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Thursday, May 29, 2008

The FED exodus

Its quite amazing that Mishkin steps down and leaves the FED in a unique situation 3rd vacancy plus another who stays on until Bush leaves white house. Interesting to me is that in a situation of crises someone would leave who joined not even 2 years ago and has his job until 2014. Now where Fisher the most hawkish man claimed the FED might be forced to hike rates and Mishkin was one of the architects of aggressive cuts. Is it for the difference of 130k in income he left or due to the fact he will not join the clean up of a hazardous FED policy which might create a hyperinflation even based on their own artifical low inflation figure policies - check out this site but basically everybody is sub-/consciously aware of it.
So the FED is bailing out investment banks but does not do anything about its two targets inflation and economy - even the contrary Helicopter Bernanke will prove he did it litaraly and the world will pay with hyperinflation which will raise house prices at some point but almost nobody will be able to afford the high interest rates since the cleansing of the financial system will take years or to be honest I suspect it will be a process which will be more intense when many might think right now since many balance sheets of banks are creatively massaged in the hope they will survive by miracles but actually we will have a wave off chapter 11 cases starting 2009. The underlying structure for balance 'cheat' will be disastrous with a weakening consumer base so far mostly the effect of subprime was the driver, the regular consumer is now on the edge with rising negative house equity job losses and inflation squeezing money he does not have out of his pocket. The FED has not achieved any improvement for mainstream. We will have a little relief period with falling commodity prices in Q3 and oil likely dropping back towards 100 which will trigger another leg of the rally but thats a trap medium term since next year look for a severe correction in stocks steeper than the one in Q4 07-Q1 08. In astrological terms starting November 2008 one should be on highest alert levels its gonna be a very unpleasant election campaign in the final stage and Republicans will pull all strings and one of them might be throwing America into war with Iran ( a surgical strike). In any case the FED is running out of bullets and we might see a repetition of the Japanese story interest rates close to 0 but still markets will drop sharply still. The toxic waste is still in the books of the banks my estimation is closer two 2 Tril. so we have done 2-3 innings yet and nothing but a severe economic upswing could save them from disaster.
Unfortunately we are heading for disaster the next years are in astrological terms a repetition of 1929 a depression is very likely and the odds are there. Inflation is going out of hand the events in Burma and China are small warnings of the things to come since they happened in good angles of the same planets which will enter hard aspects starting Nov. 2008 til 2012. Pluto is in Capricorn which is by itself very challenging last time it happened 240 years ago - from famine unrest to wars everything happened plus we had special climatic events where Millions of people were killed through a breakout of a volcano in 1783.
We have to be aware that life happens in cycles and nothing can be taken for granted we got used to our life style and it seems that the ugly things can only happen to the other people but our media helps us to ignore the reality surrounding us - right now in Somalia we have a genocide going on and nobody takes care of them ( they do not have any resources of interest like oil ) . The bird flu freaked us out because it could have reached everybody but Aids is still spreading and nobody talks about it. Billions of Dollars disappear in Iraq but Bush veto's a health-bill for children in USA. This world is out of balance in a major way but we should not forget that in a bigger context things go back to their point of balance thats a physical and universal law and that is usually what happens in a crisis the balance is restored.
Coming back to the financial situation banks have made money by constructing profits and swaping away the losses since the bonus was the only target nobody acted in the interest of the stock-owners and the universe forbid in the interest of society or the planet but they squeezed all out to the limits - its like an Enron on a global scheme and the supervisors let them do it. FED and SEC let the banks ride leverages of times 30 exactly like 1929 and that they could sell things with highest ratings for mortgage bonds where 20% even never paid their first mortgage payment as I heard in a congress hearing. The banks who knew what was going on still paid out this year record bonuses just to step up a few weeks later to raise capital. Who are those stock-owners who let themselves get ripped off in such a manner - well the majority of stocks is managed by funds and they do not dare to raise their voice for good reason.

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I am a professional independent trader