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Yesterday, as I predicted last week, Barack Obama won re-election; and markets headed down. Why did markets head down? Obama has been so good to investors. He's allowed Ben Bernanke to give away billions to keep stocks advancing, and to damage the US Dollar so they would continue to advance. This went on for four years.

Bernanke is out of bullets, and out of ideas. He is going to retire, as he watches the 'global recovery' fueled only by massive spending by governments, give way to the dark powers of black hole matter-collapsing gravity.

Of course, gaining in investments and losing on the home currency is a wash, but most people don't bother to consider that.

During Day-Cycles (1983-2001; 1947-1965; 1911-1929), generally-speaking, both the US Dollar and stocks advance, meaning the wealth gained from investment is real wealth -- wealth in terms of the local currency. During Night-Cycles the opposite is true: gains in stocks are counter-balanced by losses in the home currency, meaning the gains are window-dressing gains (mostly fluff, for political purposes).

The banks and housing stocks are two areas of the market that had resisted selling until recently. Yesterday, bank stocks buckled. We will watch housing stocks in the next few days to look for deterioration. So far housing stocks have held up well. That DOES NOT MEAN that housing is back -- it means investors believe housing is back, and are holding on, refusing to sell.

Another heavy wave of recession and more unemployment will take the starch out of any so-called housing rally, which is being fueled by speculators hoping to rekindle the house-flipping ('the house is like a pancake' school of shysterism) and by historically (artificially) low interest rates (held down by the Fed); but we are heading into an environment that will be deflationary, and, at the same time, with rising interest rates. This will devastate the so-called housing recovery.

Remember: the real bottom of a housing depression will be when NO ONE is interested in buying a house.

However, housing stocks are still resisting the general selling coming in. But it won't resist selling for ever.

The S&P 500 broke resistance yesterday. It is in a freefall now. Prices are going lower.

I was torn about the election. Mitt Romney is a nice man with any real deep passion and who is also a dinosaur: he thinks we need another Reagan and he thought he could pretend to be Reagan and be elected. But he didn't really want the job. He doesn't have any ideas, hearkening back to the 1950's view of the world that cripples Republicans when the economy passes Harvest Time.

We really don't need a businessman to be our leader. Businessmen are obsessed with money. That's all they see, in their dreams and in waking life. They tend to be passionate only about material achievement. This makes them shallow, with lasting deep character. We need a leader who has more depth than that. Money is NOT the only thing in life that gives us meaning.

We need to start thinking of the "American Dream" reality in a new way, substituting QUALITY for QUANTITY. We need to begin honoring human beings (The American Dreamers) for the QUALITY of their IDEAS instead of the QUANTITY of the POSSESSIONS.

Why are we, today, SLAVES OF DEBT, slaves of the banks? Because we think of success only in terms of the QUANTITY of our possessions.

Honoring the quantity of our possessions breeds a race of thieves, embezzlers, and cheats -- and criminals -- since the outcome, the possessions, is the goal that is honored. Honoring the quality of our ideas does not do that.

Obama is smarter, more cultured, more inspiring than Mitt Romney -- but he is afraid of the truth -- all liberals seem to be afraid of the truth today, the truth about the debt. They see the Abyss below them: the Deflation Abyss, with the monsters of economic depression, war, civil discord, starvation, despair inhabiting the deep. And they will do anything to avoid going down there. Understandably; they dream their own nightmares.

The sad truth is that we must go there. I conclude today's instablog with a DIATRIBE against debt and against the rose-colored glasses view that everything is getting better. Everything is not getting better.

The SPX (GSPX) has broken through resistance at 1400, and is certain to go lower.

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The Banking Index (BKX) shows very clearly the cracks in the foundation of the banking stocks.

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Not all indicators are negative for the banks we are showing. But our leading indicators are negative. Goldman Sachs (NYSE:GS) is heading lower. This is what our M5 and CGTS indicators are telling us (top pane, red and blue lines). Their price collapse seems certain at this point. It could not happen to a nicer bunch of criminals and neo-criminals.

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JPM, JP Morgan, like Goldman, is cracking.

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C, Citi Group, is also breaking down. Note, only Citi, of the three, has not broken its M4 21 Trend (black line, second pane down). This will come today or tomorrow.

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MET, Met Life: Broken trend. Lower prices almost certain.

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LIFE, Life Technologies: Biotech, Stem Cell technologies. The entire picture is not negative here. But CGTS (red line, top pane) shows a very clear failed rally that is heading down.

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XOM, Exxon Mobil: chart looks like a disaster just beginning.

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VIX is getting stronger; UUP (US Dollar Bullish ETF) is getting stronger. Both of these are bearish for stocks.

European indexes are much stronger than US indexes technically. But European problems are surfacing again (who really believed spending more money was going to cure the EU of its debt problems) -- there is one way out of this mess -- AUSTERITY -- and it is NOT going to be easy. If we lose our nerve, as Europe is trying to do, it won't fix anything -- it will only make it worse when we finally end up confronting the mortality of debt.

