are easier that way. Some wonder in
private exchanges to me why corruption is such a regular theme in my articles
and work. My answer is simple. Corruption is reaching a climax in
proportions, the dominant theme behind the failure of the US banking system, the co-opted USGovt, as well as the national charade that has taken root
nationwide, the war on terrorism. Bernie Madoff is not an isolated case. An
entire cluster of Wall Street and other major financial fraud-ridden
institutions is plain in view, like AIG and Fannie Mae, even Citigroup,
Goldman Sachs, and JPMorgan. The nation reveres the very fraud kings that
ruined the national financial structure. Numerous hedge funds operate scams
of various shades. Before long, if justice finds a little luck on some
upcoming twists, the Madoff Scheme might reveal a broad USDept of Treasury
involvement spanning two decades, centered in London. The four major
trillion$ syndicates have strangled the nation. It is in a death spiral. Delusion
of a recovery is pure propaganda. Talk of recovery is politically necessary. Was
there song on the Titanic, or mere rearrangement of chairs?
The hope in my view stands as a
cloud that must cover the other cloud that permeates policy decisions
regarding banks and mortgage. The major motive behind most solutions today
is to administer aggregate solutions, from the top down, so as to eliminate
the scrutiny at the grassroots level. The level that deals with
individual loans is ripe with pervasive fraud in bond securitization, as in
poor perfection of titles, which means mortgage bonds do not have proper
links to actual home loans. Change of loans would force change in mortgage
bond values, the start of the discovery process. The issue of colossal
counterfeit of Fannie Mae bonds is a topic that eludes the entire press
corps. It reached over $1 trillion by many accounts. Any solution other than
aggregates must enter the fraud and counterfeit quicksand. The public is
unaware. So the nation will continue to sink while the elite are redeemed.
FAILED REGULATORS WITH GREATER
POWER
The next changes for regulatory
bodies will grant them more powers, when they failed to exercise their
current powers in protecting the public investment community. The gaggle
of agencies will next have powers to enable even greater corruption, control
of your assets, access to private position data, integration with markets,
and likely price controls much broader than today. Geithner has warned
that extraordinary measures will be taken and implemented in order to sustain
the system. The problem is that the system is broken, firms are deeply
insolvent, and conditions are actually growing worse. Almost all efforts at
this point will be to produce more climax events in the corrupt vein, leading
to a crescendo like bank holidays. Such an event would be a perfect backdrop
for a missing cool $1 trillion in private brokerage accounts, bank accounts,
and insurance accounts. They will probably do it because they can, since they
have already paved the way with consolidations and removal of legal
obstacles. They require more confusion though.
BIG BANKS, BAD BANKS, PEYTON PLACE, HUSH MONEY
Could it be that the hidden
JPMorgan garbage has grown too big to manage, and that the USGovt strives to
create an official ‘Bad Bank’ to contain worthless toxic bonds
and related securities? Surely, the JPMorgan garbage can continue with a
foundation of toxic credit default swap and interest rate swap contracts. A
Bad Bank would enable JPMorgan to shuffle tens of billion$ in the dead of
night on a regular basis, putting the entire collection of swill under the
USGovt roof. The entire issue of nationalization of the major
components of the US bank system in my view would constitute a grand embrace
of a totally destroyed enterprise laced with fraud, giving ownership
of the broken pieces, fraudulent lattice work, and acidic flow to the
American people. The entire concept of a Big Bad Bank is ludicrous. If its
foundation is based upon reality, then the banks that unload toxic assets
will receive next to nothing in return, rendering the banks themselves deeper
into insolvency. If the foundation is based upon mythical models, then the
USGovt will pay 3x or 5x or 7x too much for them, in yet another bankster
welfare theft program whose price tag could easily reach a few $trillion
after the dust clears. Banks will be reluctant to lend in either case, since
they will either be insolvent and unable OR view borrowers as unqualified and
unable to repay. In such a horrible setting with bleak outlook, staggering
rescues and stimulus ensure that gold & silver shine!
The last question: Could another
bigger motive be at work in granting $450 million in retention bonuses to the
credit derivative group at AIG? The more sinister reality might be that such
a large sum was necessary within AIG to reward deep failure in order to keep
them silent on colossal corruption in the machinations among the
USTreasurys, Wall Street, and COMEX regarding illegal market controls,
interference, and interventions. The same argument holds for the hire of
numerous failed traders in key roles at Lehman Brothers. The failed fellows
followed the path back through Wall Street doorways, fully hired, totally
locked in, and thus motivated not to speak to the press or write damaging
articles in key publications. The same argument holds for appointing
Tim Geithner as Treasury Secretary. He knows too much, and could easily pull
a thread that would unravel the entire tapestry that conceals vast
corruption. The system remains firmly in place.
