NASDAQ Volume

NASDAQ - Abondoning "ship" baby

The same type of action was seen in 2007 for the NADAQ and market highs.

Dollar update

VIX does not make new lows...

Obviously this is a big deal...perhaps there actually is a market that Ben BernaNke does not manipulate.

Market Update

Daily ES/SP500 system have initated new shorts over the last few days. The TF Daily system initated a short on the close yesterday and will likely add today. While the weekly systems are still short, having built nearly full size positions and expecting a drawnout and painfully large drop into the end of the year.

"...it does no good at all to just throw dollars from a helicopter"

Brazil will use the upcoming G20 meeting as a forum to complain about the Fed's decision to print billions of dollars to bolster the US economy, Brazilian finance minister Guido Mantega said.

Mr Mantega told reporters the Fed's decision could aggravate imbalances in the global economy.

"Everybody wants the US economy to recover, but it does no good at all to just throw dollars from a helicopter," Mr Mantega said. "You have to combine that with fiscal policy. You have to stimulate consumption," he said.

A Quick Update

I apologize for my lack of posting lately, I have released a batch of new systems as well as implemented new trade server infrastructure in Switzerland.

I would like to update you regarding the posture for the systems. The daily short that I posted previously was covered @1159.50. The weekly RVS models have continued to add short contracts to their existing positions which have been building. So, the systems are now weekly short, ES, NQ, TF, EURO, YM and long the DX (Dollar). The average win for the weekly systems on the ES contract is over 100 points and can be significantly higher. Given the extended conditions in the markets and the posture of all these systems on the short side...I believe this is a fairly compelling risk for the bulls here given the downside consensus and also supports my view that the markets will be 20+% lower by the end of the year.

Asset = Liability, Good = Bad, Wrong = Right, QE = Deflation, Up = Down

Well, here we are...in a world where what thing look like is not necessarily what they are...so, the market is very difficult - it is unable to trend as opening prices and close prices are a virtually identical everyday, we get almost no intra-day direction - just volatility and chop. Moves are generally coming overnight and then chop most of the day.

We have overshot logical and normal resistance levels such as my 1.272 levels at which I look for reversals and gone parabolic. I know that this has been a very frustrating market for people to trade. What is even more frustrating is that the market has actually not moved much either in the last 30 days...it feels like it has made a much bigger move than it actually has. Though on indexes like the Russell and Nasdaq we have had supstantial moves. The market as a whole has not however. Below is a snap shot of a month of trading for the SP500...in that time all the candles are heavily overlapped and we have risen roughly 30 points...that's a little more than one or two good trading days for the SP...and all this while the largest QE effort in history (not to mention deception) has been in full swing. Impressive, Very Impressive, indeed. Below is a snapshot of those 30ish points:

So, I likely will post some charts later as to what my systems are doing with this market. Currently, daily and weekly systems are short. Weekly's and some daily's added short contracts on Friday, so they are short ES, TF, EMD, EURO and NQ. Also, weekly systems are now long the dollar.

Several interesting points regarding this market. The volatility indexes directly diverged and are not confirming the momentum in the markets - nor is breadth or many other secondary indicators I watch. The reality is that everyone and their brother is now looking bullish over the longer-term and thinks that QE will kill the dollar and create hyper inflation. All I hear about is discussion of "Inflation". You can see what I am talking about by reviewing my post "Some Objectivity" and "Coordinated Deception" regarding David Tepper's CNBS appearance.You can see what has happened to his arguments already...here is the Appaloosa Portfolio and below is a list of holdings.

The reality is the if you refer to my "Ending Well" post...we have breached the primary trend line and Bernake and his accomplices have proven once and for all that they will stop at nothing to prop up inflation assets as the expense of the economy and individual Americans no matter how risky the strategy is.So the stage is now set for the worst case scenario which I was hoping would not happen. So, the downside risk/targets for the markets are much greater accordingly. Trust me, this issue is not lost on businesses and investors who now know that they will have less demand from the consumer combined with higher overall costs if Bernake's plans were to work. I can assure you that if someone were to attempt to do financial mediation for me personally and the result was less income, higher expenses and the small potential that some of my assets would rise in value due to inflation, I would not think very highly of that person. Bernake is an amature and a failure. Please also read (A dog with fleas, Insurance ...scam of our age...)