Some people argue that Austerity is needed -- only not when the economy is contracting and people are hurt and scared. This is silly. Austerity is needed when it is needed, not when it is not needed.

Substitute the word "Winter' for 'Austerity'. The idea that we should have Winter in the Summer instead of in the Winter is ludicrous. We have Winter during Winter for a reason. If Winter is painful and kills plants, animals and humans on a large scale, this does not mean that we can change the logic of the seasons to try to avoid the pain.

Winter prepares the way for Spring. We can't wait for Austerity until we don't need Austerity. We don't need Winter in the Summer BECAUSE we HAD Winter in the Winter.

There is no easy way out of life. There is no 'easy' way through the Black Forest of Debt.

Karl Jung wrote: "Not AWAY FROM the Black Forest (of depression and moral/emotional death) but THROUGH the Black Forest". We can't hold our breath and pretend the Black Forest isn't there. The Black Forest IS there. Our future lies on the other side of the Black Forest. Not 'away from'....but 'through'...

We can't let our fear of the Black Forest reconfigure our intellectual understanding of reality -- this is intellectual dishonesty. This is the basis of the 'It's different this time" way of dealing with unpleasant reality. We all KNOW, in our guts, that we have to pay our debts, in a financial and a moral and in a religious sense.

The idea that we can let the taxpayer take over responsibility for corporate and consumer mismanagement and theft and bad judgment is more than ludicrous: it is criminal, and will eventually lead to a civil war. That's why our banks need to become 'not for profit corporations', like public utilities. Banks and bankers will always try to find a way to steal the money they are safe-guarding. History shows this to us. The more freedom the banks have, the more injury they deliver, in the name of financial ingenuity. We have had a 'banking crisis' almost every 36 years of our history, followed by an economic depression.

The basic truth is this: Debt is a deal with the devil. More debt to protect the exiting debt (through artificially low interest rates) is a re-financing of this deal with the devil.

The two paths through our current mess has been characterized by one SA writer as the difference between going to the doctor and enduring a long period of sickness and treatment and weakness and spending millions of dollars for this treatment but eventually recovering and continuing to live (the protecting the debt method now being pursued -- I won't call it the Obama way, because it was also the Bush way, and probably would have been the Romney way: blame government and give away potential debt-busting tax revenue to keep the rich richer) -- and the 'austerity way' in which the patient fights the cancer alone at home and dies.

In truth, it is not the difference between the man with cancer who seeks treatment and goes to the hospital and suffers through chemotherapy and survives verses the man with cancer who fights the illness himself and dies. The it the 'positive spin' view of the 'hopium' alternative of spending more and more money to try to protect our debt and keep the monster away. The man who gets treatment and chemo comes home weak but hopeful and then gets a secondary cancer and also dies, having spent all his family's money in an attempt to outsmart the devil.

It is the DEBT that IS THE CANCER. The man who survives is the man who cuts out the cancer (gets the doctor to cut out the cancer). Japan is still alive, but Japan is going to die also -- it is on life support and is using all its savings to stay alive in a kind of slow-death vegetative state. Japan survived this way because Japan's bubble popped when the rest of the consuming world was expanding its business cycle. Japan popped 1989 -- and the Western business cycle growth season ran 1983-2001. Exports 'saved' Japan. But now exports are disappearing.

The idea that austerity failed in Europe (or IS failing) is the rose-colored glasses view of "spending and borrowing can't kill us". The austerity of Greece and Spain is where we are all heading, like it or not, until the MOUNTAIN OF DEBT -- the global mountain -- is cut out, carved out, destroyed. The idea that we can all 'muddle through' is the latest form of denial. It's the: "It's different this time. We don't have to die. We can muddle through' idea.

It's a kind of prayer. A prayer that we don't have to witness the death of our own creation. But we do have to witness the death of our own creation. We witness the death of our own creation every 36-years. However, the death of our own creation and the rebirth of our next creation are linked in the same breath. Our fear of death is (inadvertent to our understanding) also our resistance to our own rebirth.

Austerity is the way we learn to say 'no' to our self. And rebirth never will come until we face the fact that we cannot continue saying 'yes' to ourselves, which is what produced the cancer and the contract with the devil.

We have to die -- but death is not what it seems. Death is the door into the next world. Of course, some would rather cling to this world, in a hospital, with chemotherapy, telling themselves that they have cheated death, as they get weaker and weaker, thinking they have somehow triumphed over inevitability. This patient will just continue to get weaker and weaker and weaker...until he dies.

Death, in truth, in this social/economic/political sense is not what we think. We die every 36 years and then we are reborn. Night-Cycles are this death process. Things fall apart. Chaos ensues. But this death-process is also temporary -- until it isn't. Rome eventually disintegrated, and did not really make it back for more than 1,000 years. That will happen to America also. But we are not there yet.

I've said enough.

Good fortune to all.

Michael J. Clark

CGTS, Hanoi, Vietnam