Just a footnote in my objection
to a theme. During the Geithner confirmation hearings, a theme arose that
although he was at the center of the failures within the financial system, he
was familiar with how the system works. The nation could not afford to
engage in ‘On the Job Training’ for someone unfamiliar, an
outsider. In other words, the corruption continues since an outsider
would require training!!! Is that precisely what is needed, an outsider who
would not be trained on how the system currently operates, but rather on how
the system should be set up in order to function properly???
FEATURED ITEMS
The upcoming February Hat Trick Letter will feature the usual fare of
analysis. However, a few highlight items will be shared next month. They
relate to foreign boycott of USTreasury Bonds, not in the news.
Creditor nations have stepped back. Their nations must contend with their own
budget deficits and deep stimulus programs, even massive bailouts. Little or
no funds remain to assist the constantly demanding Americans, who should put
a tin cup in Uncle Sam’s hand in national posters. The need of the 50
states must be tended to before they suffer collapse. The USGovt is
pre-occupied by elite banker welfare, and by saving giant corporations, as
the state insolvency turns rapidly into illiquidity, also known as bankruptcy.
See California, which is in a constant crisis condition, now ready to cut
thousands of jobs rather than face court challenges for layoffs, now unable
to fund prisons, now unwilling to pay welfare checks, soon unable to pay
pension checks. Curiously, the big stimulus package in the process of passage
has nothing for the states, but the Senate wants a state aid inclusion.
The USEconomy continues to
deteriorate during the disintegration process that is evident only to those
not paid to close their eyes. The housing decline continues, as new data is
out. Consumer confidence is rock bottom, plumbing lower levels than ever. Job
losses are the mushroom cloud, badly understated. Despite criticism of
European high unemployment, the US has a very high jobless rate right now,
when the novel approach is used, COUNTING PEOPLE WITHOUT JOBS. Even the
broader U6 jobless rate published by the Bureau of Labor Statistics is at
13.5%, which counts the discouraged workers dropped from state insurance. The
Shadow Govt Statistics folks go further, and ferret out other jobless who are
typically ignored in a systematic fashion by the BLS. The SGS jobless rate
is estimated at 17.4% alarmingly. It could be close to 30% for minority
groups. The next stories to grab headlines will include the extreme supply
chain constipation, from port facilities to chemical plants to refined energy
products like gasoline to food items. Word comes to my desk that the plastics
industry has a horrendous backup in the chemical pipelines, due to lack of
end product demand. Soon a large slice of US industry will come to a halt, in
a land where not much has the lights turned on. In such a horrible setting
with greatly disrupted systems, staggering rescues and stimulus ensure that
gold & silver shine!
Also, details are given on martial
law preparations that have become very loud, from numerous corners,
whose order for mercenary troops comes from a very surprising place. That
would sidestep the Posse Comitatus Act. Agreements have been struck to
provide foreign mercenaries on US soil, an incredible development. Also,
murmurs from international groups raise objections to US banks operating with ties to narco war funds. People in high positions are talking. Then
there is Russia, which is pushing toward a review of the Afghan region and
prosecution of the war. Sounds like Putin wants his cut, his leverage being
airbase canceled contracts in the Chaos-stan nations. Worse, the Untied
States, being a nation whose leaders do not read, respect, or learn from
history, are committed to a disastrous path. Putin has blocked the USMilitary
in both Krygystan and Uzbekistan. Next, in the words of a well connected
contact, “[The Russians] have the West cornered in Afghanistan, and they will stand by to see them being slaughtered as has happened many times before
in Afghanistan.” It seems the planned Surge might just lead to a
climax of destruction and failure to match that of the USEconomy. Nature does
force balance. In such a horrible setting with civil liberties soon to be
sidelined, the ensured refuge of gold & silver thrives!
DECEPTIVE PITCHES
Deception by Wall Street firms,
fund managers, and equity management firms continues. They tout endless wrong
loose forecasts about ‘2nd Half Forecasts’ that have become
tiresome. When in doubt, promote a silly recovery several months from now. They
talk about cheap valuations, meaning Price/Earnings Ratios, when their
estimates of earnings have been consistently wrong high, and the USEconomy is
faltering badly. All that cash on the sidelines is another promotional pitch.