Now on to the next subject. If QE is really in full swing will it create money? My answer is no. What QE creates is levitating or rising inflation asset prices, in this case nearly ubiquitously for banks and very large corporations and no one else. That money has a very interesting way of vanishing as soon as the mystery buyer is no longer there with a bid. QE would have the potential to create money "IF" it were to create true inflation by influencing the risk taking of individuals and small business. That would have been much easier to do ironically than to prop up banks - and by the way, it would have also resulted in much more support for the banks. But QE is not for individuals its for cronies. The reality is that QE is creating deflation - massive deflation because it is creating more debt and risk on the part of already insolvent and unstable enterprises. There is NO velocity of money and QE will not do one thing to create any. Just like Obama's 500,000 a month job projection that the he and his administration were pumping early in the year...QE will never make it will never happen. In fact, the opposite will happen. Expectation is for inflation or hyper inflation but we will likely get D-E-F-L-A-T-I-O-N and much higher real interest rates! This is what this post is about. Now, the masses and equally the guys with the bazookas think that things will happen that defy reality and that an imaginary outcome can be projected on reality...this will likely be, once again, a sore disappointment. However, I am sure that there will those who will be nicely enriched.

Most of the time in my life when I looked for the answers where I thought they were or followed the crowd, I got exactly what I deserved - nothing, or better, less than nothing. The reality is that if you expect the obvious, you all to often, end up pushing the same stone up the same hill as everyone else...the results are obvious only not to you while you are pushing that stone. One of the things that people are doing now is fearing change overall. I know Obama was supposed to be change, but we can see how that has turned out...more of the same. People are fearing allowing failure for fail. They fear those results rather than allowing things to rejuvenate by being based on a constructive foundational premise. The reality is that I see many people still touting the concept that an asset is valuable and that a wrong can be made right. I think it would be much better to think differently rather than trying to project an outcome based on past experience.

While failures are a primary instigator for innovation. One must first accept the failure and then move on to build an organic and foundational reaction. One must be willing to accept that a premise or expectation may have been 180 degrees off course. That is where we are today - 180 degrees off. This is, ofcouse, because when one looks at the world, there are assumptions that are made that have very little to do with reality. These assumptions are usually colored dramatically by our projections of expected outcomes.

For example, it is easy to expect a dessert to be "good" when you are eating it and looks and tastes well. Yes, its a nice finish to a meal. However, several hours later if you are worshiping a porcelain throne...that same desert seems pretty bad. While we entertain one side of an expected outcome we often are reticent to pay too much attention to the less desirable one that's lurking.

What is ironic about this is that for many years people have played this kind of charade by investing in "ASSETS" that are really liabilities. A house is a liability not an asset. A car, a commodity, a collaboration, a business, a stock, a marriage are capable, with just one slight change in polarity, of transforming from things which you want and view as positive to things that you don't want and that view as negatives and wish you never had.

For example, basic materials companies, well if Apple computer keeps selling computers and people need to maintain, build, expand or renovate facilities that they currently use, obviously companies that own copper, aluminum or steel mines and production will have assets that are required to keep society going. This is a such a fundamental argument that its is incontrovertible. In this case, steel is an asset, aluminum is an asset, copper is an asset and the facilities to mine them, produce them and deliver them are assets. However, as soon as the demand for new materials is reduced, people will rely on existing supply and prices will drop. It has happened many times that core Basic Materials companies have gone bust because the reality is a Mine is not an asset its a liability. When the prices drop below the cost of maintaining that liability, the reality is that insolvency can blow up the strongest basic materials company or emerging markets economy faster than any expectation could envision.

This is where we are, we envision a need for humans to constantly expand, produce and multiply. Those expectations are rather silly when we think about them. People tend to expand and produce and multiply very well after they have consolidated and reset their expectations. That means that, we have the capability to contract, reduce and reuse much more than we think. If that is possible, its also possible for basic materials to drop below the prices of production...which would be gigantic shift in reality...and not necessarily a negative one.

As I see it we need to be prepared for the opposite of our social and governmental expectations or projections. The fed's and government's actions are creating a prime foundation for us to get exactly that. If QE actually increased the volume of money that would be called a success...but what if it were to drastically decrease it? I know that seems implausible because the Fed is printing supposedly new money. But its not new money - its new debt (debt money) and the collateral that is supposed to be propping it up has a funny way of collapsing when there are no more mystery buyers...so QE is setting us up for the opposite of our most comfortable expectations.

An update on allocation...

I received a few emails over the last weeks from some hedge fund managers who seem to be close to blowing up, curious market participants and from some individuals asking about whether or not I am short. I want to answer a different question. The reality is that if it is necessary to ask someone regarding a position or trade then one is most likely looking for support or rationalization regarding a position and it likely over allocated. Without question the primary issue that I see for traders is over rationalization, allocation or concentration. The markets are not rational and nor are they very forgiving. 

