THE DOT - if this turns orange or red be alert

Tuesday, September 30, 2008

Bill Gates - is scared? Since when is he an expert

Excerpt from Bloomberg

Home Prices in 20 U.S. Cities Declined 16.3% in July (Update1)

By Bob Willis

Sept. 30 (Bloomberg) -- House prices in 20 U.S. cities declined in July at the fastest pace on record, signaling the worst housing recession in a generation had yet to trough even before this month's credit crisis.

The S&P/Case-Shiller home-price index dropped 16.3 percent from a year earlier, more than forecast, after a 15.9 percent decline in June. The gauge has fallen every month since January 2007, and year-over-year records began in 2001.


As long as houseprices fall the economy is not going to bounce back - the average affordability point over the last centuries which can be viewed as a fair value is still 10-15% away to the downside for houseprices. Usually we also have the pendulum effect which is after an exaggeration to one side we also have a swing to the other side hence we might even undercut fairvalue by 10- 20% to the downside.

The 4th quater is the home-run quarter for Tech companies thats why Mr Gates wants the spirits too be boosted by a bailout package (forget it) and he runs a huge stock investment enterprise with his philantropic cover the Bill & Melinda Gates Foundation

excerpt from Wikpedia

As an executive, Gates met regularly with Microsoft's senior managers and program managers. Firsthand accounts of these meetings describe him as verbally combative, berating managers for perceived holes in their business strategies or proposals that placed the company's long-term interests at risk.[31] He often interrupted presentations with such comments as, "That's the stupidest thing I've ever heard!"[32] and, "Why don't you just give up your options and join the Peace Corps?"[33] The target of his outburst then had to defend the proposal in detail until, hopefully, Gates was fully convinced.[32] When subordinates appeared to be procrastinating, he was known to remark sarcastically, "I'll do it over the weekend."[5][34][35]

does that sound like a philantropic man

The foundation has also received criticism because it invests the assets that it has not yet distributed, with the exclusive goal of maximizing the return on investment. As a result, its investments include companies that have been criticized for worsening poverty in the same developing countries where the Foundation is attempting to relieve poverty. These include companies that pollute heavily and pharmaceutical companies that do not sell into the developing world.[54] In response to press criticism, the foundation announced in 2007 a review of its investments to assess social responsibility.[55] It subsequently cancelled the review and stood by its policy of investing for maximum return, while using voting rights to influence company practices.

The foundation is just a camouflage for his real purpose - to make money with investments - thats why he linked with Warren Buffett. I guess his portfolio has suffered substantially with the recent market decline.

Technical outlook for the DOW

Left hand the weekly Dow and as you can see the bias is to the downside still heading for the 61.8% retracement level at 9900/10000 which is also an good support for this year. The process of getting the bottom will take another 4-5 volatile weeks with a small rally due at the end of this week with the bailout package finally approved. Astrologically the days 2nd - 5th Oct. are very promising. Thereafter we will fall back into selling pressure with Hedge funds liquidating and the ban short selling of financials being ended. The other point confirming an extension and a severe low comes from the VIX - the only other time it closed on a weekly and monthly basis over 40 we had a consecutive month of those levels and a low in the month thereafter was Sep. 2002. Although this low will not have the same significance but still I expect a repetition of the situation and a retest of the low in the first quarter nexz year for other cyclical reasons.

another addition to the FED and the Rothschild's

A friend just send me this excerpt from the following source - that confirms the basic game-plan and this below mentioned Second Bank, the prior version of the FED belonged to the Rothschild's and was closed from the 7th President obviously the current President is a lobbyist for the other side.

http://benbittrolff.blogspot.com/2008/09/andrew-jackson-had-courage-will-we.html

"Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves." -Andrew Jackson, 7th US President

In 1836, Andrew Jackson forced the closing of the Second Bank of the U.S. by revoking its charter.

Interesting... now why is this so familiar?

"The Second Bank of the United States provided a convenient way for the government to handle its affairs. The bank was created when James Madison and Albert Gallatin found the government unable to finance the country in the aftermath of the War of 1812. The War of 1812 had put the United States in significant debt, and the First Bank of the United States had closed in 1811. The debt of the nation led to an increase in banknotes among the new private banks, and as a result, inflation increased greatly. As a result, Madison and Congress agreed to form the Second Bank of the United States.

After the war, despite the debt, the United States also experienced an economic boom, due to the devastation of the Napoleonic Wars. In particular, because of the damage to Europe's agricultural sector, the U.S. agricultural sector underwent an expansion. The Bank aided this boom through its lending, which encouraged speculation in land. This lending allowed almost anyone to borrow money and speculate in land, sometimes doubling or even tripling the prices of land. The land sales for 1819, alone, totaled some 55 million acres (220,000 km²). With such a boom, hardly anyone noticed the widespread fraud occurring at the Bank as well as the economic bubble that had been created.

In the summer of 1818, the national bank managers realized the bank's massive over-extension, and instated a policy of contraction and the calling in of loans. This recalling of loans simultaneously curtailed land sales and slowed the U.S. production boom due to the recovery of Europe. The result was the Panic of 1819 and the situation leading up to McCulloch v. Maryland 17 U.S. 316 (1819)."

Central Banks and fiat currency have always imploded. Some just last longer than others...

thats how they play the game - does anything in the current situation strikes you as ...

Interesting times end of Ramadan and Rosch ha-Schana

"Hayirli Bayramlar" - "LeSchanah towah tikhatew vetechatem lealtar leChajim towim"
This are strange times the world is in a turmoil and yesterday was a holy day for two religions the end of Ramadan (most important days in Islam) and the New Year of the Jewish People and we have the golden week in China. As the Torah says thats the
"day of judgment." and the DOW fell 777 points

Excerpt from Insiide

How Soon Will the 3 Bears Emerge???
Stock Index Cycles in September 2008 Could Clarify...
In September 2007 - January 2008, Eric Hadik described for his INSIIDE Track readers how the Stock Market Bear, the Russian Bear and a 3rd Bear were all poised to come out of hibernation. As his published analysis showed back then, October 11, 2007 was the culmination of the 17-Year Cycle in the Stock Market and was projected to usher in a 2-3 year bear market with declines of 35--50% in the Indices.
The Stock Indices topped on October 11, 2007 - EXACTLY 17 Years TO THE DAY from the beginning of the bull market on October 11, 1990 - and have already seen declines of about 25%!
This was projected to coincide with the awakening of the Russian Bear in 2008--2009. As explained back then, August 2008 was EXACTLY 17 Years from the breakup of the Soviet Union in August 1991. As Eric's published analysis showed last year, August 2008 - and the ensuing Jewish Year of 5769 (which begins in September 2008) - was/is the culmination of the 17-Year Cycle for Russia and should see a re-emergence of the military-minded Russian Bear! (You don't have to believe this e-mail, you can view Eric's previously published analysis at http://www.insiidetrack.com/pdf/INSIIDETrackSR200817YearCycle&3Bears01em.pdf).
The Russian Bear - with all its military might - is waking up and making its first move into the oil-rich Transcaucus region... a region known in Biblical times as Magog! And, Russia is doing this EXACTLY 17 Years from the breakup of the Soviet Union in August 1991!
There is MUCH, MUCH MORE to this 17-Year Cycle and what it has been forecast to usher in between 2007--2011. Eric has spent 2 years detailing this one cycle - which corroborates dozens of other cycles - and what it means for the next 2-3 years. The period between September 2008 - January 2009 is the next CRITICAL period and could, among other things, coincide with a major volcanic eruption. [The exact date in the midst of this 5-month time frame - with the most cycle synergy - was already provided to INSIIDE Track subscribers.] If this is accurate, it could have a 12-24 month impact on specific commodities.

