Saturday, October 1, 2011

The cataclysm begins...

I will be posting a few charts this weekend…I am seeing quite a lot of mistaken analysis the recent days. I of course, have been aggressively long the dollar and short assets and am accordingly up substantially (meaning over 50% net) in September for medium to aggressive allocations and over 10% net for conservative ones.

My interview with Douglass Lodmell on “The Mind of Money” from last weekend was a final attempt to get some color out there about the coming gargantuan margin call. That margin call has begun and it will not likely finish with a nice clean bounce off convenient levels…this margin call represents the exact references that I made in the video. Its a margin call on all the crazy illiquid leveraged trades that the banks have been doing to generate income and cash-flow without real accommodation for risk. We will likely see several banks, and larges ones too, blow up or go under due to these types of positions and next week will likely represent a pivotal gutting of their assets and remaining cash. There will be a mad rush to obtain non-credit money…that means unencumbered dollars…this will further undermine the asset quality on most bank balance sheets. We will likely begin to see Jamie Dimon’s ponzi scheme at JP Morgan and Blankfine’s a Goldman Tax to begin to be revealed in all their glory in the near future and the credit-lines of major financial institutions like Morgan Stanley, Bank Of America, Well Fargo and Citibank called in. European banks will likely fare even worse. Overall, this will not likely be pretty and it will make the unwind so forceful, in my opinion, that it will likely make our initial margin call in August look like a baby…as nearly every arb/correlation strategy, diversification and leverage strategy becomes strained and overwhelmed…Flash in the pan managers like John “Can I PLEASE close my fund now” Paulson, Eric “what what I thinking" Sprott and David “my equity curve looks like an EKG chart” Tepper who have confused luck with genius and their AUM curve with their equity performance curves - will likely usher in the next phase of their legacies - "life support".

Accordingly, as I see it from a larger-term wave count, we are in an impulse wave of an impulse wave of a C wave zigzag down. This means in Elliottwave terms, we are in a very strong wave 3. I generally, prefer not to put impulse labels on market structures and almost always label things purely as single, double or triple zigzags. Market activity falls very well in to zigzags and the urge that people generally have to find an impulse wave where there is not one is very strong - so there is a lot of bias that comes in unnecessarily. However, in this case, I do believe that we have a zigzag three wave bounce in June, followed by a clear zigzag three wave bounce off the lows in August. I have almost never seen a wave 4 take this form. What it looks like is a double zigzag down or that the bounce off the lows is another wave 2 which sets us up in another wave 3. The fact that the macro picture is likely to become more intense than 2008’s will likely be recognized by a few brilliant minds after its too late and this will most likely be represented in next weeks action. Accordingly, I expect that the market will test 940 to 1,000 in the SP500 next week and ultimately (maybe a lot sooner than logically expected) will not hold there, with clean options to trade to much much lower levels as I have indicated in previous posts regarding out pattern. Lest I leave it out, Gold and Silver among a host of other commodities will also likely suffer broadly as well in the they are beginning their trip to much much lower levels.

What is very disturbing about what is occurring is that the markets have so little real liquidity in them, meaning non leveraged cash that there is not enough money for shorts to hold short positions and certainly not enough money for people to hold long positions. This can be seen by the ridiculous volatility - meaning people’s books are so strained that even a small pop causes their shorts to be forcibly covered and drops trigger the predominant long positions to be involuntarily unwound and sold. Many more people are long than are short and most people are over invested in both directions - this results in stress in both directions and creates irrational and wacky behavior such as we have been seeing over the last few weeks and days.

Again, I will post some charts detailing the market this weekend as a follow-up on this post.

Friday, September 30, 2011

What do social programs do to benefit our society...

Perhaps this is something Obama should think about before coming up with more harebrained ideas…

Thursday, September 29, 2011


Of course Journalism is not coming from anything close to mainstream in the US…try Aljezeera, CBC and RT for more interesting reporting…This video is of history, just keep in mind that what is about to happen is not…there is a compulsion among people to view a big even that can be documented in a memoriam in a piece like this as an indication of the event being behind us…history, however, is still being made and the event is still on going.

