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…zerohedge.com 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.
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.
In this video, Nigel Farage, once again says it like it is…while in the kings lair the mood is apathetic and pathetic. Barroso is an agent for the banks and special interests, his plans are an extenuation of US Fed policies and will likely end up faring even worse that the US fed due to the fact that the EURO zone can not really issue and print new sovereign currency by decree. What a mess we weave and how unimportant it is the people who have warned about it for the last few years…its so unimportant that its not even necessary for Barroso to listen to the one guy who stood up and dared to tell the truth and has been right BTW.
We are watching the story play-out exactly as I have been presenting on this blog. Sprott, Paulson, Wall street pundits have totally missed the configuration of the precious metals…arrogant fools that they are…their reputations will also likely follow. Zerohedge, Marc Faber and Jim Rogers have also missed the significance of what is going on…though they are deserving of respect.
These assets are not an alternate to fiat money they are a source of fiat money and will need to be sold to generate required cash. As the banks close, as the system comes to a screeching halt people will continue to use anything valuable in a “Mad Rush" to generate “CASH”. This of course will likely take Oil and Gold down very much lower than most are expecting. Gold likely into the $500 to $600 range and Oil further, likely into the $8 to $20 range. Silver is going to get annihilated and will likely come to rest below $2.
It is truly amazing to watch the convictions of the masses take them just where convictions such as this usually go…It is also sad.
As I am not surprised by today’s action in the least…I think the next real surprise may be the heights to which the dollar rises and depths to which assets fall. Clearly, the boys in Washington, having been led by the illustrious Larry Summers, can make no mistakes - or any that they will admit to. The reality is, of course, rather different. What we really have is a comedy of errors. Given that, I am very long the dollar and quite short assets and comfortably sitting with big profits again this month. I am now approaching triple digit returns for almost all of my segregated accounts for the month so far, which I have never done before…personally, I see the markets following through in a big way and this may be the biggest month of trading afforded to us all in a long long time.
If this market is confusing to you, my suggestion is to do anything but being complacent - its likely to be a very uncomfortable ride unless one is very clear and focused. Stand aside in that case and wait for a healthier and more compatible market.
On another note, I am doing a webinar tomorrow at http://bigmiketrading.com. I will be discussing lots of trading related issues and an in-depth discussion regarding psychology and risk. I invite you to attend. You can register at this link:
Big Mike trading is a trading forum run by “Big Mike” and is the 4th largest trading community/forum on the web. Mike is a trader and really runs the place…I look forward to seeing you there.
I have to say, I fail to understand why everyone seems to refer to Larry Summers and the work brilliant in the same sentence. Larry is an idiot who uses degrees, big words and misdirection to promote an agenda which has financially devastated everyone it has touched…well except himself I guess.
It is clear, especially when you take into account my previous post, that the central planning community is aware of the destructive nature of their policies. They have now decided to give up the ruse that they are trying to protect us and provide stability. they have decided to crash asset prices. This is apparent due the clearly conflicted agenda that is coming from all the big bureaucratic mouth pieces.
Various credit agencies, for one example, have recently downgraded major government debt in clear contrast to their previous patterns of behavior. Anyone who believes that they had such a turnabout due to self-reflection and introspection or because they just felt like it was time to do the right thing, can simply refer to Warren Buffet’s recent tax propaganda and hype for reference. Certainly, if I ran a company that required long assets by its very nature and then required manipulation, backroom deals, bailouts and cronyism to function…I would want the eak out every little bit of extra tax I could, so that I could try to influence its use and ultimately so it could be used to prop up my credit money inflated balancesheet that I know is going to get decimated.
The reality is that the amount of money raised by taxing the rich is insignificant in the big picture and Warren Buffet has officially lost any credibility that he still had left. Obama is a disaster and Ron Paul will likely become president in the case we have a major financial and economic collapse - this is something I have predicted for many years in private and publicly.