Well the above mentioned facts are in sink with astrology since the Uranus Saturn oppostion on the 4th Nov. has many implications as we could see conservatives will clash with liberals. Last time we had this constellation the world went wild. 1964-7 various terrorist organizations were founded like the RAF in Germany (the film about that event has a nomination for the Oscar - foreign film category) and the youth clashed with the establishment all over the world.

On the left hand a monthly chart of the DOW where can see what happened last time when Uranus was in opposition to Saturn (1965/6) only from the exact opposite signs Uranus was in Virgo now its in Pisces and vis versa and some other planets had different positions but nevertheless the basic effect was the same and the markets lost 25% in the first run but within years dropped 50%. This was a 18 year period with no basic move of he DOW it was locked into a 1000 - 500 - 1000 range for 18 years and high inflation. So even after recovering all the losses after 18 years you had lost a lot off money due to they high inflation which peaked around 18%.. The difference to now is that the financial system is at the brink of breaking down like 1929 with the biggest leverage in financial history. We will get a rally within a week ( Mars sextile to Pluto makes for a breakthrough on the bailout plan and on October the 5th Venus will be sextile Jupiter) hence around these days a relief rally is highly likely combined with technical patterns of the market. Nevertheless we will keep falling for a few more weeks or even months as a bottom line. The downside risk for now is limited to 1050/60 SPX , 1440 NDX and 9900/10000 DOW from where we can expect a countermove if not earlier- but todays month end quarter end will activate more bearish momentum. Hedge funds will get substantial fund withdrawels.and will have to unwind and deleverage further adding to the volatility. The VIX index at 47 will make a new record above 50 which was usually a good indicator for capitulation and we do have the wash out right, now only other monthly indicators are not at 2003 levels at all - pointing to another unprecented level of risk to come. A few weeks ago I was wondering how people could have it below 20 under this circumstances and about this phony Goldilock cheerleaders with Paulson being one of them and to my suprise Buffett's praises him and the stockmarket but he is a very clever man who can even bargain on Goldman. Looking at his astrological chart and the positions he takes its not wise to stay in Berkshire shares after mid 2009.

Monday, September 29, 2008

Again the central banks need to cut rates - Reps vote against the 700 bil. bill

As I said earlier politicians are freaking useless when it comes to face the music - they are more interested in CYA then in making tough calls. The cost comes heavy aprox. 5 tril. have been lost within 24 hours. The mistake was again with Bernanke - its a tough thing before elections - but he needed to cut rates 2 weeks ago with other central banks to buy time for a good bailout plan. Its ruthless from the Reps to create the mess and than expect the Dems to bring the votes together. Bush is the worst leader America has seen in decades to say the least and he should live up to the duties of his office at least this time in 8 years. I hope the Reps do not pull this off to make McCain look like an hero when he convinces the 10 votes to switch.

We are reaching my targets far quicker than I thought - NDX is already there, we lost 10% in one day. We broke below the 1600 support and we can drop to 1440 now for the NDX and 1050 SPX and we can be sure if the bill is not produced within 24 hours ( I just read the earliest point to vote again will be thursday) we will see 50BP rate cuts by the central banks to get the market to snap out of the panic mode. Since 2 continental European banks collapsed today the EZB will be more willing to follow a concerted action the UK is anyway ready to go. In any case the bill has to be produced as well but this obscure bailout plan of wallstreet by Paulson will not solve the real problems at the end of the day. Fianally keep in mind in such an overall situation a PE(price earnings ratio) of 10 is the max the market deserves right now we trade at 15 times hence markets are overvalued medium term. Reducing stockexposure is the right thing to do - sell any rally in the next weeks and months.

Wachovia sold to Citi by FDIC -Bush administration is insa

I can not believe what I read on the ticker, that the FDIC sells the banking operation to Citigroup and Citi has to take a 42 bil. loss - wholy crab - Citigroup is basically bankrupt they cannot afford to shop for 1 cent of losses. Ms. Whitney from Oppenheimer is astonished as well - the only person to upbeat about the whole situation for my taste is Warren Buffett that refers to his market call that markets are good value at 1250 and the next is that the bailout plan is a winner. He is short 40 bil. of notional Index puts that will make him medium term being long MARKETS to full extend even with cash.
The crazy thing is the wild way they bailout banks, every deal is cut different and this inconsistant behaviour undermines the faith of the markets into their ability to control the situation. Again they gave a backstop since they share part of the losses Citi wll have to take by the Wachovia assets - this is like in a bad nightmare you wish to end - but it does not. They are cherry picking who survives and who not and thats not the duty or choice of an administration. Now Citi raised themselve to a size which is too big too fail by any means and I think they will be a big time participant on the bailout program with a possible 65 cents on the dollar they will suck in a huge chunk of those funds- I would guess 100 bil. minimum even much more they need to do.
Actually the subsidies which Citi will receive have a lot to do with the shareowners in Citi - some serious amount of Saudi money has been invested there and the Bush's have strong links with them so its not only the taxpayer being protected here.

Second part

Now I get a clear picture about the Wachovia deal ,they arrange things in the background for Citi to survive on the back of taxpayers. Citi got a good deposit network through Wachovia ,so far the financed their balance sheet by 22% with Wachovia it jumps considerably. In the chart you can see that the Wachovia assets tripple the deposit ower which makes sense since they are more independent from borrowing money at markets or the FED.

[bank consolidation]

But lets see the real deal is that they took 42 bil . in losses from Wachovia for 12 bil. in warrants. The trick is that Citi has big chunks of BBB tranches of toxic stuff to unload which basically are only worth 10 cents they sell that for 65 cents to Mr. Paulson for 200 bil notional that gives them 110 bil of activated capital which was only worth 20 bil. So even after taking a 42 bil. plus 12 bil. hit they still are ahead 38 bil. When Paulson gets the second 350 bil. they can sell right into it another 100-200 bil notional for 65 cent and another 55 to 110 bil comes in cash to their balance sheet. Bankruptcy avoided but do not believe for a second that the taxpayer will ever make back the 65 cent it had to spend.
Vikram Pandit was bought with his Hedge fund from Citi for 800 mil. that fund is not worth a cent today he made already a killing on Citi so even if he gets a salary cap. that is not realy a problem for him or his other executives who were partners in this fund.

Technical outlook for SPX

Todays new moon in Libra has two components its the Jewish New Year and the end of Ramadan (astrologically its in a square to Jupiter and Pluto). Pluto in this context symbolises fear and debt, Jupiter in squares is overspending and not well based euphoria. Both are true by the events of today since the bailout package was introduced and the panic is now entering European banks on the continent but also on a global scale people are aware how helpless the administratin acts.

