THE DOT - if this turns orange or red be alert

Sunday, May 31, 2009

A Pessimistic Assessment, Especially for Europe -

This is an amazing piece of disinformation I have to say that the US banks started their deregulation process back in the 80's is true but that does not diminish the fact that they grabbed values from the real economy in an irresponsible if not criminal way, which they never deserved. As they cooked their books for the same length with profits and strategies which were and are still insane. The biggest Mergers they initiated all went broke and people still suffer from that just to give on example. The latest trick as the recession in 2001-3 was deepening was another insane interest rate cut strike which helped them to initiate the housing bubble to distract Americans from the fact that they never made money again in stock markets. That Rothschilds investment strategy is praised is a joke they manipulated anything to make money and one move was to buy the old Reuters - to be honest I actually suspect they also own Bloomberg but not formally. Rothschilds current value should be in the trillions which is not an official number since they started to diversify their assets also outside their family name and if they have put 33% into real estate last century that alone would count for trillions as of today. I agree that all the green shoot bullshitting campaign cannot be taken serious for many reasons and I can assure you that 2010 will be an ugly year as Zoellick from the Worldbank has put it correctly.


AN INTERVIEW WITH NIALL FERGUSON: The Harvard professor and media star is cautious on the global economic outlook -- and bleak about Europe.

A PROLIFIC AUTHOR AND MEDIA STAR, NIALL FERGUSON has become one of the most prominent academics in the world. The Scottish-born Ferguson, 45, is a history and business-school professor at Harvard, and holds other high-profile posts at Stanford and at Oxford -- where he earned his doctorate.

Ferguson is a provocative writer. His most recent books are The Ascent of Money (2008) and The War of the World, a study of World War II, published in 2006. He has also done several TV projects, including a multipart series based on The Ascent of Money that will air in July on PBS, the Public Broadcasting System. He is working on a book on Siegmund Warburg, who was an influential British financier from the 1940s through the 1970s.

Barron's profiled Ferguson in a cover story more than two years ago ("Wake-Up Call," March 12, 2007), in which he astutely warned that the markets were too complacent about financial and geopolitical risk. Today, the rightward-leaning Ferguson is cautious on the global economic outlook, worries about Russian intentions in Eastern Europe -- and thinks Britain's Conservative Party may finally win an election in 2010. Ferguson also has a distinctive view on investments, inspired in part by the famed Rothschilds. Barron's caught up with him recently in New York.

Barron's: Is the worst over for the global stock markets and the economy?

Ferguson: It may look that way, but appearances can be deceptive. The stock market has actually tracked almost perfectly its downward movements between 1929 and 1931. Now that doesn't mean that we are going to repeat the Great Depression. I don't think we will, because the policy responses have been different. It would be excessively optimistic, however, to conclude from a relatively small set of green shoots in the economic data that we are all going to live happily ever after. It is certainly way too early to say the Obama administration is right that the economy is going to grow at 3% next year and 4% in 2011. I find that scenario as implausible as a rerun of the Great Depression.

What is the relative position of the U.S.?

It is in significantly better shape than the other major developed economies. The U.S. can run bigger deficits at lower cost, because of its reserve-currency status. The Japanese economy has fallen off a cliff. The German economy isn't a great deal better. These two economies are suffering their worst shock since the 1930s. The contraction in Germany and Japan probably will be roughly twice that of the U.S. Real gross-domestic-product growth in Japan is almost certainly going to be a negative 6% or 7% this year. In the U.S., it is going to be about minus 2.6% for this year.

It is ironic that the U.S. may hold up better.

We have a crisis that was clearly American in origin. It had a Made in America stamp on it, yet it ends up hurting other people more than it hurts Americans. That brings to mind [19th-century Prussian leader Otto von] Bismarck's great line: "God looks after drunks, fools and the United States of America."

When will the recovery come?

Nobody has the faintest idea what next year is going to look like. It isn't clear yet that this is just a common recession. This is probably more like a slight depression. We won't see a big V-shaped bounce. Much of the consumption growth in the decade up to 2007 was fueled by things like mortgage-equity withdrawal. That game is clearly over. Strip that out, and you are looking at an annual economic-growth rate in the U.S. closer to 1½% to 2% than 4%.

What is your disagreement with New York Times columnist and Princeton professor Paul Krugman about massive government borrowing?

This is one of the most interesting questions of the moment. The view of Keynesians, their Econ. 101 textbooks and the Nobel laureate at Princeton is that the world has an excess of savings over investments and therefore the deficit can be almost any size and it will be financed. My sense is that if the U.S. government tries to borrow $1.8 trillion in a year, that is an awful lot of bonds to sell at the same time [as] all the other major governments. It looks to me like a supply-and-demand story, and what tends to happen in those stories, regardless of the macro environment, is that the price of bonds tends to fall. The U.S. 10-year Treasury rate has moved up more than 100 basis points [one percentage point] since January. There is a problem in Britain, where the Bank of England had to protest about fiscal stimulus because it was causing a huge interest-rate problem. It is also happening here.

Are you concerned about the potential for overregulation as an outgrowth of the financial crisis?

My worry is that we end up with an overreaction. Now history is something that gets written in a hurry. The consensus is that this crisis came about because of deregulation in the U.S., and that what we need is more regulation. Whether it is bankers' compensation or derivative markets, there is going to be more regulation. My feeling is that all this zeal for regulation actually grows out of a very faulty analysis. Why do I think that? For one, if this crisis was all about regulation it took a hell of a long time to come about because deregulation began in 1980. And deregulation can't be all bad because lots of good things happened in the world economy after 1980. The second problem is if deregulation was the issue, why was it that the most regulated entities, banks, caused the biggest trouble, and that unregulated hedge funds didn't? Some hedge funds have failed, but there has been no systemic downside to it. And thirdly, the regulatory frameworks are not the same on both sides of the Atlantic, and yet European banks are in as big a mess as the American ones. German banks are the most leveraged on average in the world. Now the Germans have been wagging their fingers at the Anglo-Saxon model, but their model didn't prevent extra leverage in the balance sheets.

