THE DOT - if this turns orange or red be alert

Wednesday, June 11, 2008

The enemy within

A thought just crossed my mind, which is quite irritating. The CEO of Countrywide is free to move around although he and some of his fellows should be in Guantanamo. Subprime mortgages initiated in 2007 had a first rate of no pay of 18% - means even first payment was not done ( got the number from a congress hearing where Bernanke, O'Neal and some other heroes of the biggest financial terrorist attack on the USA) were 'grilled'. The Republican members of the committee were acting like defense lawyers. Alone in Q1 1,7 Tril. of US households wealth were destroyed in these 3 months (total net worth around 54 Tril. ) Amazing how reluctant Bush's administration reacts on this issue since it will have very destructive implications going forward on the world - but no surprise with the treasury secretary being the ex CEO of Goldman.

That Banks were allowed to distribute record bonuses although the impact was already obvious of massive losses to come- how can a Stan O'Neal walk out with 180 Mil. he was responsible for at least 30 Bil. of losses at Merrill Lynch? The problem with such ignorance we can observe in Germany the center left and right parties have a drastic erosion of their voters and the extreme left right parties enjoy a run on them.

People do not believe in democracy anymore (more than 50% result of a research done for the EU) since their seems to be no justice and the state does not care about the interest of the people. I find that, by any means, more dangerous than outside terrorists ever could be. Its not only the irresponsible leaders who are to blame but also the people, since democracy asks for involvement and commitment from any single person - if they would kick ass the politicians would have to act. Thats a good point to remind of a crucial remark J.F. Kennedy made once
"Ask not what your country can do for you; ask what you can do for your country."

Politicians are by no means self-efficient people and they can get seduced easily to hunt their own little interest if the people let them. This is the crucial point almost too late - historically this is exactly the groundwork for war , famine and disaster the forces are out of control and all the lies which are spread around this days (- the situation is contained by Bernanke and Paulson 1 year ago - expecting 50-100 Bil. of losses, we are now above 400 Bil. and no end in sight) enforced by this 'talking head' blubbering media which makes everything to a breaking news just hunting the next little sensation but not showing the big picture - scared they might loose some viewers yet they are controlled by people who's interest is not to inform but to distract, is a catalyst for the erosion of democracy and decency.

Technical picture remains constructive bearish SPX heading for 1300/10 and the minimum for the NDX is 1904 (38,2%) but with a close below 200 and 50 MA's 1860 is possible as well. It might get a bit tricky next week with a volatile counter-swing upwards since BKX will reach a short term exhaustion level Friday / Monday below 65 and since we are entering tripple witching some adjustments are likely. The overall trend will remain down though with especially XBD members in a weak picture. GS should see the 150 short term.

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