I do not trade that way. Let me give you an example. If I trade a weekly strategy, I know that my average winning trade is going to be around 110 SP points, I also know that building a position may result in scaling into an average of 35 points but up to 80 points. The question how much I am going to risk not how much I am going to make. Additionally, the best risk management of all is NOT stops, its proper allocation. So, where I may trade a 15% allocation of risk capital in one system for a daily chart, I know that the average risk is 15 points and up to 45 points, therefore, I can trade for a 1.75% risk to 3% risk depending on how aggressive I am. If I am going to achieve that result with a weekly system I may have to trade at a 7% allocation. Trading just 7% of your money in one strategy may not seem like a lot, but the rabbit rarely wins the race. In the markets its about doing the opposite of what you think and want to do and doing the disciplined and practical thing. People are rarely practical about losing money and exceptionally rarely disciplined about it.But those are precisely the things that will make us successful. So we must think about our weaknesses and capitalize on them. My experience is that the market is about hitting base hits not home runs.

So, in response to whether I am short or not, I have Weekly systems that have built short positions in some major markets and now some dailies, however, I also trade intraday long and short across quite a few markets, so, its important not overreach. I am not short 50% of assets, probably more like 8% of assets right now. Keep in mind that the maximum avererage allocation percent I will take is around 20% and that generates a very hefty return. If the market rallies, intraday longs and shorts will be taken without regard to my opinion of the market or any long-term positions - they will  be taken as appropriate with strict risk rules. As a note, I regard a break of 1122.5 as a key confirmation of a larger short move.

I hope that answers the question and gets people asks some questions of themselves too...

Market Update - more panic...

Ironically on the day that the Fed, I mean JPM reports earnings, the financials produce bearish action on rather not bullish volume. The shorts are non-existent and are now certain that POMO and QE will work to run over them with eighteen wheelers. Yet the bulls feel safe while the market has moved essentially sideways for 28 of the last 30 days. There have been very few trend days and even today closed near where it opened - that is not bullish! However, it is classic behaviour for a cheaply manipulated market (by a bunch of charlatans masquerading as Bennie and the Bets) as its much easier to move overnight prices than intraday prices... When you bankrupt the shorts there is another side effect - NO BUYERS ON THE WAY DOWN. Bennie and the Bets better have their dancing shoes on - they will be the only buyer left.

It may not be popular to be short...but from my vantage point...I hope that we remain at these levels till the end of the week so that the weekly systems can add to their positions short. I am not optimistic that we will be able to remain at these levels and feel that a cascade lower could happen at any minute - regardless of the perception of Fed support and intervension in our non-market markets.

The common theme right now is, Economy bad - Gold up, Market Up because of QE. Economy good - Gold Up Market Up, Economy stagnant - Gold up Market Up, Bank's broke - QE, Fed, Stimulus, Gold Up, Market Up...and for heaven's sake that Cramer guy is a raging bull again...so, I guess BoooYAA is making a comeback and Gold Up, Market Up - No worries! Yes No Worries. These are manifestations of a top - not a bull market...the bears even buy into the above thinking. People are bullish - plain and simple they are ridiculously bullish and at the same time they feel negative. Perceptions of prices do not have anything to do with overall feelings of well being...therefore this market full fills two criteria - most people are negative regaring their wellbeing, yet positive about prices and socialised intervention supporting inflation asset prices.

Market Setup Updated

Get ready for fireworks...a failure of the overhead trendline and control, indicated in red on the chart below, targets 810 to 800. I am currently short EURO from 1.40ish and short TF, EMD, ES and NQ via weekly systems. FYI, weekly trades may add another entry at this friday or next, but the hold time for weekly trades is 3 weeks to 3 months.

Please note that the ten year bond is not confirming the recent highs. In fact this is the largest non-confirmation divergence I have ever seen between Equities and the ten year, indicated in light blue on the chart below...not good.

ES Volatility Breakout Model

I figured I would show some new results since I am really happy with them. These are the results from my new ES Volatility Breakout intra day trading model. It trades 1 to 3 (max) trades per day. The risk process uses a fixed risk and that in this case is 1%. This risk is reduced to .5% generally within 20 minutes after the trade is filled. This means that the max targeted risk is $10,000 per trade and reduces to $5,000 per trade for a $1,000,000 account. The results above are uncompounded and trading on a $1,000,000 account from 1/1/2000. The model produces similar results back for nearly 30 years.