What about your native U.K.?

The economic outlook is pretty bleak. The size of these big too-big-to-fail banks like Royal Bank of Scotland is really huge, relative to the United Kingdom's GDP. It creates a fiscal nightmare. The U.K. is taking on an enormous pile of liabilities in relation to its GDP and the existing public debt. The U.K. isn't Iceland. It isn't Ireland. They were the extreme cases where finance was vastly greater than the economy. But the U.K. is closer to them than to the U.S. Americans worry a lot about bank leverage and the scale of the government's financial commitments. But the U.S. is a pretty large economy, and the financial sector never got as big in relative terms as it did in Britain.

Any hope for the U.K.?

I am, broadly speaking, bleak about the U.K. until it gets a new government, and that almost certainly will be within the next year. Then I think we will see some radical reform. The U.K. needs another dose of Thatcherism very urgently, and I'm hoping it gets that. [Conservative Margaret Thatcher was British prime minister from 1979 through 1990.]

Are you saying the British Conservatives may actually win an election?

They can and will. The Brown government is probably the most unpopular ever, and it is really quite spectacular. [Prime Minister Gordon Brown leads the British Labour Party.] The Conservatives would have to screw up on an absolutely epic scale to lose.

What about the rest of the world?

The emerging-market story is actually much more straightforward because there is a real stimulus package out there that is working much better than the U.S. stimulus package: It is the one in China. It is giving a shot in the arm to those economies that supply commodities to China, and they are the markets that have rallied the most since the year began. The Russian stock market essentially is a play on the price of oil. Brazil is partly a food story, and India has done pretty impressively, too. So, if you had to take a view on equities, it would be the BRICs [Brazil, Russia, India, China] over the U.S. There is also a big commodities opportunity there.

Where is the biggest potential source of political instability in the world?

Eastern Europe, for sure. Four governments -- in Latvia, Hungary, the Czech Republic and Estonia -- have already fallen since this crisis began.

Americans aren't focused on that.

It is funny, because the Eastern European crisis not only is economically interesting, but [also is] strategically important: It blows a hole in balance sheets of Western European banks. We have been beating ourselves up here for the way U.S. banks were managed. But Western European banks are in worse shape, and what really is going to hurt them is the mess that is Eastern Europe, from Ukraine to the Baltics, Romania, Hungary, and Slovakia. These economies are in a terrible mess.

Are there political implications?

These new democracies that came out of the collapse of Communism have been pretty solidly pro-American. They are Donald Rumsfeld's famous "New Europe." Well, now they are being hammered by this crisis, and that creates an opportunity -- all crises are opportunities -- for Vladimir Putin and his merry men in Russia to start reclaiming some leverage over what they call the "near abroad." The gas pipeline crisis in Ukraine last January, like the invasion of Georgia, could be a foretaste of an important trend over the coming year, where domestic instability starts to create opportunities for the Russians to regain at least some of their influence in that area.

In writing about the Rothschild family, you have discussed your admiration for their old-fashioned investment approach.

There is no doubt that orthodox notions of portfolio diversification didn't help much in this crisis. There was so much correlation among asset classes last year that it was hard to avoid a pasting. But that old Rothschild model, about a third securities, a third art, and a third in real estate has a certain appeal to it.

Or having some exposure to gold. That is the thing I most regret not having done. When the Bank of England sold a pile of gold in 1999 at an incredibly low price [around $300 an ounce], I remember thinking, "That is a stupid mistake," but I didn't buy any gold. That would have been a killer investment.

Stocks haven't done well since 1999.

You are back to square one if you had bought the "stocks for the long run" story then.

How were you positioned prior to the market meltdown last year?

I didn't have much equity exposure on the eve of the crisis. But I probably had rather more real estate than I wanted, though my strategy has been consistently to buy historic real estate on both sides of the Atlantic. Nothing I own was built after around 1800. There is a premium on things that can't be replicated.

You live now in Oxford.

I divide my time between Beacon Hill [in Boston] and Oxfordshire. And the Oxfordshire house is a 17th-century farm house. The Beacon Hill house is one of the oldest in the U.S. We also have an ancient pile in South Wales, which dates back to the Middle Ages. Most of its structure is 16th century. Now that's a kind of quirky investment, because most properties of this kind aren't very liquid. But I see them as investments for the long run -- I mean, they have already been around for the long run.

Thanks, Niall.

Friday, May 29, 2009

SOX and market update

The SOX still needs to make another close at 272 before markets will turn down and we will see that within 4-5 trading days most likely around Tuesday.
Oil makes a 12 count today and should top the A wave around Tuesday as well.
The classic will be a higher opening next week followed by a turn with follow through as the market is hold up by eager manipulation through Futures buying there is no real buying interest for now just a lot of noise from the 'boys'. Even today's Futures volume is very thin we are in a distribution and the bulls are running out of steam it seems as the 'green shoot story' has many bugs. I have a 'deja vu' with how it felt 1 half of 2007 before it turned south but overall still 2 -3 months to go.