Coming to the technical situation we enter week 5 which has the potential to have a corrective nature to the upside but nevertheless the momentum is strongly to the downside and we have to go to 1050 in the SPX, which is the 62% retracement level and a strong support for this time frame. Tomorrow is the end of the quarter and all medium term charts will close on a weak bias confirming the downside momentum. Also the weekly SPX moving averages are close to have a negative cross of the 50 through the 200 week MA which is a very bearish call medium term. On the other hand we have extremely oversold short term conditions and a little relief rally is due at any time. We will see a rate cut soon and hopefully a concerted one with the EZB on board - its not possible to save the financial system and hold inflation in check at the same time. I am afraid the choices have dimished to zero - they had a chance for over 12 months - now its too late. Nevertheless the motto must be sell the rallies until we are 10% lower since its inevitable technically and fundamentally that markets have to adjust to lower earnings for the whole economy. Any rally should be kept to 1300 if it occurs short term but the probability is only given with a rate cut of 50BP since the bailout plan is priced in mostly.

Politicians do not get it - let aside the Bush gang

Ms. Pelosi's remark that the party is over does neither speak for her wisdom nor gives me the confidence that she understands the situation. But thats true for almost all politican's including the two candidates especially disappointing is Obama in this context. Every day now is crucial, extremely crucial as we can see by the simple fact that although a bailout was announced 2 big banks collapsed and at least 2 are at the brink (although its far higher my calculation shows potential hidden losses of 5 tril with a potential to be bigger even).
This is not about a bailout of wallstreet with the exception that having made a big present to JP Morgan on how the situation was handled on the Bear Stearns case. The situation is that we have to deal with a systematic armageddon in the financial system with looming losses of around 6 tril and the potential for an exponential factor when the system collapses. I am not trying to take the side of Paulson who should be fired right away for insane incompetence. The party is over comes 6 months to 5 years to late to say the least while everybody watched paying out record bonus as the crisis was already unfolding in Jan/Feb 2008 - to come now and say the party is over is as reckless as she claims wallstreet to be. Democrats took over the houses a while ago and I do not remember an effort to stop the banks from doing insane investments and enforcing stronger oversight. When Paulson/Bernanke were sitting infront of the banking committee's they were praised ao by Dems until recently when it became unpopular to do so. This two gentleman could have been stopped and even more so Greenspan who is in charge for the bubbles and some damage avoided. Most disappointing is the approach of Obama who claims the change but walks the classic approach of campaigning - the six weeks to the election and the remaining 3 months of Bush administration make the difference of deep recession to depression. Its not appropriate to make some populistic speeches and not to act right now. I think McCainis is sout of question because he is on the wrong path praising tax cuts (Bush's tax cuts have not done any good obviously except for the very priveledged ones) and surrounded by the wrong people the same people who brought us into this mess.
I am afraid I have to agree with Jim Rogers who say both do not understand the situation and cannot deal with this crisis finally. None of both presented anything close to a solution for this crises instead they stick to their schedules and fight about how to deal with Iran and ignore the severe situation of the economy. I saw Ahmadinejad in his CNN interview with a big smile on his face - Bush allowed for the biggest terrorist attack on American soil by an enemy within. Greedy CEO bankers destroyed the backbone of the US economy - its not the regular trader he can only operate within rigid rules within the bank - the top executives made the calls to make trillions of insane investments and got last year 3 bil. of bonus for that - one of them (not the last 2 years) is Paulson the Secretary of the Treasury - who claimed in various interviews a few months ago that the US financial system was strong and sound - I have nothing to add.

Sunday, September 28, 2008

Barron's comes up with obscure assumption for bailout plan

While two more banks struggle and are close to collapse (Wachovia and Fortis) a third one Bradley&Bingley was nationalised by the UK government this weekend.

Excerpt from Bloomberg

Bradford & Bingley, the nation's biggest lender to landlords, is the third major British bank to run into trouble since credit markets seized up around the globe last year. Its shares have fallen 93 percent this year. Northern Rock Plc was nationalized in February and HBOS Plc sold itself to Lloyds TSB Group Plc on Sept. 18.

Barron 's comes up with the title story that taypayers likely will make money from the bailout, which I can not agree on according to the data I have put together.

Excerpt from Barron's article 'Making A Mint'

Despite the public outcry over the bailout bill, taxpayers and the Treasury are likely to come out ahead.

By most accounts, current losses on U.S. mortgage paper -- the difference between face value and current fire-sale prices -- stand at about a trillion dollars. In a sign of the distortions from panic selling, eventual losses on the underlying morgtages figure should be no greater than $250 billion. The market, irrationally, is assuming losses of four times that amount.

Of the $1 trillion presumed hole, $800 billion involve subprime and Alt-A mortgage securities, which are of slightly higher quality than subprime. The remainder of losses is accounted for by under-water prime mortgage securities and unsecuritized mortgage loans.

According to the BIS statistics between 2000 and 2007 MBS (Mortgage Backed Securities) with a volume of 13 tril. were issued of which roughly 3 tril are Subprime or ALT A. They have so called ABX indeces which measure their current value and the tranches for BBB- and BBB trade at 10 cents, single A at 20 cents and AA at 60 cents. Well Subprime and Alt-A are the 10 to 20 cent assets and if we take the average price which is still a generous assumption for 3 tril. we end up with 450 bil. of value and 2550 bil. of losses if the assets would have been marked accordingly. So far banks and other financial institutions only reported for 550 bil. in losses - so we are missing 2 trillion of losses or mark downs.

That is still not the whole truth for 2 reasons - first the AA tranches which might be good for another 4-5 tril are valued at 60 cents. Lets go for 60 cents of 4 tril. thats another 2.4 tril in losses we have not heard about and the AAA at 90 cents gives us another approx. 600 bil. of losses. which brings the total amount to roughly 5.5 trillion of losses acording to the ABX. Secondly another negativ spin on the story comes from a still reluctant rating policy of the agency who rate this tranches and they need to be downgraded by some notches which would increase the losses.

Furthermore this article and the mentioned experts assume a sudden stabilization in the housing market thereby the truth is a running number of 10k foreclosures per day. Lets make the math on that momentum 10000 times an average houseprice of 150000 value is 1.5 bil a day or 45 bil a month. ıf they can recover 50 cents on the dollar through a firesale on those houses with an average processing of 2 years. the monthly loss will be 22.5 bil a month or 265 bil. a year . That assumption was for no further detoriation for the economy.

Summing up the assumptions in the Barrons article that only 1 tril. are at stake makes no sense to me and the assumption of Bill Gross that the Treasury wants to pay 65 cents makes no sense to me as well. With 3 tril. of Subprime and ALT -A issues out there it would request for those alone to have 2 tril. at hand and again we are talking 5.5 tril . of losses which should have been marked according to real money investments. On top we also have 400 tril of derivatives based on interest rate products not all of them are based on mortgage rates but all other are effected to some degree and some huge losses are still hiden somewhere which are easily in the trillion ranks. I am afraid taxpayer will be lucky to come out alive of this deal and that many banks are hiding huge losses on one hand but what is as dangerous is the matter of a fact that their counterparts may mark profits which they will have a hard time to cash in since it may stay a paper profit.

