conceptwizard

Why I'm (Cautiously) Optimistic About the Future

News of Dubai's payment "standstill" roiled global markets where investor confidence was already thin. The dollar and yen strengthened and US Treasurys surged. The "flight to safety" is making it doubly hard for the Fed to reflate asset prices. Dubai-like credit events make investors jittery and they pull in their horns. That extends the slump and deepens the recession.

If the Dubai crisis drags on, the dollar will get stronger and the flourishing carry trade will crash. That means that the maxed-out banks (which are heavily invested in high-risk positions) will get clobbered once again. That's the nightmare scenario.

The Fed has wrapped its arms around the financial system and provided unlimited guarantees on trillions of dollars of dodgy collateral. But that might not be enough.

Dubai's Debt Woes Could Further Unhinge U.S. Commercial Real Estate Sector

Dubai World owners were caught up in the same heady debt-fueled commercial construction-binge that swept across the United States. The problem can be traced back to lax lending standards and low interest rates. Now demand has fallen off a cliff and credit is getting tighter. Dubai World can't roll over its debt or meet its obligations. That's what typically happens when credit bubbles burst.

On Thursday, Bank of America analysts issued a statement: “One cannot rule out — as a tail-risk — a case where this would escalate into a major sovereign default problem, which would then resonate across global emerging markets in the same way that Argentina did in the early 2000s or Russia in the late 1990s.”

First, it illustrates that the financial crisis is not over---households, businesses and countries are still deleveraging. This ongoing process will slow spending and increase defaults, bankruptcies and foreclosures. Government guarantees and stimulus programs will not reverse prevailing trends. More incidents like Dubai World should be expected. These "credit events" will disrupt the recovery and spur greater risk-aversion which will push stocks downward.

Second, when these incidents take place, there's likely to considerable collateral damage from the unregulated insurance policies (credit default swaps) which underwrite the bonds. These CDS derivatives are not sold on a public exchange so no one knows who holds them, in what amount, or whether the issuer has sufficient capital reserves to pay off claims. We should expect a repeat of AIG over and over again (although smaller) until the system is either regulated or CDS are banned. The bottom line, is that the current financial architecture is not designed to work; it is designed to make a handful of speculators very rich. These speculators own congress, the White House and the financial media, which is why there has been no meaningful change in regulations.

The Week Ahead in Videos: Nov. 29- Dec. 4

Thank you for the video.

Its amazing how the media world is so far disconnected from the major issues.

NYSE installing rule 48 at 9:20 on Friday.

The potential effect from the Dubai default on the dollar carry trade.

The Japanese Government declaring a currency war.

The Hadley papers outing Global warming as a farce and its effect on Cap & trade and other markets.

The fact the 600 Trillion in derivatives could be affected by the Dubai meltdown.

The probability that the dollar will rally against a depreciating yen, sending the equity markets into a tailspin.

The Comex Gold delivery and whether or not all the Gold is available, already dollar premiums have been offered out of London instead of the metal. Other stories include China shipments being Gold covered tungsten (I can't verify the accuracy yet).

An Article:
Next comes the scandals. In the forefront are the tungsten bars coated with gold discovered by the Chinese several weeks ago, which has been blacked out in the elitist owned media. The bars were held and delivered from London and believed to be from the ETF-GLD, which received them from the US government. Our question is how much gold held by the US government is a fraud?

December is usually the largest delivery month of the year and we expect delivery problems again on both gold and silver contracts. The first line of defense by the exchanges will be intimidation and then offers of dollar premiums for not taking delivery as has been recently done in London. Over the next week and into December the drama will again be played out. The question again arises can London and Comex make delivery?

So many issues so little space....

Global Warming Models: 'Out of Order'?

It is not the fraud of Global warming that is the main issue. It is the profession of science itself that is in question. When a scam of this magnitude that has the potential to drain trillions of dollars from economies, is uncovered. And no major media is covering this for the fraud that it is. With Obama still going forward with Copenhagen he is still perpetrating the lie.
The system is being hijacked by the very people charged to protect it.

If no formal inquiry in forthcoming from the Science community in particular, politicians and Media, that will prove my point.

Spending, Durables: Basically, Stuck

Contrary to most thoughts rge FED does not want spending to occur as it will drive up the inflation rate. Banks are hoarding cash by the billions cutting credit lines to the tune of 1.2 trillion and raising rates. Does it sound to you that are are going to lend anytime soon.

The savings rate is up and 4 million people on the 20 week extended unemployment handout are set to expire shortly.

GE lobbists did a good job with the cash for washing machines for all the people without a house to go and buy. Geesh what are they thinking? Another false GDP bounce so the markets will roar ahead on no fundementals.

Interesting points to follow:

Comex delivery ends within a few days, i wonder if they really have that much phsyical gold?

Japan is fed up and not going to allow the appreciation of the Yen any further. Dollar rally means equity drop.

Dubai fallout is estimated to be much more than what is officially on the books.

Bernake says no significant increase in GDP for 5-6 years.

ts shaping up to be an interesting week next week

Accountants Upbeat on Canadian Economic Prospects

What few Canadians realize is that the housing market has avoided collapse (prices are down 32 per cent in the U.S.) because the Harper Conservatives directed the CMHC to change the mortgage rules to effectively make the Canadian government the biggest sub-prime lender in the world. What’s almost as alarming as this reckless policy is that no one in the financial media is talking about it, even though everyone knows the facts.

The facts are that over 90 per cent of existing mortgages in Canada are “securitized” -- that’s the practice of pooling mortgages (or other assets) and then issuing new securities backed by the pool -- MBSs, or Mortgage Backed Securities.

