SW Richmond

Will the Market Crash?

'Actually, even under the previous "mark to market" rule, commercial banks were allowed to mark assets that they were allegedly keeping "for investment" and "not for sale" to imaginary values.

This was a huge hole in the rules, through which a great deal of mischief was wrought.'


Everyone's gonna hate me for this, but this situation is an inescapable consequence of fractional reserve banking. Leverage is how bubbles are blown. Asset values can only be so grossly inflated over such a short time frame (a few years) where credit is being created out of thin air. Fractional-reserve acolytes say that it's not fraud, since the 'loan' is balanced on the books by the value of the 'asset', yet anyone can clearly see how, when lending stops, asset values fall to more realistic levels. This is the reason for the Fed's obsession to 'reignite lending'. Reinflating asset prices via phony leveraged credit is the only way to make the banks look solvent.

FDIC is out of money, and Sheila Bair is quaking in her panties. I apologize for the visual.

The phrase 'reignite lending' means the same thing as 'reblow the bubble.' Reblow the bubble or bye bye banks. Re-leveraging our way out of a de-leveraging has always worked for the Fed in the past. This time the systemic losses ($4 Trillion) are just too great.

The only way to keep the system inflated is with newly printed FRN's. Now that Bernanke has failed to extend QE, that program will end in September. The markets are already interpreting that as a withdrawal of liquidity, and thus the next leg down.

www.youtube.com/watch?...

These European Nations Are in Worse Shape than the U.S.

The media will shift our focus onto, then away from, various issues as a means of manipulating the currency markets. These focus-shifts will be used to assist in the manipulation of FOREX markets up and down on a recurrent basis. The overall theme of coordinated currency debasement has not changed. It is merely EU's turn.

Media concentration on this will be the vehicle for:
1. stick-saving the U.S. Treasury market yet again
2. hiding the fact that the USDX is only a relative measure, and that ALL currencies are being debased as time goes by in the greatest coordinated global reinflation effort of all time.

Buy PM's and take delivery.
Turn off the financial media.

Preview from Europe: Stocks Hold Up While Waiting on Obamulus

Faith in Obama and "change we can believe in", anyone? Those pesky IRS regulations:

"Source: Treasury nominee failed to pay taxes"

apnews.myway.com/artic...

"WASHINGTON (AP) - President-elect Barack Obama's choice to run the Treasury Department and lead the economic rescue effort disclosed to senators Tuesday that he failed to pay $34,000 in taxes from 2001 to 2004, a last-minute complication in an otherwise smooth path to confirmation.

Timothy Geithner paid most of the past-due taxes days before Obama announced his nomination in November, an Obama transition official said. The unpaid taxes were discovered by Obama's transition team while investigating Geithner's background, the official said."

The Bottom's Within Sight - Barron's

"This isn't the end of the world, but you can see it from here."

Thank god, I feel better now.