The only bubble left to have, besides what will be a precious metals bubble occurring in about ten years, is the fiat bubble. The Tech bubble was popped as fast as it ballooned, the easy liquidity bubble followed, and now all that is left is fiat currencie. Once the fiat currencie bubble pops, and only then, will there be a gold bubble.
The fiat bubble may have a year or two left, depending on how fast people wake to it. If people do not understand it, it could last several more years. Every country, and every establishment is fine boiling the frog slow. It means that more control can be leveraged out of the police state, and taking away freedom from the common person is the main goal.
The financiers and oilgarchs are taking their time pushing on the string, allowing both sides of the system to stay in flux. The economists want easy liquidity, while the other side ask for austerity. Both sides mean to slowly defile the system that has been set in place.
Tomorrow Bernanke will play his role, if that is by announcing anything or not. He is already providing liquidity to Europe, and this has dire consequences for fiat currencie. He will continue to inflate the fiat bubble, until there is only the gold bubble left to inflate.
Thursday, August 25, 2011
Wednesday, August 24, 2011
America's Last Day
The markets: who really cares, right? Gold and silver have storable value, and everything else is worth the paper it is printed on. That being said, there will be fire works, if not a fire storm, starting Friday. Bernanke has his back up against a wall and the walls are closing in. Bernanke's policy is boxed in, but he thinks he is Houdini.
How will he have ZIRP for the next few years without a stimulus/easing program? Is China going to stay in the market, along with all the other indirect bidders? Are the Private Dealers going to be able to afford the debt, without the Fed flipping the bonds for them? I do not think this will happen, I do not think it is possible.
And Bernanke can not achieve the impossible. He is not a magician, despite his wishes. His other alternative is to let rates rise, and then all social programs will get cut due to the interest on the debt outweighing inflows. If that happens then America is debt in the water, and it will be forced to default, and not for political reasons. A default in that scenario will prove Keynesian policy and monetary policy does not work.
Gold sold off like I thought it would, albeit at a higher price than I thought. Gold's bull run moved higher than my target price of $1850, one that I had for 9 months. Once it got going, it was obvious the reason: Bernanke needed its price to appreciate so that he could get the highest return possible when he loans it out. Now he can afford QE 3, because he has his cash from his gold loans.
This is why Bernanke is such a donkey. He acts like he does not know what gold is used for by the Fed, when gold is loaned out to other Central Banks as a performing loan. It is, in fact, the only performing loan on his books. Everytime he has a comment concerning tradition, he lies.
How will he have ZIRP for the next few years without a stimulus/easing program? Is China going to stay in the market, along with all the other indirect bidders? Are the Private Dealers going to be able to afford the debt, without the Fed flipping the bonds for them? I do not think this will happen, I do not think it is possible.
And Bernanke can not achieve the impossible. He is not a magician, despite his wishes. His other alternative is to let rates rise, and then all social programs will get cut due to the interest on the debt outweighing inflows. If that happens then America is debt in the water, and it will be forced to default, and not for political reasons. A default in that scenario will prove Keynesian policy and monetary policy does not work.
Gold sold off like I thought it would, albeit at a higher price than I thought. Gold's bull run moved higher than my target price of $1850, one that I had for 9 months. Once it got going, it was obvious the reason: Bernanke needed its price to appreciate so that he could get the highest return possible when he loans it out. Now he can afford QE 3, because he has his cash from his gold loans.
This is why Bernanke is such a donkey. He acts like he does not know what gold is used for by the Fed, when gold is loaned out to other Central Banks as a performing loan. It is, in fact, the only performing loan on his books. Everytime he has a comment concerning tradition, he lies.
Saturday, August 20, 2011
Panic on the Exchange
There are many factors for the selloff: prices were overvalued, there was easy money pumped into finance via Central Banks, but the main one was that Major Banking Houses needed liquidity. Major Banks are insolvent due to toxic collateral from fraudulent loans. These banks needed needed cash, and fast.
The prop desks of the Major banks, from Europe to America, had to sell stakes in equities among other things to have enough assets to balance their balance sheets. This was the major cause of the correction. Some banks, like Bank of America, were forced to liquidate their portfolios. Some, like JP Morgan, were shorting the market knowing that this move was going to happen. So while Bank of America sold their equity positions in Exxon and Hess, JP Morgan was selling calls and using the Special Petroleum Release to locate their shorts.
This caused a huge downward move, and since JPM was going to benefit, the President's Working Group did not step in. I am sure JPM floated some Fed funds loans to Bank of America in exchange for the market making, too.
So now that the cascade has happened, the questions are, where do we go from here? Does the Federal Reserve step in and monetize the debt, so that Primary Dealers can flip their bonds and use the cash to get back into the corporate market place? Does the President's Working Group prop up the trades while the scheme begins anew? Will the Federal Reserves first move be to loan gold out, giving them cash to marginalize assets 100:1 by using fractional reserve lending?
All I know is that a big week lies in store for the markets.
The prop desks of the Major banks, from Europe to America, had to sell stakes in equities among other things to have enough assets to balance their balance sheets. This was the major cause of the correction. Some banks, like Bank of America, were forced to liquidate their portfolios. Some, like JP Morgan, were shorting the market knowing that this move was going to happen. So while Bank of America sold their equity positions in Exxon and Hess, JP Morgan was selling calls and using the Special Petroleum Release to locate their shorts.
This caused a huge downward move, and since JPM was going to benefit, the President's Working Group did not step in. I am sure JPM floated some Fed funds loans to Bank of America in exchange for the market making, too.
So now that the cascade has happened, the questions are, where do we go from here? Does the Federal Reserve step in and monetize the debt, so that Primary Dealers can flip their bonds and use the cash to get back into the corporate market place? Does the President's Working Group prop up the trades while the scheme begins anew? Will the Federal Reserves first move be to loan gold out, giving them cash to marginalize assets 100:1 by using fractional reserve lending?
All I know is that a big week lies in store for the markets.
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