By the end of 2007 there were $138 billion in NHA securitized pools outstanding and guaranteed by CMHC -- 17.8 per cent of all outstanding mortgages. By June 30, 2009, that figure was $290 billion, which exceeds the total value of mortgages offered by CMHC in its 57 years of existence! CMHC’s stated goal was to guarantee $340 billion by the end of this year and is on track to reach $500 billion by the end of 2010. Total mortgage credit in Canada will grow by 12-14 per cent of GDP in 2009

Things are no different in Canada, just widely under reported.

U.S. Unemployment: From Bad to Worse

Good job. I would like to see these charts using the U6 numbers.

Black Swans: Sometimes We're the Turkey, Sometimes We're the Farmer

Heres a Black Swan event.

"In 2015 alone, the estimated interest due - $533 billion - is equal to a third of the federal income taxes expected to be paid that year, said Charles Konigsberg, chief budget counsel of the Concord Coalition, a deficit watchdog group."

We'll go on getting fed by the farmer until he says, hey, you are now broke, and so am I. So get off the farm and scounge off the land.

Looking at $5 Trillion in Losses and Zombie Debt in Residential Mortgages

What the wealthy don't realize is that the their sustainability is dependant on the attitude and pacification of the 70% of the people. Such an obtuse an idea that the degradation of the masses will be tolerated by the freedom loving fully armed and patrioted minded Americans is a complete underestimation of what made America what it is today.

The lowly will not be contained when the enlightenment takes place that will strip the clothes from the annointed ones, and allow the simple hard working American see what they have done to him.

Then the lowly will take control of their own destiny as always has happened in the past. The purging of the greed, corruption and the pandering ways of the abusers of mankind will be completed.

And America will be cleansed and rise again.

Case-Shiller Still Predicts Massive 45% Fall from Today’s Values

Total foreclosures and delinquencies are higher right now than total annual home sales. I should add subsidized home sales.

ALT A resets don't peak for another 18 months.

I don't know anyone who has done an ounce of homework who agrees that housing is recovering. The long term trend line is accurate and will overshoot as normal.

Declining Savings: Short Term Growth, Long Term Disaster

The banks are hoarding capital and not lending, the same as they did in the 30's. The FED does not want them to lend as they know it will trigger inflation. We loose sight sometimes, the largest shareholders of some of these Financials is the Government (taxpayers) so if we truly wanted them to lend, we would make them.

2 Unfortunate, Possible Consequences of Deficit Hysteria

On August 12, excess reserves at the Fed stood at $708.501B. For November 18, the figure has soared to $1.046180 trillion. Now that the Fed pays interest on reserves, banks are receiving free money from the Fed, indirectly on US taxpayers. Why lend when you can mint money for free on the arb?

The United States government is financing its more than trillion-dollar-a-year borrowing with i.o.u.’s on terms that seem too good to be true. But that happy situation, aided by ultra-low interest rates, may not last much longer.

Treasury officials now face a trifecta of headaches: a mountain of new debt, a balloon of short-term borrowings that come due in the months ahead, and interest rates that are sure to climb back to normal as soon as the Federal Reserve decides that the emergency has passed.

The St. Louis Fed President Bullard says the Fed should extend its authority to purchase more MBS, mortgage-backed securities and agency, Fannie, Freddie, Ginnie and FHA bonds. The Fed will buy $1.25 trillion of MBS by March and $175 to $200 billion in agencies. They refuse to tell us what they are paying for this toxic garbage.

If sold publicly you might get 30 cents on the dollar, the taxpayer pays the other 70 cents.

Commodities' Multi-Week Highs: If This Isn't Inflationary, We're Missing Something

Next comes the scandals. In the forefront are the tungsten bars coated with gold discovered by the Chinese several weeks ago, which has been blacked out in the elitist owned media. The bars were held and delivered from London and believed to be from the ETF-GLD, which received them from the US government. Our question is how much gold held by the US government is a fraud? Is GLD a fraud? Is SLV a fraud? Why can’t London OTC gold dealers deliver gold and have to borrow it from the Bank of England? Why does Comex not have gold to deliver and has to borrow it from Canada and the ECB? When is the CFTC going to stop the short side concentration in gold and silver? When is the SEC going to stop black box front-running and naked shorting? Once these factors assert themselves will the system break down and finally will some of these crooks go to jail? Wall Street, banking and our government continue to steal from the American people with the assistance of the Federal Reserve. Is it no wonder that 75% to 80% of Americans want the Fed audited? We must also keep in mind that the public still only knows a fraction of what has been done to them. They know little about front running, naked shorting or bogus gold bars, thanks to our media. Criminals are doing 20 to 30 years for much less than what these crooks have done and the core, the heart of the mechanism, springs from the Federal Reserve. The Fed is the center from which the fraud emanates.

Economic Reports Show Mixed Results

Real nasty times are just around the corner and nothing can be done to prevent them. The system must be purged. More major layoffs are on the way, real wages will fall and taxes will rise. The Dow will settle somewhere between 1,500 and 4,200. We won’t know where until we get a lot closer. Companies have maintained the bottom line by firing people, offshoring and outsourcing and using illegal aliens. That method of cutting costs is approaching a threshold of diminishing returns. The next big wave of layoffs will be municipal in towns, cities, counties and states that no longer have the reserve to pay employees. Some states, such as Florida has no funds to pay for unemployment benefits and were it not for the stimulus plan they would have stopped issuing checks a year ago. At this rate in many states municipalities will cease to function and schools, fire and police will be disbanded. That is where this is all headed. Americans have to be told the truth about what is really going on and who and what caused it and how we can fix it.

Are Markets on the Verge of a Breakout or Meltdown?

Buy Canadian bonds. Good solid low "stanadard deviation" solid returns and exchange rate bet on the US dollar devaluation.