Well, here we have it, the biggest collapse of all time is not just going to happen - the cronyists in government and in their contingents are making certain that it does. In the past, they would have tried to suppress unwanted negatives and mask their agenda…now big tax increases, sovereign debt downgrades at precisely the wrong time are the norm and their agenda is being laid more and more bare for all to see…and what’s more, it is NOT a random amalgamation of events…it is sanctioned from the highest levels and specifically designed to destabilize our markets and economies. Anyone, therefore, thinking that the Fed will come out tomorrow being a dove and an angel is likely going to get a swift and sharp jab to the upper jaw…Ben is done, but his job is not. His and Timmy’s job is to transfer the wealth of a sovereign nation and people into private hands, he has not completed that job and will not quit until he has.
We are now short as of yesterday and long the dollar as this epic fraud continues. Government regulators, central banks and bureaucrats are lining up to see who can push the "lie while clenching your teeth" button first. Apparently, the feeling is that the first one out has the best chance of being right for at least a couple of days and they feel like there is no alternative other than to lie and LIE REALLY “BIG".
The reality is that, just as Mr. BURNanke’s harebrained policies stoked leverage in commodities and equities when the SP500 was in the 1100’s causing a drug induced move to 1370, the arab spring and fueling the sovereign stress in europe…the guy did not really print money at all…he BURNED it - hence my name for him. And also, hence the dollar shortage that I have been talking about for a long time. Compared to the dollar shortage, physical GOLD and SILVER look plentiful in relation the real demand for delivery.
Using his illustrious powers and keen faculties, Ben got the markets to the highest leverage to equity level in history and just as the leverage peaked…the unwind required by it built its inevitable base and top. The crash from that base was swifter than nearly any I have ever seen…and the result is that by forcing his credit injections in the veins of delusional drug addict bankers and cronies who have already destroyed their neighborhoods and families, double or triple the money BURNanke attempted to print has been directly and totally obliterated. Additionally, the indirect effects are that many people’s non-debt money (Cash) investmentshas been significantly impaired. The tune of this devastation according to my rough calculations is somewhere around 17 trillion dollars of asset destruction that would not have occurred had BURNanke and his merry men not done anything with their now infamous QE2 initiative. These guys do not print money they BURN it while dropping it from helicopters - what’s more it never gets to the ground.
So, what we get from this is that the lies only make things worse and that addressing the truth would have been far more constructive and less stressful. This realization is not apparently occurring now in europe and for the central planning bureaucrats who are hell bent on making this orgasmic response to their previous failures into their biggest and most epic mess and failure of them all. The dollar shortage will continue to expand despite the best efforts of these bumbling fools who pretend that they can create dollar liquidity in appropriate amounts to quench the thirst for them. Ben does not have enough power, friends or money to accomplish his goals - he has BURNed all of them already.
Today, rather unexpectedly, my systems got flat all of their equity shorts and flat the currency trades. The markets may run further but I am now flat going into the weekend. This was a rather amazing month…with some account results over 100% for the month but overall performance averaging over 40% returns for the month. I get big months like this several times a year…but it still amazing to see the trades close.
I think its rather interesting that the systems covered and I am happy to be flat…certainly dangerous times we live in and challenging trading. I would not be surprised with anything out of our fearless money printing credit pushers. But in any case, I hope everyone takes this as a symbol that things are NOT ok and addresses their risks appropriately.
9/11 was a big event personally for me as my office was right there by the World Trade Center and it effected me and many of my friends directly - my thoughts are with all the people who lost loved-one’s this weekend. Have a safe weekend.
Sorry to say it…but the currency machinations are an expression of the credit money system. They are and expression of the conflict that people have clamoring for available cash amounts the vast amounts of defaulting credit…since cash is not available, ironically, Tyler (as most people who study this subject),has it totally backwards. The Swiss actions related to Franc are highly deflationary not inflationary…its just amazing to me that people just don’t understand everything is the exact opposite of the way it appears…just as with nearly any good trade. But I guess when silver is $1.60 and the Dollar is over 200 Tyler and Sprott will finally get it. Don’t get me wrong I like Tyler, but that does not change the fact that he just does not get it…but then again that’s why some of my managed accounts are up well over 50% so far this month (and up hundreds of percent over the last year) - I would love to see his results. These fundamental misunderstandings regarding the nature of money and the unwind of the credit money system will be bankrupting quite a lot of people by the looks of things.