The Rothschild media cheerleaders work 24/7 to convince the world of green shoots

The Chicago Purchasing manager contradict the consumers sentiment as it dropped to the lowest level again and the consumer sentiment to be frank does not tell the story at all since every week another 600k plus people lose their jobs and the part time work is rising as well hence the real action power of the consumer is shrinking whatever this obscure statistics ( most of them are cooked anyway)say. The Rothschild club just wants to lure you in and get a handle on the 4 tril. in money market funds but even more so they want to increase the pain medium term in order to get to the next level in the new world order. As the 9/11 event was a scam to undermine democracy and distract from the hidden agenda as they can only reach their targets with a severe global crisis. Those would be one government one central bank etc. and all under their control but they will run into difficulties with the natio nalists in China and other countries as they might have in Russia.
The current upmove is just a trap and a natural reflex as everything in the order of math and physics does move in certain patterns and is not linear. We are now in a 4-5 month reflex move up which should end around Aug.
The FED's purchase program of Treasuries has failed as was foreseeable and rates are rising again besides the fact that they are loosing taxpayer money ( the bonds are lower than the prices they paid and at some point the steepening curve is not good for the banks as well as they need a steep curve but a stable one to generate taxpayer sponsored profits. As prices fall they generated losses since they are long the longer end of the curve. At the same time refinancing mortgages has become expensive again the rates are back to old levels although the FED has put tril. of taxpayer money at risk. While the foreclosures are rising even in the prime sector adding to the toxic assets more toxic assets and bringing the other ones under price pressure. Rising long term rates are very dangerous since it can spiral easily in more losses with foreigners pulling out of Dollar assets as they loose on both ends currency and value.
The consumers are not a good benchmark at all as they are the easiest to manipulate and the sentiment does not indicate their economic behaviour since every lost job adds to the negative momentum and the Obama administration has not manufactured flowing credit but bailed out banks and made their clients in Wallstreet happy with tril. of taxpayer money against of the public noise they made on the media nothing has changed.

Consumer Sentiment Reaches Highest Level in Eight Months

By: Reuters | 29 May 2009 | 10:11 AM ET


U.S. consumer confidence improved in May to its highest level since last September, prompted by hopes the government's economic stimulus program will bring the economy out of recession.

Analysts monitor consumer sentiment as a leading gauge of consumer spending, which accounts for about 70 percent of U.S. economic activity.

The Reuters/University of Michigan Surveys of Consumers said its final May reading on consumer sentiments was 68.7, higher than an early May figure of 67.9 and a final April reading of 65.1.

"Compared with the state of the economy six months ago, consumers have indeed regained a good measure of confidence," Richard Curtin, director of the surveys, said in a statement.

Thursday, May 28, 2009

Oil tech update - wave A up is coming to an end

Oil one of my favorite longs is about to finish wave A up around 65 after it made 100% up but we have still some room for weave C up with my target at 78/80 but that's rather more an August2009 event. As the count at an 11 today we should turn around next week for a correction or consolidation. We should retest the 50 level as Neptun the planet for Oil turns retrogade today interesting timing though. Well the oil is pretty much in sink with the overall market now with oil going into a consolidation the other markets are poised to do the same. Although Wallstreet wants to get you in to the stock market as they know 4 tril are sitting in money market funds - that makes the horny vampires really crazy to get you finally back in around the tops is the mission of the Goldman,Rothschild,Rockefeller gang. I recommend to do the opposite and sell them all your stocks around 1000 in summer. Traders can play the market but investors should use the levels to exit do not get fooled by this green shoot propaganda. we have nothing but a straw fire which will burn down quickly and reality comes back in Q3 very ugly.

Must listen to this - worth the time - sensational stuff

You should take the time and listen to this interview of David Icke - if you want to get some deep insight who may is running this planet on a deeper level you might have had a hunch but never dared to put the pieces together. It is very close to what I put together so far but there might be even more to it - good stuff about Obama as well as it apparently can be observed on a daily basis.

part 2

The hyperinflation begins with such moves

Japan has already an unbelievable deficit and wants to print half a tril $ on top of that to buy Japanese stocks - by the way they did that already on the way down as they ordered the government run pension funds to load up on stocks on much higher levels. Basically the Japanese stock market is inflated by artificial created money which was financed at a rate of 'zero' as long as there was still enough morons to buy worthless paper it worked out to a small degree. Foreigners might have gained the last 2 years as the carry trade unwinding brought currency profits but that is a simple currency tradeanyway.
Why do I tell this as on the chart below you can see also the American curve and its now on the path of Japan and the the statistics do not tell the whole truth as the FED has created money by printing which is not in the debt statistics yet but America is already above 100% of GDP and the trend keeps marching. The problem will be as all developed countries are on this path the difference to Japan will be that there is no last resort to buy left at some point which leads to simple printing of money and that creates hyperinflation.I am not sure if we really reach Marc Faber call but we are on the way to some insane levels.


U.S. Inflation to Approach Zimbabwe Level, Faber Says


click on this link to see the chart

Wednesday, May 27, 2009

Market update - shame on you Bloomberg

After we had the NDX far higher this morning the 13 count only showed up just before the closing and the markets were far lower - that's the shame on you on Bloomberg - strange things going on with this machine some times (little manipulations?).
Today's price action marks what may serve as an interim top finally ( only the SOX is still missing). This ki,nd of double high is in sink with many other fractions of the market the only delayed part is OIL as it needs to go up at least 2 more days eventually 3 before a severe correction of wave B down will materialise. VIX also confirms. Sell any strength the next days short for a test of the 1300 level going forward. The intermarket divergence with the SPX is symptomatic and the BKS is heading lower with banks coming under more pressure going forward as they have lost already 8 points or 17% from the top- XBD will follow as all estimates about brokers are insane put out recently especially about Goldman. The party for the brokers is over soon when it comes to fundamentals and 4th quarter will be a disaster but they keep cooking books and receiving presents from Geithner and Bernanke for the time being but that will be not sustainable.

SOX about to break the news - tech update

SOX is in wave 5 up and needs to close above 270 to finalise the count as the NDX is about to do the same in a bit more complex count. Will happen within a few days as the max. window is the 6th June with an exact 3 month time frame from the low. The upcoming Full Moon around that date is an uncomfy one as it is in square to Saturn. Tomorrow the positive effects of the recent days will vanish with Neptun stationary ( the fake euphoria might run out of steam anyway as Mercury is turning direct as well at the end of the week. This will bring plenty of confusion but most likely a turn of tides short term. Watch the SOX carefully to get a good indication for a short as we need to close above 272 to trigger it.

