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Quadruple Witching Hour - Chaos After the Market Crash?

 

Chaos will necessarily follow: social and political turmoil, military adventures, racism and xenophobia... All the evils the world has already experienced after Black Thursday in 1929. The Deep Depression is not a fatality. Act before September 9th.
 
The Invisible Hand of Irrational Exuberance.

The Invisible Hand of Irrational Exuberance.

FOR IMMEDIATE RELEASE

PRLog (Press Release) – Jun 28, 2010 – No one disagrees now: the global economy is in a fragile condition. We will soon discover that governments, central banks and supra national bodies will be powerless when faced with another slow down of economic activity or an outright market collapse. 

We already have clear signs of economic slow down: increase in new jobless claims, decrease in consumption, durable goods orders and an eye popper stumble of new home sales. 


Diagnostic and Prognostic: 

Fiscal Policy: 

Also called Keynesian stimulus has found its limit as people and financial markets become wary of further deficits and, more importantly, powerful vested interests oppose it. 

Monetary Policy: 

That also has reached its limit with short-term interest rates close to zero in every developed economy. Central banks will find it difficult to decrease it lower than what they call the zero lower limity. The so called 'quantitative easing', which have pumped trillions of liquidity that can't find their way into real investment. If they were we would witness some sort of inflation which we don't. It raises the question: What several trillion dollars more will do that 2 trillion dollars didn't do. Will people accept another round of these obviously unjust measures? The last non conventional monetary policy tool, devaluation of the currency, has also already been exhausted. 

What can yhey do the Japanese couldn't during the last decade, which is now 17 years old, when faced with a milder local collapse of the economy? 

How could we know how effective is the monetary policy? The Federal Reserve System decided on March 23, 2006, 9 month before Goldman Sachs decided to pull back from Mortgage Bond Securities market, to terminate the publication of the single most important measure of the effectiveness of its actions: the M3 measure of money supply or the quantity of liquidity it injects that gets transformed into long-term investments. 

Symptoms: 

Long-term yields go down as they have since 1981. At some point they will be so low as not to reward the investor for interest-rate risk. Sooner or later he will prefer cash at 0% interest rate rather than any lon-term investment: it is the crash. 

Long-term trend of the Yields of US Treasury Bonds: 



Short-term trend of the Yields of US Treasury Bonds:

 

I estimate that the fair value of that yield, given the present volatility of interest rates and the short-term rate of 0%, is around 4.60% against 4.06% now. It is already below the lowest reached before the Great Recession, which was 4.15%. I estimate that any value below 3.90% would be unsustainable and a small shock would make it return to its fair value and investors will retreat from any long-term investments. 

There is no doubt in my mind that during the next four witching hour on Friday September 17th market will call the bluff. 

Consequences: 

Chaos will necessarily follow: social and political turmoil, military adventures, racism and xenophobia... All the evils that the world has already experienced after Black Thursday in 1929. 


Prescription: 

Chairman Ben S. Bernanke and Secretary of the Treasury Timothy F. Geithner don't know what they will do the day after. It is a luxury you can't afford.As credit is the flaw in the ideology that backs that failing economy the single plausible alternative to the Deep Depression is an Adjusted Credit Free, Free Market Economy. 

The right to participate is granted to anyone who will have registered the serial number of a €5 euro note and will have signed the participants agreements. That right is linked uniquely to the effective ownership of the note. It is the owner's responsibility that these are authentic and constitute a legal tender. 

The right to register a note is strictly limited to one per household. 

Registering does not constitutes an obligation to participate but a right to do so at anytime in the future. 

Participants Agreement: 


    •   Not to steal from another participant. 
    •   Not to hurt another participant. 
    •   Not to lend money with interest to other participant. 
    •   Not to own any long term assets or work 
        (except to provide for food or shelter): 

------------------> from September 09th, 2010 at 9:00 AM EST. 

------------------> till September 17th, 2010 at 4:00 PM EST. 

Long-Term Assets: 

Long-term assets are anything which is not directed to your own day to day consumption: businesses, Stocks, debt instruments, real estate, and commodities including gold or silver. 

The proceeds must be held either in cash or invested in short term treasuries (maturing in less than two years and held with the emitting treasuries. (With Treasury Direct for the US Dollar.) 

No holding must be deposited with any bank. 

Participation: 

We don't expect a strong participation rate before the crash but we already know it will explode as fast as the stock market will dwindle after the catastrophic event. The higher our participation rate before the crash the faster we will be able to implement our economy and limit the extent of the consequences of Chaos.Your leadership is very important, we must be as numerous as possible now so when the crash break out we can spread these ideas as fast as possible and limit the numbers of the casualties of the Chaos. 


It is Up to You Now. 

To be sure after this age of turbulence, like it or not, there will be an adventure in a new world. What this new world will be is up to you but, soon or late, it is ideas, not vested interests, which are dangerous for good or evil. This adventure can be a once in a millenium opportunity or catastrophe. It is your choice. 


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Disclosure: No Position

Disclosure: No Position