Competitive currency devaluations and currency debasement throughout history have led to inflation and the impoverishment of the mass of the people.
The Swiss franc’s 10% plummet against gold this week clearly shows how cash is far from ‘king’ and no fiat currency in the world, in any bank in the world can be considered a “safe haven”. - Zerohedge.com
That analysis is plainly WRONG as an analog to our current conditions!
Chris Whalen did an interview which can be found here. Apparently, he is totally mistaken as to how money works and what it is. He seems to believe that the dollar will continue to weaken, as printing and selling of credit increases as a mechanism to prop up the banks. He seems to believe that the FDIC is going to cover his funds at Bank of America when they go under - in fact he’s not worried in the least about his money deposited at BAC. He also can not seem to utter the phrase Bank “OF” America - to him its "Bank America” - clearly he has a Klugman type deficiency. What urks me about this kind of stuff is that these people ever had jobs running anything in the financial system when they do not understand the essence of their business - the nature of money, that the problem IS the FDIC. That in reality the implied guarantee from the US government is much less binding than one would think - the FDIC has up to 99 years to give you your money back. The reasons we have systemic problems are because people either cronied up like a lobbyists with a retainer or are simply clueless (like Whalen) or both.
What this means is that for all the fancy swanky talk, leveraged banks will go under and you will not get paid…Whalen will likely be one of them. What he seems to fail to understand is that flushing of credit down the toilet is not the same as availability of cash. Therefore, we have a MAJOR liquidity problem - MUCH MUCH bigger than in 2008 and the Fed and FDIC and the assorted credit pimping entities will have the only impact they have already had…they will make things worse.
I beg to differ with Macro Story (post can be found here) regarding Whalen being "arguably the best bank analyst in the country". His analysis is, on its face, fatally flawed.
Listening to Trichet attempt to avoid answering questions is troubling…he consistently uses double abstractions in an attempt to create the appearance of something concrete. For example: “Zee method for avoiding zee problem, all things being equal, as we have said strongly in zee past, is to do a very comrephensive analysis of zee zee analysis and then to make zee appropriate adjustments as we think appropriate. We will not negotiate on this.” What the hell is that supposed to mean? This guy knows nothing…and is apparently totally confused. As an example, these idiot central Banker’s like to talk about price stability…however, in the first year of the EURO, in Germany mil went from 1 Deutsch Mark per liter to 1 euro…there happened to be over 2 Marks to every Euro at that time…so that’s a 100% inflation that apparently Trichet did not notice. And the Dairy market in Germany is not isolated.
What a web we weave. The dollar had a nice productive pullback from its recent test of resistance, is above major support at 75.25 and appears ready for lift off. While the USD/CHF (US Dollar/Swiss Franc) setup a flag for continuation of its move. The equity markets want to pretend that this whole thing is not happening…Gold and Silver are playing out as expected (Zerohedge was wrong again and does not seem to understand the problems embedded in the precious metals markets) with Oil the lone standout. Oil will fall too and much lower than nearly anyone may be expecting.
So, they are squeezing the begeebees out of poor shorts that used to be longs and don’t have very much money left. The best place to short is when all the shorts are forced to cover…this is where I like to short and today was no exception. I am expecting follow through on the dollar and a fairly dramatic one at that. Additionally, the markets may try to fool around up here…but I doubt it will last very long…but its not good to get excited about higher levels to short in a market where the EURO has put in a divergent asymmetrical zigzag off the lows…the pattern is weak, weak, weak.
The character of a good bear market is powerful rallies that close at the highs of the day…people swear they have to go higher, that they will go higher…but its a bear market remember.
Anyone who may be wondering just why Uncle Warren seems so predisposed to snugly deals with insolvent financial firms and crappy rating agencies may want to consider the implications in another one of his backroom deals to both use his reputation and confidence building inertia to supply operating capital to one stinky, smelly and apparently preferred investment vehicle for the likes of John Paulson and Davie Tepper. I have, for a long time, expressed the total ridiculousness of the economic merits and synergies of BAC and Countrywide. But over inflated egos and dependence on the grand art of the capital raise as the engine of the 2% management fee for incompetent management diligence is quite popular on Wall Street and can overcome any obstacle that might get in its way - including a really shitty deal. This is why it so important for real managers not charge a management fee at all - after all, amatuers have to charge the fee because that's the axiom - its the main way they make money.