I will post more details about these systems when I can.

Ending Well...?

Well, Mr, Bernanke and his illustrious companions are at it again. Its apparent that all the brainiac economists over there at the central banks think that inflation at all costs is the answer. This is why I phrased my post regarding the primary down trend line several days ago the way I did. (Please see the previous post "A Dog with Fleas"  for the charts and analysis.) If we sell off from fiddling around at that trend line (as posted earlier today), as I still expect we will, that represents the best possible outcome for the markets. It means failure does not get rewarded. It means that pending insolvencies will be recognised as insolvent. It means frauds will be revealed, identified and handled. It means that there will be a point at which stability is possible.

Now the alternative is not so good. If we breakout decisively above these levels, I have no problem with that from a trading perspective as my systems will trade long. However, it means that the chances for the constructive scenario will be slim to none. The death nail will be layed to rest in the carcass of the economy. The brainiac economic team at the Fed will have succeeded in disconnecting reality from reality - and that's a very difficult thing to do. They will have determined that higher prices for inflation assets, lesser currency based buying power and lower wages can coesxist to establish a stable economic foundation. I would like to point out that there is only one way to support sustainable higher prices and that is through high employment, wages and productivity. None of these issues are even being addressed.

Wages are decreasing as they have for the last 10 years for the middle to upper middle class. Jobs and opportunities are decreasing and likely will not stand much chance of rebounding - especially if commodity and raw materials and general asset prices increase. Additionally, if indeed the US thinks that it can repay its debts by drastically devaluing the dollar and crushing the purchasing power of an already weak America, then we will face another problem in a staggering rise in interest rates which will finish the economy off once and for all. No jobs, no purchasing power, no credit and no chance for a reprieve.

The upside is that the Bankers will own your house after you lose your job and all your savings, - they will likely offer to rent it to you. The concept that the market will sustainably store value simply because dollar devaluation is in full swing will not support the unilateral objectives the bankers would like you to believe. Business relies on consumers of services and products in order to generate profits. Demand collapse will force most companies to eat through remaining credit lines, if they are still available, and the cash that they carefully reserved in bonds with collapsed principle value due to raging interest rates. The Fed, by the way, only controls the Fed rates...market rates are quite another matter entirely and they will not nor do they deserve to influence any of them. Any way you cut it corporations will NOT do well - unless of course you are a BANKSTER and would like to own everyone's assets without bringing any value to the table at all.

The setup brings up yet another issue, people with nothing will have no problem losing the nothing that they have left by rising against the Barron thieves that will have been identified as having stolen from them. Our illustrious banking community as led by Bernake and Co. and politicians may have quite a problem on their hands. No wonder we need all those new executive orders that we never really hear about publicly.

The end in this scenario will likely result in the markets falling much further than I have already thought they would, a total loss of confidence in fiat money, total distrust of banks and governments and a near halt to productive business transaction. Much worse than if we wring out the insolvencies and corruption now. However, I would like to point out that it appears that, whether Bernake and Co are successful or not, they have already decided that inflation via dollar collapse is an acceptable risk. It does not matter the risk. If people can not afford gas, eggs or bread - who cares?

This issue alone demonstrates Bernanke's incompetence. In fact, I think that Benanke and Co should face charges for this disastrous handling of our situation. In time I think they may indeed get that wish. However, for now, the market will likely see the scenario painted above fairly clearly and will not allow Bernake's BS to get too far before slamming it back where it belongs. The sad thing is that the Fed is willing to simply throw taxpayer money out the window without even a care for the future, the economy or the people of the United States of America - that alone dramatically increases the risk for the stock market, the economy and the country for market particiapants. I am not the only one who sees that the Fed has NO credibility nor capability...given that, confidence is not inspired by this episode in the least.

This is all very troubling. In fact, I have spent quite a lot of time writing systems precisely for this reason. When dollar devaluation occurs or dramatic deflation bites the violence can not be handled by the human mind. Some people may have good reasons for the trades they do and get one leg right but will get crushed by the one they don't see. It is important to remember that markets can remain solvent much longer than their participants. Benake and the Fed are but participants in our markets and one insolvency I am very much interested in seeing play out.

For now, weekly systems are building shorts at these levels and my current expectation remains for the markets to be down substantially (20%+) by the end of the year.

SP500 Primary Trendline an setup

Kenysian Insolvency defined...FAIL

Jim Grant Accuses Fed Of “Lethal” Intervention And Manipulation Of US Economy
- Watch more Politics Videos at Vodpod.