Saturday, September 27, 2008

The FED and the Rothschild's (part 2)

The FED is not what most people assume it may be its not a government entity and barely a few people can explain how it works. ıts a secretive organisation and the only official part in it is the appointment of the chairman and board of directors by the President. Goldman the superior investmentbank has infiltrated this institution, they have people who usually earn 10 mil. a year sitting on 150k a year jobs - do you think they do that to serve theit country. No Goldman developed a web of informatin infrastructure and that was the case from the beginning the first president for the FED was a Banker from Warburg (Germany) that was an outlet of the Rothschild's as much as Goldman is today. Before we have a brief look into history and how the FED was created Mr Greenspan has a big part in this financial disaster from many angles. He introduced this phony inflation measurement changes and allowed the banks to leverage to this insane degree's and create this spectacular bubble's which had to burst with the support of the Bush administration.

Excerpt from Robert Glover

http://www.stariq.com/Main/Articles/P0008354.HTM

Most Americans are taught that the Revolution began with the battles of Lexington and Concord. Monetary historian Alexander Del Mar says:

Lexington and Concord were trivial acts of resistance which chiefly concerned those who took part in them and which might have been forgiven; but the creation and circulation of bills of credit...were acts of a whole people and coming as they did on the heels of the strenuous efforts made by the Crown to suppress paper money in America they constituted acts of defiance so contemptuous and insulting to the Crown that forgiveness was thereafter impossible...there was but one course for the Crown to pursue and that was to suppress and punish those acts of rebellion...Thus the Bills of Credit of this era, which ignorance and prejudice have attempted to belittle into the mere instruments of a reckless financial policy, were really the standards of the Revolution. They were more than this: they were the Revolution itself.

In its Constitution, the new nation provided for a monetary system that was to be debt-free and controlled by Congress. This was viewed as an outrage by aristocracies around the world at the time, who believed the human race would disintegrate into helpless chaos without the guidance of those “divinely appointed to rule.” The Rothschilds, a banking family from Germany which showed genius in taking over the money systems of European countries around this time, determined to serve the world’s aristocracy by persuading the USA to create a central bank and issue currency as debt owned the wealth elite who owned this banking operation. Cried the London Times:

If that mischievous financial policy which had its origin in the North American Republic should become indurate down to a fixture, then that government will furnish its own money without cost. It will pay off its debts and be without a debt. It will become prosperous beyond precedent in the history of the civilized governments of the world. The brains and wealth of all countries will go to North America. That government must be destroyed or it will destroy every monarchy on the globe.

Presidents Andrew Jackson and Abraham Lincoln steadfastly resisted attempts to privatize US money by creating a central bank. Lincoln was assassinated and Jackson would have been had his would-be assassin kept his powder dry in the damp Capitol Building of those times. Astrologically, Jackson’s veto of the central bank bill in his day occurred under an opposition of Saturn and Pluto. Lincoln’s introduction of the Greenback occurred with Saturn and Jupiter conjunct in Virgo (putting both conjunct the US Neptune) opposite transiting Neptune, with Pluto in Taurus making no major aspect.

The Rothschilds and their increasingly large number of associates worked diligently through the 1800s to get a central bank established in the USA, for they would then reap a cornucopia of profits into perpetuity by lending money to government, to be repaid by future taxpayers at ever-compounding interest. They finally succeeded when, on December 23, 1913, Congress created the US Federal Reserve System. At this time, Pluto was opposite its conjunction with the Galactic Center, and also—tellingly enough—opposite the Sun.

At this time, the years leading into and through World War I, anyone who suspected foul play by bankers was castigated as a conspiracy nut. President Woodrow Wilson, who’d signed this legislation, joined the nuts 10 years later when he said:

I am a most unhappy man. I have unwittingly ruined my country. A great industrial Nation is controlled by a system of credit. Our system of credit is concentrated. The growth of the Nation, therefore, and all its activities are in the hands of a few men. We have come to be the worse ruled, one of the most completely controlled and dominated Governments in the world—no longer a Government of free opinion, no longer a Government by conviction and vote by the majority, but the government by the opinion and duress of small groups of dominant men.

The old saying is, “Whoever controls the money, controls the nation.” Amselm Rothschild put it this way: "Give me the power to issue a nation's money, then I do not care who makes the law."

I think we have to open up to any possibility and even consider a conspiracy since for the one's who are informed (Bernanke made his first rate cut surprisingly on a Friday before markets opened and Golman boughts unusual big amounts of calls the prior day against the trend - that is not a coincidence since the head of capital markets in the FED is a former Goldman and would habe been informed) or even creating events its easy to make incredible amounts of money even with falling markets. The Rothschild's made big money because they knew how Napoleon's defeat ended before anyone else knew. Thats why they bought Reuters which was at those times the dominant news agency especially for financial news. They own the Economist which has the reputation of being a liberal considerate but elitist magazine but I have to say they use medie to opinionate other people as media's main function has been brought too. Thr Rothschild's were the most powerful financial entity til the 1900 centuryand suddenly they vanished some small entities of boutique investment banks stayed - lets se where they are hiding

Helen Sachs (Grandaughter of Goldman Sachs co-founder Joseph Sachs) married Nathan Straus Jr. (Grandson of Lazarus Straus who headed R.H. Macy & Co.)...

Nathan Straus Jr.'s first cousin (also grandson of Lazarus Straus) Roger William Straus Married Gladys Guggenheim (Grandson of Meyer Guggenheim)...

Meyer Guggenheim's daughter is Cora Guggenheim.

Cora Guggenheim married Louis F. Rothschild...

So you have the Rothschild-Guggenheim-Straus-Sachs connection.

Here is more...

Louis F. Rothschild was partners with Albert Loeb to form Albert Loeb & Co.

Louis F. Rothschild was the son of Frank Rothschild.

The powerful Jewish families of finance are linked together through marriage and Goldman is basically the trading arm of the Rothschild financial structure. They are smart enough to understand that with the 19th century the information distribution made a quantum leap and is on a much higher level which even increased with the Internet. So they had to dilute their presence and distract the public from their influence. When you read the lists of the richest people at Forbes magazine that is one of those distractions. The richest people are even not mentioned there or at far too low numbers. Rockefeller was the richest man on earth after Rothschild's and even if you just invested his money after he died in Bonds he would still be the second richest. Compared to them Buffett has only petty cash with 64 bil. they are easily by the trillions. The one bank which benefits the most by the financial disaster are JP Morgan and Goldman, JP MOrgan got Bear Stearns for free and Washington Mutual assets for a bargain. The prime brokerage which is one of the few lucrative segments in Investment banking has been concentrated now on those two and Morgan Stanley but I doubt that the latter one can survive on its own and has less credit by market participants. The default of Lehman looks obscure to me in many ways first of all Fuld is a shrewed guy why did he go for such pathetic prices to sell stakes with 85 bil toxic assets and why did the FED did not bail them out - does not make sense to me from a straight mind frame but rom an evil one it was the ideal trigger point to let the markets collapse. As I said earlier some people will make big money from this and we are not talking about Hedge Funds they lost in average plenty money during this year.We will dig a bit deeper going forward.