However, none of this forgives the fact that by some mysterious means Uncle Buffet, owning a large share of one of the most corrupt mortgage pumping institutions in domestic the financial world, was neatly omitted from the recent legislation that implicated even the grandest accounting control frauds going - JP Morgan and Goldman Tax. Somehow, one of the main engines of highly leveraged banking and mortgage products - Wachovia - was not even worth a mention next to the likes of WAMU and Countrywide...Wachovia only went bankrupt because of their fraudulent accounting and models for mortgage products - remember.
In fact, during the height of their demise, a friend of mine wanted to wire a payment of roughly $200,000 to a vendor in Europe only to be told that Wachovia could not execute the wire...it took weeks for them to get the wire transmitted though he had his business cash in their accounts.
Now, Wells Warrenovia Fargo has risen to the grandest of heights and pulled a Bank of Countrywide Lynch and actually competed for a useless liability called "Wachovia". The results should end up being similar. The reality, however, is that if you ever questioned the motivations of the master of integrity and character in the insider trading game...you now have your answer. The investment that Buffet made into BAC was a highly orchestrated manipulation by not only regulators and the government but also Buffet and Wells Warrenovia Fargo. There is simply no practical way of understanding how this organization is NOT on the list without some backroom dealing. Not to mention the fact that Wells is a totally predatory banking institution and has had a consistent pattern of deceit and manipulation in their markets...to find out more about this pristine piece of stinking excrement for an institution, one need only refer to the practices represented in this article: Reason to stop banking with Well Fargo
Think about it - if things are so bad that they are already calling in the last remaining guns via the Buffet slam...then things are really not pretty indeed. My view is we should be prepared for a liquidity crunch of such magnitude that it makes 2008’s small by comparison.
Nobody can believe that an ever decreasing availability of a resource can do anything but drive prices to stratosphere. Even sophisticated investors like Jim Rogers are falling into this trap. The fact is that there is a lot in common here, not with the behavioral dynamics of supply and demand, but much more with music.
This process is a dance and no symphonic dance can crescendo into the infinity of ever perpetuating grandeur - there will always have to be a cadence of some kind - a resolution, if you will. The fact is that when you cross over the threshold at the top of the exponential curve, the trip stops and the dance begins. That dance is the dance that finds all the appropriate reasons, moves and momentum to both drop demand and prices, all while supply continues to perpetuate its illusion of unavailability. We are in the Coda (a musical term and structure) of this dance now. Gold, Silver and various Oil products are nearing the point at which they will not simply drop in price - but collapse. This is totally contrary to every fundamental that you could possibly use to underpin a decision to own them…but as I have said fundamentals are relatively useless for making "people" decisions - which is essentially what investing is…people are NOT rational remember.
The condition in these markets is not different, in many respects, to the total misunderstanding that Marc Faber, Bill Gross, the Gold and Silver promoters at Zerohedge and Jim Rogers have had regarding the behavior of US Debt. While I respect them, especially Marc and Jim…I have to say that money dynamics and the nature of credit psychology tends to totally distort expected behavior of people en-masse. At this time, precious metals and energy are build of the framework of a credit driven dynamics. It does not matter that Eric Sprott, a total charlatan in my opinion, thinks that he is paying for his gold in cash and taking its delivery physically…the foundations for the prices he is paying and the psychology of the people deciding those prices are build on the flimsy framework of a very sloppy matte of credit. As I have said many times…technically credit is money…however there is a big difference as to how people spend credit and how people spend money…these markets are prime examples.
You can rest assured that I will have equally rewarding shorts in these markets as my systems call them in the near future. We are up big (well into the double digits on average) so far this month…and I expect these markets to offer a dramatic opportunity in the very near-term.
Again, this is not a time to rest on laurels, hopes or impressions - it is a time to be very careful.
I use Multicharts Charting and Backtesting Software.
I post high resolution charts made with Multicharts and Adobe Illustrator. Click on chart for a more detailled view.
If you do wish to contact me or have any questions you can do so at m3analytics@gmail.com
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