Do not get fooled by this green shout propaganda - they want to suck you in

Dropping Schiller house prices at highest pace again yesterday and the fact that there is no bottom in sight for real estate is the reality. Economy losses jobs by over 600k per week - Obama promised to generated 4 mil. jobs over 2 years by spending 800 bil (quite optimistic). Reality is that is the amount of jobs within 2 months at current speed. We have to be aware that the whole system of capitalism as we have it now is purely designed to enrich an elite of bankers and the club members of the Bilderberger which includes their lobbyists and helpers in government and administration. The system depends on the situation that debt is the natural source of their income and the modern way of enslavement of the other population. The dominant thought in today's society is how can I pay all the debt I have ( education,shelter and living standard) and you almost have no chance to escape the system unless your an Internet wizard or make it to Wallstreet to get an elite slave as you still depend on the good will of the 'club' to keep you on your feet's.
All current interventions were primarily focused to fic the banking system America has allocated over 10 tril for that problem and just 800 bil for Mainstreet ( which partly flows back to the banks anyway. The government does not work for the people they just have to make sure you vote for them at current society model so you get some little perks which make them look they care ( some certainly do - most are rather after their own perks). Since the so called aristocracy has been replaced by democracy which is just a camouflage as it is in communism because they also created an elite of bureaucrats who got all the perks and the others are citizens of a second and third class in Russia and China - things have not really changed. The elite always considers themselves in the position to get more for whatever reason and makes sure it stays that way in every society we have but apparently none will survive as they all can not manage the events longer than 1 or 2 generations.
Well as I wrote months ago we would get this rally towards summer and that this mark a great opportunity to get rid of stocks because there is an evidence like summer and winter there are seasons and cycles of all kinds and we entered into a big contraction wave which will last for at least an decade. In 1930 many Guru's called for the end of the downturn and one of those were also Rockefeller and JP Morgan besides many others and all were wrong. Subprime and Alt A just give a number of 4 tril which may completely default and even the prime mortgage segment is defaulting in some segments that are just the numbers for America. So far the total losses amount to 1.5 tril but only half of that is connected to mortgage we have not seen anything yet which was really severe and an definite indication is that nothing has been changed about banking and the guys who brought us all into this are still sitting in the driver seats hence the cancer is still alive and spreading. All they did is to dope us with high dosis so we are numb and do not feel all the pain right now. Why is Japan after 20 years still not out of their down cycle with zero interest rates and had a big time growing China to deliver too which both did not do the trick? Ask yourself why a Greenspan who denied there was a bubble for many years and worked as a Bank lobbyist became the FED chair. People who are working against the interest of the position they hold are a regular event these days Paulson,Geithner and Bernanke are current proves of that pattern. It is not their incapability but rather the fact that they have a hidden agenda they work for they people who put them their ( although many might be aware of that only partly as they only have a partial knowledge about the things going on behind the scenes). In any case the current straw fire is bound to last another 2-3 months before things turn ugly again so may get under the impression they did the trick.

Excerpt 1

Mortgage Applications Sink as Loan Rates Rise

The highest home loan rates in more than two months drained demand for refinancing last week, dragging total U.S. mortgage applications to the lowest level since early March, the Mortgage Bankers Association said on Wednesday.

The average 30-year mortgage rate rose 0.12 percentage point to 4.81 percent, above a low of 4.61 percent two months ago though down more than a percentage point from a year ago.

Refinancing has been the lifeblood of the renewed push for mortgage funding much of this year, and even that has lost steam, according to the industry group's data.

Total U.S. mortgage applications fell 14.2 percent in the week ended May 22 to 786.0 on a seasonally adjusted basis, well off a recent peak of 1,250.6 in early April.

Home loan refinance requests last week slumped 18.9 percent to 3,890.4, about half of the 6,813.5 peak in early April.

Refinancings accounted for just over 69 percent of all applications, after hovering closer to 75 percent in recent weeks.

Excerpt 2

Elliott Wave Guru Sees Dark Days Ahead


One of America's most famous market forecasters thinks that investors should play it safe with their investments.

ROBERT PRECHTER, THE market forecaster who told investors to sell their stocks weeks before the October 1987 crash, is back in the news.

Prechter, head of market-forecasting firm Elliot Wave International and author of several books, including Conquer the Crash (available from, has been quoted recently as saying that the current recession could last for a long time and even force stock markets back down to levels seen at the market bottom reached in March of this year.

Barron's caught up with Prechter by phone this week to understand the technical trading signs he looks at to draw conclusions about investor sentiment. You've said that today's recession represents a very deep and prolonged decline, akin to the 1929-1932 depression. What's your reason for viewing things as so dire?

Robert Prechter: My model is that naturally occurring waves of optimism and pessimism, which result from unconscious herding, are the driver of financial and macroeconomic trends. Upon rare occasion, waves of very large degree come to an end. In the financial realm, when people get more pessimistic, they sell stocks and curtail credit. They also take fewer risks in the realm of production, which causes the economy to contract. Taken together, these changes -- at very large degree -- portended a downward revaluation of the stock market, a deflation in credit and a depression.

Q: By what measure are you judging this pessimism?

A: Aside from price patterns per se, we track waves of social mood by way of psychological indicators. At large degree, we use things such as price/dividend, price/book and bond yield/stock yield ratios, mutual fund cash percentages, the number of investors bullish vs. bearish, credit spreads, savings rates, consumer sentiment, duration of optimism, and so on. From 1998 to 2007, these measures set records. P/E is still setting records. Optimism occurs at tops, and the more extreme the optimism, the bigger the degree of the top.