Friday, September 26, 2008

The unfolding disaster - astrological perspective

Lets have a look whats ahead while we observe the impact in the present (keep in mind astrology is like a watch - its not the watch making the time or us being tired at night - we have choices). Some economic choices I do describe later have to be considered seriously.

Excerpt from

http://www.mmacycles.com/weekly-preview/mma-comments-for-the-week/comments-forthe-week-beginning-september-29,-2008/

But make no mistake: this is a real financial and banking crisis. Even longer-term than the positive Jupiter-Saturn trine, is the forthcoming 45-year opposition of Saturn and Uranus (November 4, 2008- July 26, 2010) , followed by the 126-year square of Uranus and Pluto (2012-2015). This is a different world than anything we have seen since the Great Depression. This week Washington Mutual folded, the largest banking failure in history. Last week it was Lehman Brothers, AIG and Merrill Lynch. The week before that it was Freddie Mac and Fannie Mae. Every week it seems another big one bites the dust. The investment community is scared, which is also the nature of Saturn in opposition to Uranus, which will be even more exaggerated next year when Pluto (debt and more debt) forms a square to both. Jupiter will conjunct Neptune next year too, so once again we will hear the exhortations that the economy and banking system are sound and resilient. Our leaders stated the same in 1929 and 1930, and again all last year and even into Monday, September 15, when Mr. Paulsen went on TV and shook his head back and forth and proclaimed exactly that - while looking at the floor.


Excerpt from

http://www.stariq.com/NewsScope.HTM

Astrologically, the parallels to the Great Depression are sound. In the early 1930s, Saturn, Uranus and Pluto were forming a T-square in the cardinal signs, which provided the celestial pressure to undermine a mismanaged financial system. Some analysts have decried the current monetary crisis as the "greatest regulatory failure in history", as we are once again heading into a T-square involving Saturn, Uranus and Pluto in cardinal signs.

Three outer planets forming hard aspects to each other tends to correspond to historic, seismic shifts in the socio-economic-political realm. In 2010, Uranus enters Aries while making its fifth and final opposition to Saturn, as the two form a square to Pluto in Capricorn. This T-square is shaping up now: Pluto is heading into Capricorn, and the first Saturn-Uranus opposition becomes exact in six weeks.

When comparing this developing T-square to the U.S. Scorpio Rising horoscope, the nation's Venus is in the cross-hairs. Venus is found in the home-mortgage sign of Cancer, and in the Eighth House of Credit. Since the nation's founding, Pluto has never been in this position (in the Second House, opposite Venus). We are in uncharted territory, and one can only hope that the government takeover of the financial system serves the public good, and is not just a bailout for wealthy investors.


and finally an Excerpt from

http://www.stariq.com/AquariumAge.HTM

The keyword for the Saturn/Uranus opposition is “a challenge to the status quo,” but don’t let that fool you into thinking this opposition only symbolizes a struggle between the powers that be and the powers that wanna be. This opposition operates on a personal as well as a collective level, and that translates into all kinds of shifts. Saturn represents authority. Uranus questions authority. And approximately every 45 years, as they oppose one another, we struggle with structures and foundations, individual and collective, in need of a serious overhaul. Notice what’s stagnant in your life, and be prepared to transform your situation, even if that means being uncomfortable—very, very uncomfortable.

Within a Saturn/Uranus opposition cycle, there are five actual exact oppositions. This current cycle will occur from November 2008-July 2010. The first direct contact is exact and separating on November 4th, Election Day in the United States, but while this election can easily be seen as the perfect symbol for this opposition, it would be wise not to think in terms of a single event. Think of the coming two years as a period of rebellion against stagnant systems that no longer work but are resistant to change, individual and collective.



We are in the middle of karmic and historic events and an aspect I barely found anything about but is apparently having a big impact - Chiron and the Moon Knode being in conjunction and Saturn in Quincunx (150 degree) is a very challenging planetary constellation. Chiron as the wounded healer at the same spot as the Moon Knode which also has the karmic inprint of former lives have a challenging aspect to Saturn. Through a suffering experience we are urged to find a remedy for the current situation thats on a personal level. Saturn also stands for aouthority or government and we will experience suffering through actions of the same.

The ongoing financial disaster is unprecended and will unfold like a nuke with a powerful destructive energy. It has spread to the entire ecomomic system and we will hear about in the coming mnths. The bailout plan might smooth down the process for a little while but cannot stop it. Up to 800 tril in derivatives mostly not on balance sheets but owned by financial institutions are being triggered with the credit crunch. The 700 bil. are a drop in the ocean - just to bail out Citigroup that money might be enough - my estimation 2 years ago was 2 tril. but that was without 7 Icons already collapsed. The impact of those collapsed institutions is that the counterparty risk bomb has been triggered. When banks can not trust each other any more the system comes to a grinding halt. Problem is that all those derivate products are by 95 % OTC contracts hence not regulated. If one part of the system fais the risk is high the whole system brakes down, which is a financial nuclear war like scenario. The government was to hesitant to stop that in the first place right from the beginning - although there was no margin for error with 800 tril.. I covered that problem in earlier posts. This events since March have brought a paralyzing effect on the real economy and we will see 2 -3 disastrous earnings seasons since privat consumption and corporate consumption (CAPEX) will suffer sharply. We can not believe any government statistics because they evidently have lost any decency and ethics and thats not only the case for the USA. Its a global trend just to mention the phony and far to low reported inflation numbers (which was a systematic approach with evil motives) at least for a decade. Stating low inflation lowers the interest rates a government has to pay when borrowing money and therefor saves big chunks of its budget for interest payments (in America alone it saved at least 400 bil in interest payment in 1 year). Sounds not bad since it reduces the burden for taxpayers on the paper but effectively for mainstreet its expensive. First off all your money lost buying power constantely since the salary raises from year to year never matched inflation and secondly the saved money was paid not the appropriate interest then invested in bonds or money market funds - so you got a double negativ effect.

Over the next years stock markets will come down sharply the least we can expect is the indices to drop to half values but realistically 70-80% is very likely. whatever they try to tell you its not true - in times of deep crises the PE of an Ibdex dropes easily to a 5-7 etc range. Currently we are trading at 15 times earnings. That alone brings the DOW to 5000-6000, now assume that the earnings come down over time which they will easily by 30% we have to deduct another 30% etc. Over the next 12 month reduce your stock exposure drastically and start to sell into any bailout rally. we will see a sgnificant low in the first quarter of next year followed by an upturn for a few months but in any case since thats hard to predict with the government market manipulations by the 3rd quarter of next year you should have reduced your equity exposure very substantially. Its not about making money anymore - the important part is preserving it. Evryone should slowly build up Gold stakes over the next 12 months.

The above mentioned T-Square of Uranus,Saturn and Pluto will be in cardinal signs like in 1930 and have a huge impact on the shape of the global economic situation. Things will be upside down and to put into perspective the things we observe right now will happen on a much bigger magnitude. Its not happy times the stars are preparing us for but neseccary since the world is out of its equilibrium and the remedy for healing is the bitter pill we need to swallow. The Phoenix has to turn to ashes before it can be reborn on a better and sounder basis hopefully.