Nassim Taleb: Don’t Listen to Geithner or Krugman
- Watch more Politics Videos at Vodpod.

A dog with fleas...

This market is at an interesting place. We are pushing on a string and have not been able to make headway over the last week. I see a primary trend line that we are bumping up against and very bad odds for us to breakout over it in some substantial way. Additionally, I really like to watch the nasdaq100 and SP500 relationship - that relationship demonstrates that the NASDAQ is no longer leading the market up and most likely will be leading it down if the pattern of related weakness continues. There is still a slightly higher resistance zone that is possible for this bearish wedge if it was not completed on Friday or does not complete on Monday...but it looks quite terminal to me.

Ironically, everyone and their brother were looking for a weak September...I guess that's because September's are supposedly usually weak. Now, however, everyone is looking for a BIG year end rally out of our sloppy inverted head and shoulders pattern courtesy of CNBS and their trusty charts and analysis...I guess that's because "as September goes, so goes the year"... Forgive me if I call a spade a spade: The market did not comply in September and now the very same people who got it wrong think that it should do the expected thing and comply in October and through the end of the year.

From my perspective, the forces that be, and expectations that are, generally try to get the market to rally into elections and then fail miserably a high percentage of the time as we progress into the elections. The elections are around the corner and the question is: "Is there enough commitment..." to deal with nasty technicals and a market that is still int he midst of massive de-leveraging? I am not betting on it.

While it may seem somewhat conspiratorial to think that the forces that be have been driving markets with artificial influence. It seems conspiratorial because it is. If one were to interfere in cooperation with others for no other reason than the objective of manipulating prices to achieve your own ends, you are conspiring. To wit, the conspiring Fed has done a terrible job of using that manipulation to get liquidity infused into the economy. They have done a terrific job of getting that liquidity to be infused into the balance sheets of their co-conspirators and Wall Street in general.

We will see the results of this conspiratorial imbalance in reference to true price discovery play out further with a crash in the MUNI markets, Bond markets in general, Real Estate markets, Commodities markets and the Stock markets. There is precious little liquidity out there looking to find a new home in inflation assets. If liquidity can not look for a bet on a healthy recovery or follow through in inflation assets then bonds will be defaulted and derivative markets will cease to function once again.

I have no doubt that the jig is up and that the piper will be paid. As I said in previous posts, just like Long-Term capital, once people with assets, knowledge and capability discover that a pending insolvency is in play - they seek it out and circle it like sharks rather than petting it like a hamster. This is not a bad thing. If there is a wounded beast, put it out of its misery and lets move on. Failure does not need to get rewarded, it needs to be failed. That is what is going to ultimately happen here.

The Fed gets an F. Fail.

The fed provided liquidity to the wrong group. A bunch of over leveraged, accounting fraud, bailout seeking institutions. It suggested the sky would fall if we did not get immediate TARP...then spent 6 months figuring out what to do with TARP. So much for "immeadate" and "the sky falling" without TARP. It also, encouraged mal-investment and accounting fraud by insisting that IT regulate and control everything it can get its hands on, like the banking institutions and consumer financial protection. The delivery of the Fed has been a disaster.

The impact of its policies will make the depression much more challenging and devastating that it would have been without them since they encouraged incredible mal-investment in an attempt to prop up asset values at any cost. That cost has not been counted - it will be.

Obama gets an F. Fail.

Obama, was supposedly about "change". From what I see he has changed nothing. He has encouraged Cap and Trade and huge bills that no-one who is voting on them is encouraged to read until they have been passed. He has weaved a web of disastrous economic policies and implemented stimulus that actually has, in my analysis, resulted in a cost of $10 at minimum for every dollar that made it into the economy.

Apparently, for both parties the government can not get big enough, spend enough or have enough overpaid employees. There seems to have been a feeling overall that a collapse of an insolvent company is going to create a bigger disaster than spending 10, or many more times the cost of that insolvency, in an attempt to prevent it. Cash for Clunkers is an example. This hair-brained program simply encouraged people to go into debt that they could not afford to buy a car that they really did not need. Additionally, it wasted perfectly good vehicles and resources in the process by destroying them. The amount of damage done to the economy and environment with the destruction of household balance sheets, perfectly good vehicles, pollution from chemicals used in disposal of vehicles and the ultimate cost to the taxpayer was simply irresponsible. Obama and his cohorts have changed one thing, they have brought irresponsibility and cronyism to the highest level I could imagine possible.