Q: Some observers allege that steps taken by President Roosevelt during the early part of the Great Depression ended up prolonging the depression. Will policy decisions being enacted now ameliorate or exacerbate the current decline?

A: Governments' policy decisions hamper and ruin economies all the time, but their meddling does not affect waves of social mood. On the contrary, waves of social mood generally spur governments to act. The 1929-1932 collapse caused the government to get restrictive and separate commercial and investment banks in 1933; this was after the bust it was designed to prevent was over. The 1990s boom caused government to get frisky and repeal the act in 1999; this was just as the boom it was designed to foster was ending. These policy decisions did not cause any changes in social mood, but the social mood trends predicted the character of the policy changes. Government herds, just like everyone else, but it is at the tail end of the herd, because it takes time for a consensus to develop so extensively that government has the public support to act.

Tuesday, May 26, 2009

NDX tech update

The NDX turned around without finishing the count last week but now we are back on track to make the 13 count finally the next days in this zigzag count with 'E' in the making before we will see a more severe correction. So far we have a distribution pattern as who ever buys a market on such a consumer sentiment number will suffer going forward. The frustrated long only manager who missed the rally are rushing in as they evaluate this numbers as positive we have to get in desperation. They are as much as the market is at current levels an intriguing buy signal - just kidding. That's just an excuse to join the party but that exactly creates this kind of pattern. Will be interesting to see if we need to go to the highs to do that. The current pattern looks almost exactly like the consolidation we had in Jan./Feb hustling around 1200 for the NDX for weeks before the market dropped 220 point.

The current 'euphoria' is in the stars but ugly things are lining up

I actually was wondering what might be the trigger for the Astro constellation of today which is a New Moon is difficult angle to Pluto but more so the Jupiter Neptun conjunction combined with a sextile from Mars. It reflect both major events the blind sighted guts North Korea has in making the demonstration of strength with nukes and the exaggerated optimism consumers seem to develop these days. Partly Obama may be blamed for this as well as people give him a lot of credit which I think he may not deserve in the final assessment as he makes people believe that this contraction can be solved soon.

Unfortunately this is just a straw fire and will end in 2 months with reality biting back even uglier than before as all trends end always in exaggeration and we did not see an extreme for this bear yet and things keep getting worse - house prices keep falling as the core problem their driver jobless claims keep rising. Another fact which confirms me in my view is the fact that we are about to get some of the ugliest constellations in astrology over the next 2 years which are the ones we had 1930-32 in a bit different set up even more challenging as the FED is involved. The T-Square due in a few months is on the FED's Sun / Pluto opposition which bears a huge risk for them being wiped out or challenged in a catastrophic way.


Consumer Confidence Sees Biggest Jump in 6 Years

U.S. consumer confidence soared in May to its highest level in eight months as severe strains in the labor market showed some signs of easing, though Americans' moods remained depressed by historical standards.

The Conference Board, an industry group, said on Tuesday its index of consumer attitudes jumped to 54.9 in May from a revised 40.8 in April, the biggest one-month jump since April 2003.

Economists had been looking for a much smaller rise to 42.

Fewer Americans said jobs were "hard to get," the survey found, with that measure slipping to 44.7 percent from 46.6 percent. Those saying jobs were plentiful climbed to a still meager 5.7 percent, but that was still higher than April's 4.9 percent.

"Consumers are considerably less pessimistic than they were earlier this year," said Lynn Franco, director of The Conference Board's Consumer Research Center.

The data was in line with other evidence suggesting that, while the economy continues to contract in the current quarter, the pace of deterioration has abated somewhat.

U.S. stocks extended their rally after the data, with the Dow Jones industrial average up 120 points or 1.5 percent.

The survey offered mixed messages regarding Americans' propensity to spend money.

Paulson is a plain liar but still vain enough to try to restore his reputation

First of all we give Goldman too much attention since they are only one broker of the Bilderberger club and not the one's running the manipulation only a part. Due to their overall position they gathered through the support of the Bilderberger they are the source they use to acquire more positions of power to secure and control the events. Hence Paulson is only a high ranking puppet who happened to run some missions for them and letting fail Lehman was definitely one as I wrote earlier just the matter of fact that one knew it would fail will have made the insiders multi billion of profits as besides stock markets within the OTC markets you literally made a killing one of which is the other Paulson ( the hedge fund manager who was short CDO's and other instruments which benefited mostly by this overall event just to give one name. Goldman was also one big beneficiary of all this the only thing to tie up loose ends was to make sure that the profits were paid out from AIG, which Paulson took care of by an insane 100 % payout ratio. That Fuld fooled the public and investors by false claims of the financial health was part of the dirty game - its hard to figure out how much of that was classic defense lies or deliberate misleading admits knowing the outcome as he may have been part of the 'club'. He may have sacrificed his life achievements for a greater good of the 'club' - a regular tactic in chess. Two Jewish names were wiped out it seems ( Bear Stearns and Lehman ) but that is just on the surface since Bear Stearns was integrated into the other big broker of the Bilderberger JP Morgan and Lehman operations do exist just work for other entities like Barclay's. The Rockefeller and Rothschild's are the center figures in this operation together with some other 'top money aristocrat's ' of the new world order. Remains the question if their is a 'king' going forward we might get some hints on the background there are some myths which rather point to aliens as to humans as in many old cultures the rulers were always from heaven and documented as UFO's even in ancient Egypt. I think its not a coincidence that various TV shows are hinting to such scenarios like the X-Files. You may think I am way out here but we have to consider such a possibility.