A disgrace for capitalism - the Bush administration

Before I say anything about them, it's also a big disgrace what McCain is doing with the House Reps - -they brought America together with the President into this mess and now they even mess with the mess. That McCain is trying to steal some glory from this historical mess does not speak for his statesmanship at all. They are close to generating a run on banks after WAMU's collapse and that would trigger an unprecedented crash.

I am not a supporter of this obscure bailout plan because it does not do what they claim - it will not get credits flowing - the credit crunch in Japan lasted for years although the government made massive interventions. Now its kind of too late for the best things to be done but still appropriate things can be done.


The problem is the hesitation of the administration to act and to lie constantly about the situation. Delivering a pants-down transparency would create faith - not moving from one failed attempt to the next on a last minute basis. It's ridiculous to have these cheerleader lobbyists praise them for wrecking the global financial system.

That is like New Yorkers cheering up everytime the Yankees team looses the ball to the opponent.

Mr. Bush, you should learn to make at least a humble face while addressing the biggest financial crisis in 80 years. I heard he has his bachelor's degree in History (besides a MBA from Harvard ) - the last crisis of this magnitude led to a World War, so let's get a bit more serious. Mr. Greenspan, you should not run around and make smart comments - you carry a big chunk of responsibility for this mess. Mr. Paulson, Bernanke and Cox, get a grip gentlemen. You have cost the world trillions with a bunch of greedy CEO's from Wall Street.

GBPYEN - the carry trade confirms the medium-term technical outlook

On the left hand, we have a textbook case for technical analysis, thereby looking back it's always easy to see.
The top was formed by a classic head-shoulder top pattern and the head confirmed with a weekly 13 count. The waves unfolded in a 5 wave count. Wave 1 down from 250 to 220 had a 30 point magnitude followed by a 2/3 corrective wave 2 up. wave 3 down which usually has the biggest magnitude. Wave 3
had the Fibonacci factor of 1.6 times of wave 1 of almost 50 points and had the lower magnitude correction of wave 4 with roughly 38% up.

Now we are in wave 5. We should find its low in the 180 area. The worst case would be an extension to 165/70 to match the magnitude of wave 3, but less likely. This shows that a severe down-leveraging leg comes to an end. That refers to hedge fund leverage more than to the unwinding of to big balance sheet of banks, which will take years.

Medium-term (technical) outlook on China

China has reached our target area at 2000 (even down to 1800) last week and is building a substantial bottom right now, which might take another attempt below 2000 to finish it. This market has basically crashed since it had unhealthy to insane valuations but, nevertheless, it's still the factory of the world for cheap goods and with a global economic contraction the demand will not disappear. The domestic construction boom due to the Olympics was a onetime event and has to de deducted from the growth. The PE's around 15 in Shanghai for growth rates above 6% are fair valued and H-shares in Hong Kong trade even at 12 times, which is definetely not a bubble valuation. The $1 tril. sovereign funds might concentrate on domestic investments as well.

We can expect a severe upside correction going forward. After having retested the lows (and marking weekly 13s), we should see at least a 1000 points bounce over the next months. A 38% retracement equals 1600 points, which should cap the upside potential but is as much as a percentage potential from a 1800 level it counts for 87% rise but less likely with a contraction of gloabal markets til Q1 2009. Q2 and Q3 2009 will have a global upside correction. In stock markets of some magnitude and in such a context, we might also see China rising to high valuations again.

Technical update for US markets

As expected, the delay of the bailout package causes severe stress in the financial markets before the WE and we will close on a weak bias if the package is not agreed upon before market close, which is very likely. McCain has the intention to gain some hero momentum. Although he rejected to read the 3 page bailout plan of Paulson last week, now he wants to gain from the situation.

A bailout plan will be hammered out this WE or early next week, which makes the very short-term overshadowed by this relief move and the prior downmove today will confirm in weekly charts a negative trend. As stated in an earlier post, the NDX could retest the 1600 support once again before another rally above 1700 occurs but that is basically just an oscillating market, which does not change direction. We still have to pinpoint the SEQ 13's to have some ground beneath our feet for a little while. In week counts, this week is week 4 and usually (likely) week 5 and 6 might carry a countertrend direction up but overall the momentum remains to the downside going forward. The SPX has to make 4-5 weeks of lower weekly closes to reach a more substantial low but that is a matter we will discuss once this bailout mess has cleared. Markets need to get the bailout plan (ironically) now, otherwise we might enter into a panic mode. That's another mistake Bernanke and Paulson made with their ANGST strategy to sell the bailout - they again could have acted more considerately.

Mercury's retrogade motion - confusing & conflicting information

Mercury is in a 3 week retrogade motion, which always produces false assumptions, delays and misunderstandings - not good for severe negotiations. Unfortunetely, the bailout package is designed in this time period, which is not good at all and a bad harbinger for the outcome of whatever deal will be reached.


The way Paulson and Bernanke introduced the plan and designed it was on weak ground since the BIS (Bank of International settlement) has all of the statistics one needs to make a more mature approach. All the more confusing is the fact that suddenly McCain enters the picture and the Reps block the plan ( do not get me wrong - it's not a good plan anyway) and try to steal some glory for the elections by having him save the day. It is a bit of a troubling approach, as the Republican deregulation brought us into this trouble in the first place with an incredibly poor performing supervising authority (the FED and the SEC).


The retrogade will last until October 14th, but for now we get close to a new moon in Libra on Monday, which usually is a positive impulse for markets but only lasts for a few days.

Thursday, September 25, 2008

FTSE100 technical outlook - trend is still down

The FTSE has the same trend that the US markets have, which is clearly down. We will have to test the support at 4700 within the next 4-6 weeks. Very short-term, we can expect a little counterwave with limited upside, which might bring us to 5500 before selling will emerge again and get us a low around 4700 (even 4500), which might hold for a few weeks. Nevertheless, the overall trend shows that we are heading for a severe low into Q1 2009. Bond/Money markets confirm this scenario with the TED - Spread at the High.

Politics are taking over the negotiations of the bailout package, which was not well designed from the beginning. It is going to be announced somehow after the WE, but with provisions that do not make the markets gain confidence going forward. Hence, we might see a little relief rally but that will not change the underlying trend, which is down.
We will even see rate cuts very soon. That was my preferred version of action for the last WE to buy some time to design a more meaningful bailout package.

Why we might not see the final package today - McCain

Obama leads in the latest polls, since the blame for the financial mess is rightly on the Bush administration. Obama needs to be identified with the bailout program and idealy as a contributing element of the final solution. Therefore, he has first to stop whatever might get ready to be introduced and get the chance to bring himself into the process. The bailout will be a crucial spot for the outcome of the elections.

If, as some Democrat indicated, the plan is not out by the afternoon today, markets will get nervous heading for the WE. Nevertheless it will be done and the hurrah effect will not last long - 1-2 weeks at the most. The execution of the plan will take weeks to months and markets will not be able to rely on the outcome. As Bill Gross put it accurately, the faith to deal with each other (financial institutions) cannot be restored that easily (if at all) and that will keep the credit crunch going. Hence, we will have 2 negative quarters of GDP and technically enter a recession.