The cash is avoiding a fire pit, an acid pit, a near certain decimation. The
primary safe ground is gold & silver, no longer USTreasury Bonds. In
fact, the USTBonds have begun to be recognized as fraught with risk, now on
the decline. All that stimulus working through the system is another
promotional pitch. It would be a positive factor for the USEconomy if not for
two things. a) So far the stimulus to Main Street has been hand to mouth, in
very small doses, to encourage consumer spending, in what can be called
‘rice & bean money’ in its effect. b) So far the stimulus to
Wall Street has been to redeem fraud and hardly to prime the lending
machinery. The stimulus does not address either bank insolvency or
household insolvency, the root problems. The low rate stimulus having
been at work for four months is another promotional pitch. However, low rates
actually depress the USEconomy in the final analysis.
A very serious shortcoming must
be stated on official policy response. For a full year, the banking and
government officials have set up woefully inadequate volumes in policy
responses, like legislative packages. Whether for mortgage loan aid or
household handouts or down payments to big banks for rescue or Detroit carmaker aid or whatever, the amounts are 5x too small, maybe 10x too small. The
$850 billion stimulus plan just approved by the USCongress is yet another
package that is 5x too small, badly designed, and way off the mark. It
appeals to those who fail to recognize the problems. The new economic
stimulus package does not lower the tax structure, a badly needed item in
order to provide incentive for job creation. Is that not what this
president has talked incessantly about? Worse, it is a hodgepodge without
clear focus, the result of pork add-ons and careful calculations not to make
its magnitude too large. My belief is that a huge price tag on the stimulus
package would give the wrong message of a broken system. The stimulus package
seems more like a soup kitchen array of filled bowls of the needy, making
sure to cover all the sectors. The United States Economy must be rebuilt
from the ground up. That is the key fact, starting with the manufacturing
industry, as resources must be redirected away from the housing sector and
financial sector toward actual value added activity. The nation lacks
industry.
LOW RATE WET BLANKET
The 0% environment is a boon to
Wall Street but a bane to Main Street. Savers are being crucified, denied
their rightful return on investments. The paradox never mentioned by Wall
Street carnival barkers is that the ratio of savings income to interest
payout in the USEconomy usually runs between 11:10 to 13:10 in its ratio,
favoring income. So the low interest rates actually slow the USEconomy in
money flow, while offering favor to the stock market in cheap funds. Less
money goes in reward to the successful at home and business, while more money
is lent to the failed borrowers and speculators. The pathetic return to the
same cause for the numerous bubbles and credit market fiasco is yet another
subsidy to the elite at the expense of the masses. The US monetary policy is back toward 0% again, the proximal cause to the current problems. Jack
Daniels is called upon to fix problems created by Jack Daniels! Further
damage is certain to all systems. In such a horrible setting with heavier flow
of monetary booze, staggering rescues and stimulus down the road ensure that
gold & silver shine!
When will this end? Probably
only with the collapse of the USEconomy, which is very much in the cards. For
those who believe such words are mere hyperbole, just wait. The current
programs are redemption of fraud and more life rafts in a powerful storm. The
secondary feedback loop effects have begun to hit, the VICIOUS CYCLES. What
are such effects? They are foreclosures from job layoff (not mortgage rate reset).
They are retail chains shutting down and reducing outlet store counts. They
are wreckage of the car industry, all the way down the vertically integrated
chain. A rescue package for Detroit carmakers is absolutely futile without a
rescue of their entire vertical supply chain, since their neglect would
result in complete disruption to the input doorways. They are job losses to
the retail industry, from stores to restaurants to shopping malls. They are
ruin of medium and small insurance companies, not just the large. They are
big cuts to pension payouts, from severe declines in the full spectrum of
their investments in stocks, non-govt bonds, and commercial property. They
are major pullbacks to state jobs and projects, from their basic insolvency.
FALL OF ICONS
Check out the icon giants
Microsoft, General Electric, even Cisco. The financial sector has numerous
victims, given substantial cuts of over 50%, even 80% in the last couple
years. But the untouchable Softie and GE are the shockers. The MSFT stock
fell below 25 this autumn, and now is breaking down below support at 20. Giant
GE could not successfully defend the 25 level this autumn, and now is half
that value. The fall from grace on valuation for these two icons testifies to
the profound economic decline. Giant networker CSCO could not hold above 22
this autumn, and now struggles to remain above the 15 level. Berkshire
Hathaway has also shed tremendous value, which is heavily tilted toward the
crushed financial sector. Maybe these corporate giants should invest in gold
& silver bullion, for a good rate of return on their investment.
Jim Willie
CB
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Jim Willie CB is a
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