Paulson’s Complaint

Lehman Brothers disappeared with Hank Paulson's reputation. He wants it back

Paulson and Richard Dick Fuld for Paulson interview about Lehman, Bailout">

Hank Paulson, former master of the universe, sits in a nondescript office in northwest Washington, D.C. He is trying to work on his memoirs, but he is struggling. He doesn't seem like the onetime All-Ivy tackle at Dartmouth, the Harvard M.B.A. who ran Goldman Sachs, the prince of Wall Street who went on to be come secretary of the Treasury. He comes across more like an athlete who has lost a game and can't stop talking about the dropped pass, the missed shot. He is trying to explain the weekend last September when Lehman Brothers went down—and the financial world collapsed.

The conventional wisdom, he admits, congealed quickly: it was a mistake for the government to let Lehman die, and the blame rested squarely with Hank Paulson. On the day that Lehman filed for bankruptcy, Paulson had tried to get out ahead of the story. If Lehman couldn't save itself, he told reporters, then he wasn't about to ask the taxpayers to step up. "I never once considered it appropriate to put taxpayer money on the line," he said. The message was that the government would no longer bail out failing companies—that would just invite more foolish risk-taking. It would create a "moral hazard."

But of course, in the weeks and months since the fall of Lehman Brothers, the government has gone on to bail out banks and other financial firms to the tune of hundreds of billions of dollars. So why didn't it save Lehman? If only the government had rescued Lehman, a financial panic could have been averted. Or so the story goes. The narrative was set from the beginning by Paulson's moralizing tone, followed by a market crash—and, as the once mighty bankers crawled out of the wreckage, the anguished testimony before Congress of Dick Fuld, the CEO of Lehman, who portrayed Paulson as a backstabbing Judas. "Until they put me in the ground," Fuld said, leaning into the microphone and baring his teeth, "I will wonder."

Paulson insists that he did not turn his back on Lehman. "There's no company that I spent more time with and worked harder to save. That's sort of the irony of the narrative that we wanted them to go under," he told NEWSWEEK in one of his first extended interviews since leaving office. He also dismisses the argument that the fall of Lehman provoked a panic. "It is absolutely a fiction that Lehman was anything more than a symptom." He says a perfect storm of other near failures caused the financial crisis—the troubles at Fannie and Freddie, the news that AIG faced huge liabilities from its financial insurance gambles, the teetering of giant mortgage lender Washington Mutual on the edge.

All this is true enough, but it doesn't mean that Paulson knew what he was doing when Lehman went down. The panicked scenes that played out between bankers and policymakers during Leh-man's last days were recounted in the newspapers in the weeks that followed. But now, more than half a year later, and with the most acute moments of the financial crisis behind us, the key players are better able to reflect on the decisions they made. Perhaps no one has spent more time reconstructing the events than Paulson. In retrospect, it appears that Paulson was not the callous titan of Wall Street, but rather an earnest, sometimes bewildered man caught in a whirlwind he could not tame or even fully understand. He did the best he could, reaching, sometimes lurching for answers, but in the end he was rescued by the sort of nerdy professor type who might have been devoured on the trading floors of Wall Street. To the extent that there was a hero during those weeks, it was arguably Ben Bernanke, the quiet, shy chairman of the Federal Reserve, whose problem-solving and salesmanship before a skeptical Congress were critical to avoiding financial disaster.

Paulson was known as "the Hammer" as a 6-foot-1, 200-pound tackle on the Dartmouth football team because he seemed to explode at the snap of the ball. Tenacity and drive, more than brainpower, have distinguished his career. He has been a champion arm-twister and shrewd enough: when he rescued Goldman's IPO in the wake of the Russian financial crash in 1998 he made hundreds of millions for his partners and shortly thereafter became their leader. Yet Paulson can be oddly inarticulate for such a powerful man. He is not a Wall Street smoothie: no trophy wife (he remains married to his college sweetheart), and at Goldman he was known for wearing penny loafers, not handmade Italian shoes. He's an avid bird watcher. A nonsmoking, nondrinking Christian Scientist, he did not head for the Hamptons on the weekend but visited his mother in Barrington, Ill. Yet, physically imposing, radiating a confident forcefulness, he came to stand for the dominating Goldman brand. In the Wall Street hierarchy, Goldman is the smartest and most confident of them all: the firm makes bets, but only ones it feels sure to win.

The Lords of Goldman, who tend to come from Ivy League schools, looked down on the hustlers at lower-ranked firms like Lehman, who came out of state schools and the trading pits. Lehman was an old firm, but its modern incarnation was built in the image of its scrappy CEO, Fuld, who came from the trading floor and liked to make big, risky bets. Fuld was called "the Gorilla," a nickname some might have resented. Fuld kept a toy gorilla in his office. His ethos was us (the public-school guys—Fuld went to the University of Colorado) against them (the Harvard know-it-alls like Paulson of Goldman Sachs). Paulson and Fuld have known each other for years. For the record, as well as in private, Paulson describes Fuld as a "good guy" and even as a "friend." (Fuld declined to speak to NEWSWEEK). But knowledgeable Wall Streeters and government officials who asked to remain anonymous in order to speak more freely say that Paulson regarded Fuld as a gambler who lost sight of reality.

Paulson began having his doubts about Fuld—and the future of Lehman—as early as October 2007, when Lehman made a big bet on commercial real estate even though there were signs the deal was unwise. Paulson remained dubious about Leh-man's rosy earnings reports for the first half of 2008, and when the red ink began to show in June, he began urging Fuld to scale back Lehman's leverage and find a buyer or a fresh infusion of capital. He was frustrated, say these knowledgeable sources, when Fuld stubbornly demanded terms that were too favorable to Lehman to attract any buyers or investors.