EURTRY technical update

They short-term picture of the EURTRY shows the need for a little pullpack to the gap area at 1.78 before the main trend can pick up again and challenge the 1.85 resistance in about 2 weeks and break out to the upside. The currency will move in sync with global markets moving mostly. Hence, positive stockmarkets globally let the EURTRY drop and vise versa. Soon we might get an intrinsic momentum as well, since the scandal factor around the current government is rising and harming their reputation. Since the new commanding General took over in August, a basic change in the attitude has been noticable. Since we expect the US markets to drop roughly another 10% from current levels, we can expect a parallel move for a rise in the EURTRY. From a pure technical point of view, it has potential up to 2.33, but we should see the high again above 2.10 as an easy target. Hence, buying drops below 1.80 is the way to trade with a time frame of 4-5 months the negative carry will cost around 4% for 4 months, which makes this trade always difficult but this time you still can gain net of 6% with upside potential. Other trades varrying a similar risk will earn better returns like shorting the XU100.

Goldman - why the sudden change??

One week before Goldman declined any need for fresh capital and suddenly they called Buffett to offer him a sweet deal. To hire him as they cheerleader for the sale of the bailout plan and for more capital. What do they need the $10 bil. for??

First of all, they have around $50 bil. tier 3 capital. That is, by definition, what we know as toxic, since it's illiquid and hard to price. Goldman was very agressively unwinding toxic material and had entered massive hedges on mortgage exposure, which (we have to admit) was a smart thing to do.

Goldman has only marked down roughly $5 bil. in losses so far and basically should not need fresh capital, since if buying a bank with deposits is the issue, they could swap their stock and the merger partner would gladly except the stock offer. That cannot be the raeson at all. I suspect that, due to the upcoming situation, Bernanke and Paulson plan to buy assets far above 'value' and will create absurd potential for profits for the better informed ones. My assumption is that this bailout plan will raise the prices of some assets easily by 100% ( e.g. if something was marked at 20% and Paulson buys it at 40%) that will create an outstanding opportunity to make big money. Goldman is famous for this trading smartness. They examined the books of LTCM to the needle under the idea to bail them out before they finally collapsed and took according positions that need to be covered by LTCM and made a fortune. The $10 bil. they raised just before the bailout plan has the background to collect parallel to the Treasury, since the government will deliver a floor for the prices and resell them higher. I hope that the Treasury will not go ahead and buy those securities sold to Private Equity from Goldman, Merrill and UBS at higher prices. They do not need a bailout. They will have a benefit anyway by this transaction and that is the part of this bailout which does not make any sense. I agree that a capital injection of new equity is inevitable but not this program, which aims to buy assets at steep premiums and create an temporary artificial market where some insider pundits can make a killing but the core problem does not get solved.

Why Paulson is anything else but qualified to deal with this disaster

Some facts about Mr Paulson from Wikipedia:

Excerpt

Paulson was Staff Assistant to the Assistant Secretary of Defense at The Pentagon from 1970 to 1972.[7] He then worked for the administration of U.S. President Richard Nixon, serving as assistant to John Ehrlichman from 1972 to 1973.

He joined Goldman Sachs in 1974, working in the firm's Chicago office. He became a partner in 1982. From 1983 until 1988, Paulson led the Investment Banking group for the Midwest Region, and became managing partner of the Chicago office in 1988. From 1990 to November 1994, he was co-head of Investment Banking, then, Chief Operating Officer from December 1994 to June 1998;[8] eventually succeeding Jon Corzine (now Governor of New Jersey) as its chief executive. His compensation package, according to reports, was US$37 million in 2005, and US$16.4 million projected for 2006.[9] His net worth has been estimated at over US$700 million.

He was an assistant to John Ehrlichman, who was involved directely into Watergate and Mr. Paulson joined Goldman months before the scandal errupted (that I have from the German Wikpedia but is not mentioned in the English version) for those who understand German an excerpt:

Hier wirkte er von 1972 bis 1973 als Assistent von John Ehrlichman, der später an der Watergate-Affäre beteiligt war. Paulson wechselte im Jahre 1974 (noch vor Watergate) in eine Anstellung bei Goldman Sachs in Chicago

That's an obsure coincidence, since the events of Watergate happened between 1969 and 74. I do not say that he was involved - do not get me wrong - but he was close.

For a moment, we jump to a different person Mr. Fisher, an East German double spy who was brought out of Eastern Germany by the CIA in the late 70's ended up as a Star-salesman at Goldman.

Back to Mr. Paulson, he was CEO until 2006 for Goldman and was a crucial part of the build-up of this mortgage disaster. The same person who was a crucial player to build up this disaster has obviously a huge conflict of interest to go against them.

The next point is that Goldman research was the first to produce research warning that a severe problem in the mortgage market was due and, therefore, took hedge positions accordingly on their exposure, consequently having fewer losses than their peers. Hence, Mr. Paulson had a warning and axcess to the intelligence of the things to come but did not act accordingly in foresight. They always have done the last second step so far, which basically worsens the overall situation.

By all means, he has an obvious conflict of interest and a proven track record of not acting in smart forsight.

Wednesday, September 24, 2008

ANGST - and the underground world of Wall Street

Paulson and Bernanke were briefed to emphasize the Angst factor in their defense strategy and almost every answer in yesterday's house hearing was channeled to these arguments. If you do not give us the $700 bil., America will go bust. Good questions were asked but the answers were not given. Especially to the image Bernanke tries to paint that these firesale marked assets are undervalued. That's the most pathetic thing he can say but he does it shamelessly. Asset-backed securities do not have a recovery momentum. If a foreclosure keeps marching, it will lead to complete loss .

Finally, we will get a obscure bailout by this WE latest and it will not stop the problem - just delay it. Basically, it's frankly a lie that this package will lay the groundwork for jobs being saved and credits coming back to Main Street. $700 bil. real money - to make it simple mat, will buy approx. $1.5 tril. notional assets, paying around 45-50 cents on the dollar (thereby overpaying by 150% the current marks, if done properly around 20 cents on the Dollar). That does not cover at all the notıonal amounts in distress.

This bailout is done for the institutions who could not mark down because that would have triggered bankruptcy like Citigroup. I know I repeat this example all the time, but it's the most obvious one since without being perfectly accurate they owned around $140 bil. of CDO's , $300 bil. of SIV's plus other mortgage related assets. They are easily around $600 bil. So far, they marked down only $50 bil., which represents less then 10% mark down on average. No way - but even paying them 50% would kill them right away - so how can they arrange to close the gap?? The only way I see is to pay them close to their mark down level (severly overvalued ) and that would have two consequences: first, the taxpayer locks in a loss of around $300-400 bil.; second, part of the consequence they have to come back in a few months to ask for another $700 bil. at least because the money will never be enough to bail out properly.