Bush gets an F. Fail.

If there was a presidency marred by incompetence, conflict of interest and dishonesty - Bush gets the award. His policies did not create our disaster but they did not prevent it. To look for the causes of our condition we need to look as far back as Bretton Woods and the Federal Reserve Act. However, Clinton's policies left little option but for the economics of the nation to focus on debt creation and expansion, surplus be damned...and Bush delivered on that mandate, just as Obama has.

Bush's Imperialisim has cost us dearly, yet we are still expanding its scope and continuing damaging policies of this failed president.

Congress gets an F. Fail.

Congress seems to side with just about anything that could "out" any individual member for some indiscretion or embarrassing conflict of interest. The most astonishing thing is that they have gone along with wholesale breaches of the constitution by the executive branch for several adinistrations with out even a whisper.

Additionally, they seem to have a certain pride about passing legislation that involves many digits with out the commensurate interest in reading the specifics of what they are passing. Health care, financial reform, consumer protection and many many other governmental efforts have been implemented to reward failure and promote people and institutions that are responsible for those failures. Until this stops the economic situation can not be changed. The only hope is that US constituents get tired enough of amatures and cronies to ultimately replace them or prosecute them.

Most states get an F. Fail.

States have encouraged budget deficits, unemployment compensation and other assistance that they do not have the budgets to afford while simultaneously generally supporting union benefits and pay increases that are a demonstration of how politicians can be bought and paid for. There certainly are exceptions and some good people showing up occasionally, but on the whole, the states and municipalities are broke and are not going to get bailed out by Washington or Wall Street...and they have done barely anything other than raise taxes and hope that things get better so that their revenues can accommodate their irresponsible obligations.

Moreover, the pension system is about the get blown sky high by the defaults that these conditions cause. This pension blowup will cause even more insolvency as states try to print IOU's to placate pension obligations. Ironically, these very issues are going to place a large conflict on the table for states that realize they are not getting assistance from Washington and therefore seek to retain assets and revenue for themselves rather than letting them flow to Washington freely. Not a pretty picture.

Regulators get an F. Fail.

Regulators have tried to skirt just about every issue that came to their attention by creating some sort of misdirection on which the public can focus. The special handling and exceptions granted to fraudsters are just amazing. Goldman Tax and most Wall Street firms who deliberately promoted fraud are allowed to get off with a simple payment and no admission of guilt or wrong doing. What kind of enforcement is that. Meanwhile a little RIAA (Registered Investment Advisor) get's pounded into obliteration for giving what he believes to be good or prudent advice to his clients. We are now left with a system that deliberately constrains peoples ability to make timely investment decisions and encourages complacency among both investors and advisers since there is no other reasonable choice. This type of regulation encourages big institutions get bigger and small ones are encouraged to get smaller...how interesting.

The flash crash, derivatives regulation, financial reform, decimalization and a host of other regulatory lapses have encouraged a general instability within our market structure. The results of many regulatory resolutions achieve the benefit of eliminating smaller players and rewarding the big ones who were the largest offenders and simultaneously can afford useless resources required to comply with regulations which don't improve effectively results for the general public.

FASB rolled right over and allowed totally fraudulent marking of balance sheet assets for an indeterminate period and at the discretion of the institution. All it took was a little peddling from the Fed, the banks and Washington to make it happen. This little tid bit will be a major driver of the pending insolvencies that need to be resolved. And these guys call themselves regulators? Legalized fraud is not good regulation and can not fix previously failed or legalized frauds, as these actions are clearly intended to do.

Banks get an F. Fail.

Banks seek to play nearly every hand, get nearly every bonus and mask nearly every truth. JP Morgan Chase is building branches everywhere while the company is essentially insolvent. They are arbitratily and discretionarily reporting operating profits as reductions in required capital reserves, minimalising obligations with improper marks and withholding asset marks entirely by placing them off-balance-sheet. Any of this would usually be criminal if your regulator did not happen to be the Fed, who is doing the very same thing. Just look at Maiden Land holdings (legacy of the Bear Stearns/JPM deal) which had to be pried loose from off-balance-sheet handling with a lawsuit by Bloomberg.

Banks are bigger, in worse shape and more contrived than at any period in history...and what's more they are flaunting it.

The essential question is: "Why we should expect this to end well?"

I do not think we should...the primary trendline that I will include with this post later is the wall under which all this incompetence and fraud sits. Its the "Ending Well" line if you wish. If we can break that line in a meaningful way with these foundations and terrible technical action supporting us, then things are even worse than I thought!