Fuld's 31st-floor midtown office had sweeping views of the Hudson River and the New York City skyscrapers. In early September, the executive suite of Lehman Brothers became a kind of war room; day and night, Fuld's lieutenants padded about, munching M&M's and chugging Diet Cokes, as they searched, with growing desperation, for a solution. A South Korean bank had seemed interested in investing, then backed off. Fuld and his men tried to stay hopeful. Six months earlier, in March, JPMorgan had rescued the failing investment bank Bear Stearns—with the help of a loan from the federal government. In early September, the Feds seized control of Fannie Mae and Freddie Mac, the two mortgage giants sucked down by the collapsing real-estate market. Surely, the Lehman team believed, the Feds would step in to help—if Lehman could only find a buyer.

Paulson does not seem to have grasped the urgency of the looming disaster. Although top financial experts were warning about the housing bubble back in 2006, Paulson—by his own admission—was not paying much attention to the way banks were slicing and dicing mortgages and selling them as complex securities. "I didn't understand the retail market; I just wasn't close to it," he told NEWSWEEK. But while he was at Goldman, he had lobbied Congress—successfully—for new rules allowing investment houses to at least double the amount of leverage they could carry.

Sunday, May 24, 2009

Geithner is out of his freaking mind when he thinks he can just screw taxpayers

It is easy to argue that 3 months was a short period and in some cases of smaller banks it really might be unfair but the bottom line is we have to see the whole picture. If taxpayers would have not bailed out Bear Stearns ( by taking over losses of roughly 10 bil. so far) and AIG ,Fannie Freddie with close to 600 bil if not a 1 tril. every bank would be bankrupt in America. Most of those up to 1 tril. are gone and will never be paid back. Hence the small pay back by those warrants is just a drop in the ocean compared to what benefits banks have right now with zero financing by the FED on top. Geithner is hopefully sound enough to consider that or he will be assisting one of the biggest thefts in history.

TARP Warrants Show Banks May Reap ‘Ruthless Bargain’

By Mark Pittman

May 22 (Bloomberg) -- Banks negotiating to reclaim stock warrants they granted in return for Troubled Asset Relief Program money may shortchange taxpayers by almost $10 billion if Treasury Secretary Timothy Geithner’s first sale sets the pace, data compiled by Bloomberg show.

While 17 financial institutions have repaid TARP funds, two have come to terms with the U.S. on the value of the rights to buy stock that taxpayers received for the risk of recapitalizing the industry. The first was Old National Bancorp in Evansville, Indiana, which gave the Treasury Department $1.2 million last week for warrants that may have been worth $5.81 million, according to the data.

If Geithner makes the same deal for all companies in the rescue program, lenders may walk away with 80 percent of the profits taxpayers might have claimed.

“For once we’d like to get a fair value when we come into contact with the banking system,” said Representative Brad Miller, a North Carolina Democrat and chairman of the Investigations and Oversight Subcommittee of House Science and Technology Committee. “We don’t want a ruthless bargain.”

Under the Old National warrants formula, Bank of America Corp. would save $2.03 billion, followed by Wells Fargo & Co. at $1.48 billion and JPMorgan Chase & Co. at $1.46 billion. Morgan Stanley’s benefit would be $983 million, Citigroup Inc.’s would come in at $965 million and Goldman Sachs Group Inc. would have $693 million, according to the data compiled by Bloomberg.

‘Stronger Incentives’

For the 20 largest TARP recipients, the total savings would be $9.985 billion, the data show.

Senator Jack Reed, a Rhode Island Democrat and chairman of the Banking Subcommittee on Securities, Insurance and Investment, said today in a letter to Geithner that warrants were part of the TARP so that taxpayers could be compensated for the risks they took investing in lenders.

“We need to ensure that the financial industry recovers and that banks can start lending again, but taxpayers must be fairly compensated as well,” Reed said.

Geithner wants to move swiftly to sell the TARP warrants, he said on May 20. Their worth depends on assumptions about the chances the underlying stock will go higher than the rights. Depending on the input, different valuation models reach a range of conclusions.

Lenders shouldn’t be trusted to make suppositions that would be to the advantage of taxpayers, said Linus Wilson, an assistant professor of finance at the University of Louisiana at Lafayette.

‘Doing Our Best’

“Bank managers have stronger incentives than Treasury personnel to get a better deal for their constituents,” said Wilson, who has written about appraising warrants.

Because Old National was the first to repay TARP money and buy its rights back, the transaction “sets the price point for the whole program,” said Simon Johnson, a fellow at the Peterson Institute for International Economics in Washington.

“The point of the warrants is that taxpayers participate in the upside,” said Johnson, who testified on the securities before Miller’s subcommittee on May 19. “It defeats the whole purpose if you’re going to sell them way below market price.”

Treasury Department spokesman Andrew Williams declined to comment on Old National.

“We’re doing our best to protect the taxpayers’ interest and make sure we get fair market value,” he said.

Returning $45 Billion

The department has a “robust process” of evaluation, using two modeling systems, consulting with an asset manager and collecting bids from market participants, Williams said.

The U.S. received rights to buy 1.4 billion common shares in exchange for $287 billion in TARP capital, according to data compiled by Bloomberg.

A company that accepted aid had to grant warrants equal to 15 percent of the TARP investment at a strike price equal to the 20-day trailing average of the shares. A strike price is that at which an option can be exercised.

Now that Goldman Sachs, JPMorgan and Morgan Stanley have applied to return the $45 billion they received, they may also reclaim their warrants.

Those may be worth about $4 billion, data compiled by Bloomberg show. If the U.S. followed the Old National formula for the three New York-based banks, taxpayers would receive less than $1 billion.

JPMorgan spokesman Joseph Evangelisti declined to comment.


Mark Lake, a spokesman for Morgan Stanley, said the bank “would support any program that is focused on benefiting the U.S. taxpayer.” Goldman Sachs spokesman Michael DuVally said company officials have “always said the taxpayers should benefit from the value associated with these warrants.”

In the case of Old National, each of the 813,000 warrants had a strike price of $18.45.