We had, according to the Bank of International Settlement (BIS), approx. of over $400 tril - yes it's trillions OTC's on Interest Rate - the entire equity market around the world are only worth $45 tril. plus credit default swaps of another $50 tril. What does that mean on the $3 tril. of CDO issuance banks have basically created up to 30 times of further derivatives based on the same underlying effect. That's why the 'Masters of Disaster' Paulson and Bernanke never could have allowed any big Wall Street bank like Bear Stearns or Lehman to fail, with no option whatsoever for any other decision. It was a stupid mistake to do so - but to some degree they are too bright to not to know that - so why did they let happen what happened because it definetly triggerd the inevitable dynamic? Bernanke sits shamelessly in the hearing, claiming that he is an expert in the Great Depression and even smiling instead of being humble and excusing for his grave mistakes.

Goldman (my undercover name for them is the Rothschild trading unit) is working in close cooperation with the FED (infiltrated with plenty ex-Goldman partners) the second most powerful man in the FED is the head of Capital markets (guess where he came from). The Fed was originally founded by the Rothschild's and, in some ways, they still own it. The Treasury has a decade-long tradition of hiring ex-CEO's from Goldman and - guess what one realy nice incentive for a $20 mil. plus earner is to serve his country? - is a little loophole which allows him to sell his stocks without any taxation. Paulson had accumulated $700 mil. worth of assets and is therefore the best paid executive in DC (he made it on not paying taxes on at least $100 mil,) not on salary, but by getting an incredible tax holiday on back of the taxpayers. So do not think for one moment that he has the taxpayers at heart when he acts.

Why was Mack the CEO of Morgan Stanley so eager to get this post with Hillary Clinton getting into White House? Now you know. There is another big incentive being at the crucial spot of the monetary power for Goldman (FED and Treasury). They are not any smarter traders - I bet you can swap the entire (99% ) investment banking force from Goldman to Morgan and vise versa and they still make the same results at Goldman.

But now the church takes care of the situation and condems the 'traders'

Excerpt from BBC news:

http://news.bbc.co.uk/1/hi/uk/7634641.stm

Dr Rowan Williams
Archbishop of Canterbury

He said the current financial crisis "exposes the element of basic unreality in the situation - the truth that almost unimaginable wealth has been generated by equally unimaginable levels of fiction, paper transactions with no concrete outcome beyond profit for traders".

The Bush administration is responsible for the biggest terrorist attack on the western world by allowing for this financial disaster to unfold - even its biggest enemies could have not executed the task any better. The Iraq War and Wall Street disaster will for now cost US taxpayers $4 tril. That's 33% of all outstanding debt in America, which has brought them crude oil above $100 and we are marching into depression. I have no idea where he gets the guts to stand in front of cameras with a smile.

NDX technical update

The NDX is about to test the 1600 once again, but that is not a good indication going forward for the bull camp. It adds from the price action to our assumption that we need to drop another leap down within 4-5 months (leap at least another 10%) to get to a point of equilibrium for real buyers to step in. The announcement of a final bailout plan will trigger short covering and, as you can see, we are close to count a seq 13 daily and that very likely will happen around the WE, less likely not before the WE. Once the 1600 has been defended once again, expect another rally above 1700. I am afraid we will break below 1600 in October, though opening the flood gates for a 10% drop. sentiment readings are supporting a short term recovery and we are getting closer to window dressing season. The overwhelming issue once the bailout approval is out, which will be moderated to some degree, will be an unpleasant earnings season and, therefore, a valuation adjustment of the stockmarket in general.

Mr. Buffett, as he speaks, makes sense partly

Just listening to Mr. Buffett’s CNBC interview, I agree that he is right that the bailout has to be done, but it needed to be done from the beginning. The hesitation of Paulson acting on Fannie and Freddie showed that he didn’t have the guts to do the necessary and, even with Bear Stearns, there was too much hesitation. That is my point - including their big mistake at LEH and AIG to be hesitant.

We were at the brink of a collapse last week - I can underwrite that statement of Mr. Buffett, but that was homemade by an incompetent administration and part of the solution is to put a different team in place. But with elections so close, that will have to wait and I am not particularly positive on the potential people replacing them - since the advisors of Obama are not without flaws in their track records. Even when Volcker passed the office over to Greenspan, we had a crash within a few months in 1987, which was the only crash he was not responsible for since then.

Good luck with your investment, Mr. Buffett. I think GS above 130 is a sell until we hit 80 again, that’s what the charts say.

They want to experiment with $1 tril. in taxpayers money?

The most puzzling fact of yesterday’s hearing was that Bernanke and Paulson had no clue what they were talking about and were contradicting each other at crucial points in their statements.

Paulson used the phrase “they needed to experiment with the process” - shame on you - is that all the former CEO of Goldman can offer in the expertise of the smartest people on earth? What happened to the “Masters of the Universe” - seems to be a one-way road. But most off all he is 2 years in office and has repeated constantly that things were under control - how about admitting to have made mistakes and humbling down?

Why are they saying this is the best plan in their opinion? So far, their opinions have only produced harm, why should it be now any better?

They have no idea how to do this but they want to pay higher prices and call it hold to maturity price. There is no such thing in asset-backed securities with 10k foreclosures on a daily basis. The underlying momentum is steep negative. To point out that the taxpayer may even make money on that is a statement the chairman of the FED should not make. That’s a salesman's approach to stress the profit potential. He since he claimed that he solely has the interest of taxpayers in mind, his actions are purely and obviously on a bailout attempt for Wall Street. Higher prices for their assets will raise their equity value but that will not lead to cheaper credits or credits at all for Main Street. The bankruptcy of banks will be avoided on the back of taxpayers.

It is strange how they try to sell their plan anyway:
• the first thing they need to tell the public is the amount of toxic assets in the system. That’s a figure they should and must have – but there is no mention of that;
• secondly, they should know to what degree the toxic assets have been marked down (that’s what Bernanke calls the fire sale price);
• finally, they should declare the premium they want to pay on those assets, which should be clear by this moment.

They make it look more confusing then it is for a good reason. They still try to cover up the mess they and the CEO's brought us into. Alone Citigroup has toxic stuff in the magnitude of $500 bil. and they have only marked down $50 bil/ so far. If they had marked it down properly, we would have the biggest bankruptcy in the history, dragging down all others with them. That has to be avoided but not the way these gentlemen try to do it and definitely not by rewarding any of this reckless thieves.

I am glad the FBI has (although astonishingly late) started an investigation.

Excerpt from CNBC:

The FBI is investigating four major U.S. financial institutions whose collapse…

But that’s more a cover up action, since if they dig too deep the implications of the results would cause huge trouble in a huge magnitude.

The train has left the station and a bailout needs to be done, but in case of LEH they had a particular strong opinion it was wrong to put taxpayers money at risk. That was 2 weeks ago. These people cannot be trusted by any means, including their so-called experts in the background, they have a 100% negative track record. Part of the bailout is to change the team to get credibility back and maximum transparency. As I said yesterday, no toxic paper from GOLDMAN at PREMIUMS, they only showed write downs of $5 bil. so far but have at least $50 bil. in tier 3 capital on the balance sheet. It has to made clear that no conflict of interest may play into the decisions of the Treasury.

About Me

I am a professional independent trader