The funny thing is that the emerging meltdown of 2011 is WAY bigger than that of 2007 and 2008…few in the press is really talking about it. The actors in the last crisis did everything they could to promote double dealing and cronyism and the setup the BIGGEST financial calamity of all time. And who is watching the boat…the water is very rough and the storm has not even started. But I believe it is going to hit in the immediate future...

part 1:

part 2:

part 3:

part 4:

Monday, September 26, 2011

Its a Mutiny…guess who’s in command?

Video Update: Mind of Money with Douglass Lodmell

I did another in the series of “Mind of Money” interviews with Douglass Lodmell.

The obvious and contagious precious metals disaster/scam. is running ahead full steam - Gold is down 100 dollars as I write this and silver by well over 4 dollars. The reality is that all the Silver and Gold pumpers will likely come out again trying to make excuses for their markets and their mania…meanwhile I have made it clear their case was flawed and empty… really needs to stop coming up with new theories on this Silver and Gold Debacle they so much did not want to see and start getting some better thought out research out there. However, I am quite sure they will come out pumping silver and gold once again. As it is right now, there should be some sort of bounce from the 26.5 area for silver and may be some pause in the EURO implosion…but both will not likely last long if they happen…
if the video is blurry be sure to choose 480p resolution…240p looks terrible.

Sunday, September 25, 2011

Is Warren Buffett really the old man, uncle, grandpa you can always count on...

Look lets face it…the world of levitation and creation of wealth via the credit is fraught with risk…its also a form of gambling that few can resist. Warren Buffett, is no exception. He has built an empire financed by, built from and operating with the core ingredient of credit money. His insurance companies, his banks and most of his enterprises survive, breath and grow because of their interface with this system. Now, there is one thing that I will grant Mr. Buffett, he’s a really smart guy. But lets face it, he’s not grandpa. He’s not honest. He’s not focused on altruism or even capitalism. And whats more, he’s not built his empire on a foundation of bricks and he knows it…the one thing that he is, is predictable - you can certainly count on him in some rather intriguingly consistent ways.

The fact is that Mr. Buffett has consistently given horrible and conflicted investment advice which quickly gets filtered by the media to look rather different. He has consistently cronied up to anyone who can help him with his schemes. He advertises cute phrases which make things sound simple and congenial, but the reality is that they are anything but. His defense of Moody’s was essentially based on “How could I know, how could they know that there was a bubble in real estate and related products if 300 million people could not figure it out either.” I do have a video of his preposterous attempt at defending these guys - I will look for it. The reality is that Warren made a lot of money on the backs of those 300 million fools and he made a lot of money because of Moody’s business model of being paid by the issuer of financial products for their ratings. This is why, if you must know, the United States was absolutely complicit in arranging the debt downgrades that we have received from them.

I can not help but post this video of Buffett. I posted this post in May of this year...Warren "No Big Risk to the Economy" Buffett - disinformation…his interview is for you to judge. Please keep in mind that at the time, we had not had a recovery, it was clear to me that double dip was wildly optimistic and that hyperinflation was an imaginary delusion and that we are and have been in a very large scale depression…not a great recession - the only people who could call the continued debt and real-estate collapse a recovery are economists, analysts and apparently Warren Buffett. Is it really possible that I am smarter that Buffett? Or is it much more likely that Buffett is a very very smart guy (much smarter and more devious than me) embedded in the highest levels of cronyism and power who knows that he MUST absolutely lie and decieve in order to get his way? I think the answer is obvious, that is less than a 1% chance that he was not keenly aware that the risks to the economy were gargantuan, the risks to the financial system were even larger and that the risk of the mother of all deleveragings could happen at any time was imminent. But instead of telling the truth he lied…just like he did about his new tax the rich initiative. I suggest that you question his motivations and integrity on that one too. This is definitely feeling like a 2008 redeaux and deja vous all over again.

Here is his interview earlier this year - a few days after the S&P500 hit is highest point from the rally off the 2009 lows:

and here is his horrible and disgraceful testimony - under oath mind you.
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