On May 11, the day the U.S. announced the sale, the stock’s option-implied volatility, derived from market prices of stock options that are traded daily, was 61 percent, according to data compiled by Bloomberg. The risk-free rate of return, or the yield of government debt, was 3.47 percent that day.

Based on that volatility and that rate, the Black-Scholes options valuation tool appraised one Old National warrant at $7.18. The bank paid the U.S. $1.48 for each.

“We were able to reach a deal that was good for our shareholders and Treasury felt was good for taxpayers,” said Old National Chief Executive Officer Bob Jones.

Risk Management

The bank, with more than $8 billion in loans and branches in Kentucky and Illinois, hired an appraiser to evaluate the warrants, Jones said. He said the government rejected his first offer of $600,000.

The second TARP recipient to reclaim stock-purchase rights was Iberiabank Corp., a Lafayette, Louisiana-based lender with $5.6 billion in assets that took $90 million in TARP assistance.

Iberiabank paid $1.2 million to buy 138,490 warrants at $8.66 a share, according to a May 20 filing. They may have been worth $19.78 each, or a total of $2.74 million, according to data compiled by Bloomberg and modeled by Black-Scholes.

The lender was able to slash the number of warrants from 277,000 by selling common stock in December, a reduction allowed under TARP rules.

A risk management device, Black-Scholes was developed in 1973 by Fischer Black and Myron Scholes to estimate the fair market value of stock-option contracts. Williams, the Treasury spokesman, declined to say whether Black-Scholes is one of the two models the department employs.

Serving Taxpayers

At the University of Louisiana, Wilson used Black-Scholes and two other systems to evaluate Old National’s warrants, plugging in three volatility assumptions: 37.1 percent, 59.72 percent and 72.89 percent.

The lowest, calculated from the bank’s stock price movements over the past seven years, yielded the smallest warrant value, ranging from $2.50 to $6.72 per warrant. The highest, based on changes since Jan. 1, 2008, returned a range from $8.88 to $11.05. The middle estimate -- the options-implied volatility -- said a right was worth from $5.93 to $9.69.

Wilson said the government would serve taxpayers better by auctioning off the securities to investors. The law that established the TARP allows for an auction.

Miller, the North Carolina congressman, said the Treasury should have insisted on terms for taxpayers similar to those Warren Buffett secured for Berkshire Hathaway Inc. shareholders when he invested $5 billion in Goldman Sachs in September.

‘A Tough Penalty’

Buffett received 43.5 million warrants valued by Black- Scholes at $3.6 billion, or $82.18 each, on the date of the transaction, data compiled by Bloomberg shows. Taxpayers injected twice as much into Goldman Sachs and got 12.2 million warrants worth $882 million, or $72.33 each.

The American Bankers Association said in an April 16 letter to Geithner that a company that wants to get out of the TARP now faces an “onerous exit fee” because it has held the investment for so little time.

“There is no reason for Treasury to impose such a punitive obstacle to exiting,” said Diane Casey-Landry, the association’s chief operating officer in Washington.

After Shore Bancshares Inc. returned $25 million in TARP money, plus $208,333 in interest, it offered to buy its 173,000 warrants, according to CEO Moorhead Vermilye. He declined to disclose the bid, which he said the U.S. rejected.

The Easton, Maryland-based bank’s warrants were valued yesterday at $12.33, or $2.1 million, according to data compiled by Bloomberg and modeled by Black-Scholes. Paying that to reclaim them would amount to an annual interest rate of more than 30 percent a year.

“It’s a tough penalty for the short time we had the money -- three months,” Vermilye said.

Thursday, May 21, 2009

FTSE tech outlook - perfect example where the overall market is

Left hand the weekly FTSE chart - after a sharp retracement up we are now in week 9 which tends to end the momentum or give it a severe turnaround even in cases we are heading for much more as you can easily see on the way down. I think for the next weeks we will swing around the top end of that high with an amplitude of 10% above it and below it in terms of the FTSE it is 500o on the upside and 4000 on the downside thereby the bias is now rather to test the 4000 within a correction and 3 weeks.
Same applies for the SPX and the range is 830-1030 basically I do think we are and remain in a bear market and are in bigger wave 4 up still and enter wave 5 down in later Q3 ( explained that in earlier posts). We have 3 reasons why we do not turn back down immediately the first is the natural law of forces an extreme move needs to find its own equilibrium and swings back to some degree just to keep the balance ( that is also true for the fundamental background as all governments have intervened in various ways to bring the economic erosion to a hold ideally they wish they have turned it but that's not possible). Second reason is that it is part of the human nature not to be able to let go ( even then you brake up with someone you tend to give it at least another try after a crisis) and in this case its even astrologically backed by a Jupiter / Neptun conjunction so the rosy glasses are on us and its easy to sell the naked emperor. Obama does that and its not a prudent thing to do because the facts prove him wrong in the near future but that's why he does not intervene with the upside manipulation since it lifts the overall/consumer sentiment. This will be around for another 2 months until some ultimate negative forces come back to play Uranus opposition Saturn and even more so Saturn square Pluto in Sep and Oct 2009. The 3 reason is pragmatic and evil as in order to make a scam one needs to create the idea that the other person can make a profit. The media and the cheerleaders are drumming the bull song again 'the worst is over' and 'a new bull trend has started'- suddenly all the 'expert politicians who missed to inform us about the top have a bliss where the low was but more so the 'club' wants to make us believe that after a deep correction the bull market is back and tries to sell the market with Goldman the top runner. For a week now they raise all kind of sectors around the highs to create pressure on the long only funds who have missed the party and I am sure they will succeed starting mid June when the end of the quarter gets closer and the market does not really fall back. Second trigger will come in July breaking above 950 and the 200 day MA they will force the retailers back in as well with the help of a great salesman President Obama.

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