Sunday, March 11, 2012

What Next?

What lies in store for the Fiat Ponzi?  Last week saw an official Greek default, which the media spun as a good thing because it means insurance contracts are still paying off, the second LTRO auction, which is like the Europonzi's TARP, and as Europe careens over the cliff the rest of the globe does no better.  Japan is not only still radiating itself to death, but they are making Zimbabwe look good.  The US is still pulling the same string they have pulled for three years, and China watches as all paper markets crumble before them as they sit on trillions of dollar denominated paper.

So what next?  PMs look to consolidate, gold right under $1730, and silver around $34.  The charts look like an up move could happen any day, and that would take gold to $1900, but I can't put it past the Ponzinators to raise margins or release the SPR or whatever else they would do.  This is a very interesting point in the markets because everyone wants more QE, and by QE I mean unsterilized, but the Fed can't go out and do it unless stocks pull back.  But if stocks pull back then it shows the last three years for what they have been, window dressing.  The Fed is caught between a rock and a printing press.

This is why I think they will continue with OT2, ZIRP, and they may likely continue with FX swaps to Europe; we know Europe needs it.  All the while inflation stays high, but so does deflation.  Housing is getting flattened, and the foreclosure market may open up and see millions of homes put on the market for the first time.  Look for house prices to get cut in half over the next few years.

Really anything can happen this week.  If nothing big happens, then the market will stay flat, as the PPT will want a trigger to move lower, and they will keep a floor under the market.  There is the thought that Europe's LTRO could trigger the final push into an even higher inflated market.  I think we are around 10% now for necessary goods (oil/PMs/food).  With all the fiat sloshing around, we could move to 15% in the coming months, and after that it could move quickly to 20% where it would get out of hand and possibly unmitigatable.  Fiat is the weakest link in the investing world, and when the SHTF, anyone holding fiat denominated assets will lose, but especially if they are sitting on the currency itself.

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