market ace

Break-out or Fake-out?

The whole financial world and the US economy are riding the gov't and medias giant FAKE OUT

The FED is destroying interest earnings for millions of retirees and therefore destroying income necessary for recovery just so they can pimp for their failed banks. Bottom line: Right now, $1,000 invested in a 3-month Treasury bill yields a meager $1.20 in yearly interest. At that rate, just to match the 5 percent interest you could have earned on T-bills in early 2007, you’d have to leave your money sitting there for 42 years! U.S. savers are obviously getting shafted.

The U.S. Treasury Gobbling Up Available Credit, Crowding Out Nearly All U.S. Businesses!

Due to giant bailouts and out-of-control federal deficits, the U.S. Treasury is now borrowing money at the fastest rate of all time, hogging nearly all available supplies of credit. Meanwhile, American businesses and average consumers are getting shut out or even shoved out of the credit markets.

In the first half of this year, the Treasury has stepped up its pace of borrowing to annual rates of $1.4 trillion in the first quarter and $1.9 trillion in the second quarter. That’s 3.5 times and six times more than last year’s pace, respectively.

Meanwhile, businesses are getting crumbs: Last year, banks provided new credit at the annual pace of $472.4 billion in the first quarter and $86.7 billion in the second. This year, on a net basis, they’re not providing any credit whatsoever. In fact, they’re actually liquidating loans at the rate of $857.2 billion in the first quarter and $931.3 billion in the second.

Ditto for mortgages. Last year, mortgages were being created at the annual clip of $522.5 billion and $124 billion in the first and second quarters, respectively. This year, they’ve been liquidated at an annual pace of $39.3 billion in the first quarter and $239.5 billion in the second. WIth a foreclosure every 13 seconds this will only get much worse.

For consumers to borrow on credit cards and with other consumer loans is even tougher. Last year, people were able to add to their consumer credit at annual rates of $115 billion and $105 billion in the first two quarters. This year, in contrast, they’ve been forced to cut down their credit balances at annual rates of $95.3 billion in the first quarter and $166.8 billion in the second quarter.

Clearly, consumers, small businesses, and even larger businesses are also getting shafted.

But Wall Street Traders Reap Gigantic Rewards While Average Workers Face Worst U.S. Job Market Ever Recorded!

So it should come as no surprise that, with the U.S. Federal Reserve virtually guaranteeing a fantasy land financial environment for banks, GS has hit the jackpot this year: The bank has accumulated a bonus pool of an estimated $16 billion to dish out to an exclusive group of its heavy hitters as part of Wall Streets pool of an estimated $140 billion. That’s enough to cover a $50,000 bonus check for each and every household living in Los Angeles, Chicago, San Francisco, and Detroit.

Meanwhile, all across the USA, with small and medium-sized businesses unable to get credit or hire Long-term joblessness has hit the highest level in at least a half century: The share of the unemployed who were out of work for at least six months reached 35.6 percent in September, the most since the U.S. Labor Department began keeping statistics in 1948.

More than 5.4 million people have been unemployed for at least 27 weeks, with 1.3 million expected to exhaust their benefits by the end of this year. 15 million unemployed Americans are competing for 3 million available jobs, the worst on record, while 35 million remain on food stamps.

More than 7.2 million jobs have been lost in the past 21 months. In contrast, in the 30 months of the past recession, only 2.7 million jobs were lost. The official unemployment rate, at 9.8 percent, is just the tip of the iceberg. The true unemployment rate, including part-time workers who can’t find full-time jobs and workers who have given up looking, is 17 percent according to the U.S. Labor Department and 21.4 percent according to Shadow Government Statistics.

Anyone thinking that this Stock Market miracle reaching over 10,000 today while the US dollar is getting crushed is not a head fake will soon learn a lot ablout false hope.

Hunkering Down for a Big Correction

You are probably right that a small correetion with a year end rebound may be in order as all of the stim and bailout money hits the economy and wasteful gov't spending spurs the GDP, but in the long run this can never be sustained.

There are just too many negative factors out there that can still cause total panic and collapse in a heartbeat. Less worse can only sustain a market so long and real growth has to enter to show any type of "recovery", but this too will take a very long time and never a return to the 'good old days".

I think right now most traders and investors are on a hair pin trigger with one foot out the exit door as seen on Monsay when just a rumor of a major bank failure sent the market tumbling. The gov't now restricting speculative commodities trading will also have very negative effects in the short term and in case you have not noticed a lot of investors are fleeing to gold again, which is a clear sign of major worry.

Anyone not using stops in this market is crazy.

Distressing Details of the UltraShorts

I have had terrible results holding several double inverse ETF's for several months now and in the future would only trade them very short term. Even with their big dividends (Which are taxable even though they are just return of capital) the results are not very good. This seems to be because they are not just short the market long term, but adjust every day so your returns literally diminish over time as each day they adjust the basis of their short positions. I had bought these as long term protection against the market, but would be much better off with Puts. Live and learn.

Distressing Details of the UltraShorts

USO is a commodities trading partnership and is not = to a barrel of oil like a gold ETF. I have had terrible results with this in the past and when you get a K-1 showing commodity trading gains or losses totally unrelated to the stock price it is not a pleasant shock. So far the new UCO seems to be doing amuch better job of tracking real oil prices.


On Jan 23 03:59 PM Clare123456 wrote:

> Please comment on USO performance long term.Does it suffer from the
> same malais?