Wednesday Market Update.

[rdenner]

Well it's morning here in Ohio and after a scan of all the overnight news stories and markets; it's safe to say all hell is breaking loose again. Let's recap some of the highlights, shall we?

*GOLD All time high of 956(and going higher)

*OIL All Time High of 101.50(and going higher)

*Gasoline Futures All time High of 2.56(and going higher)

*Dollar versus Euro spread (and CND and Pound) all at or near all time highs (Dollar/Euro crossed the 1.50Euro to 1.00 USD mark)

*Dollar INDEX is in a straight free fall this morning. Dollar index is down to near a record 74.

*Wholesale Inflation is running at over 7 1/4% THAT THEY ARE ADMITING TO!

*Housing problems are accelerating not leveling out like they said.

And on and on and on the bad news goes. So why am I NOT screaming from the rooftops to run for your lives? To be honest it's more of a gut feeling than anything. And here is the crux of it.

With the capital markets seemingly figured out, the big money boys have righted their ship for now and the possibility of a MASSIVE run on the banks or their huge funds have been averted for now. This means that they can get back to the job of slowly deflating this economy, without the HIGH risk of igniting a panic that will swamp the entire global monetary system. THIS IS PARAMOUNT.

This doesn't mean that things won't get chaotic, trust me they are and it will get much worse. But it means that the center of the financial system will stay in tact.

I expect things will get VERY squirrelly for the next few days. Gold will probably cross at or near 1000 in the next 5 days, Oil will probably push and STAY above 103 or 104 and the new LOW level of support will be 100(much like it has been playing between 98 and 92 for the past 3 months). The dollar Index will make its new lows near 70 or 69 and the new line for the Yen will be in the 96 range.

This is ALL BAD!! BUT with the core of the financial system being held together it should stop it from creating an uncontrollable tsunami that will swamp the entire global economy. I think this will allow them to again start the slow blow off of the economy.

I still stand by my remarks of the past two days that over the next 6 to 8 weeks that the DOW will attempt one more push at the 14,000 mark even in the face of all this bad news.

YES there will be bank runs in the coming months, BUT with the CORE of the financial system getting itself back in order; it will make this process much less chaotic. YES people will lose money and YES the FDIC will ultimately need to be bailed out and YES inflation will start to run rampant. But the banking system will persist and YOU WILL MAKE YOUR PAYMENTS. Don't bank on the system just dissolving and forgetting that you borrowed 200k for your home, or that you blew through your 10K credit card buying veggie plants and hand tools.

Plan accordingly in my OPINION. They are trying to manufacture a CONTROLLED decline of the economy. One of the major points of instability has been reinforced(The monoline insurers and the big Hedge funds) and this will lend STABILITY to the entire system.

With two small children at home I can't say that I am disappointed. I know that they are cheating and that they are benefiting from basically cheating and lying and being scum bags!! But we all tried to wake people up and make them aware of what was going on, but alas no one wanted to listen.

And the past 30 years are now water LONG LONG under the bridge and now all you can do is re-adjust your reality to what is in front of you. And that is inflation in most of the things you NEED (food, energy) and DEFLATION in every thing else.

I may have waited to long to start preparing for this myself. I am buying stuff from Menard's this week and pricing of things like WOOD are going through the roof. It's going to cost me so much more to do everything I need to do this spring, all because I procrastinated and didn't have faith in what I KNEW was coming.

Granted I made some wise moves as well, with the knowledge I had, I just hadn't taken it far enough...

Robert (sorry for the disjointed thoughts.. Lots going on in my head this morning)

[Neal]

Robert do you subscribe to the theory that the fed has inflated and is now deflating the economy deliberatly through the housing bubble to offset partialy the problems of PO?

[rdenner]

Robert do you subscribe to the theory that the fed has inflated and is now deflating the economy deliberatly through the housing bubble to offset partialy the problems of PO?

I would like to hope so. If they are just doing this because they are greedy little bastards and like making normal people suffer, I'm going to be really pissed off  .

I am hoping that the end game to all of this, is to slowly and in as orderly a fashion as possible, FORCE people to downgrade their lives. If you look at energy USAGE charts, you'd see that the only time in the past 100 years that energy usage actually leveled out and declined was the Oil Shocks of the 1970's. This wasn't caused by a lack of oil or even production, but it was a purposeful event staged by OPEC and the top producers.

This tactic came back to bite them hard. They only withheld a very small amount of oil and it wasn't really for that long. But the long term affects it caused was dramatic to say the least. When US demand was broken it reduced global demand for oil dramatically.

LINK http://energy.senate.gov/legislation/energybill/charts/chart8.pdf

Notice on this chart that it took almost 6 years from the first early 70's shock for there to be a dramatic decrease in demand. The first dip was very shallow, but the second dip is very deep and lasted well into the 80's. This was horrible for the OPEC producers as demand was drying up just as large amounts of oil were making it to the market trying to capitalize on higher prices. It resulted in oil crashing back to something like 14 bucks a barrel.

LINK http://www.wtrg.com/oil_graphs/oilprice1869.gif

Look at the dramatic drop in prices into the 80's.

I just hope that IF this is a controlled event that the end result is to break US demand while at the same time trying to keep us from falling into chaos. I have come to accept this fact, as hard as it is to accept. I just hope to God that it isn't just some ploy to make a bunch of fat cats FATTER, though it will most assuradly be a  major side affect of this control. I just hope that isn't the only ends they are looking for...

Robert

[mammabear]

Just wanted to say thanks for your info, and opinion Robert!

[pagancelt]

Robert,

If this could be a tactic to soften the blow of PO by reducing American consumption, then why not admit this so at least people wouldn't panic?

[Chesire]

Robert,

If this could be a tactic to soften the blow of PO by reducing American consumption, then why not admit this so at least people wouldn't panic?

because every uptick in the fuel/food price kicks someone off the sled.  Because its just lemming pacification while TPTB as far down the ladder as possible stock up and prepare to come out on top WTSHTF.  If your going to cause someone to be homeless hungry hopeless with your actions are you going to give them any warning?  Multiply that by hundreds or thousands or millions being told heya chumps the party is over and it ain't comin back . You are fucked .

[pagancelt]

If we're looking at potentially one million foreclosures, yet there are over one hundred million homes, we're looking at a 1% foreclosure rate. Perhaps this view is naive, but this would not strike me as some great calamity. Perhaps I've been missing deeper issues as I read over the material Matt posts in breaking news and read what others here have posted.

[zentao]

They are cranking out the kool-aid:

Federal Reserve Chairman Ben Bernanke on Wednesday said the U.S. central bank will act as needed to ensure beleaguered housing and credit markets do not further undermine an already sluggish economy.

"It is important to recognize that downside risks to growth remain," Bernanke said in testimony prepared for delivery the House of Representatives' Financial Services Committee.

"The (Fed) will be carefully evaluating incoming information bearing on the economic outlook and will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks," he said.

http://www.reuters.com/article/ousiv/idUSWBT00846020080227

Growth and powerdown are incompatible and they know it...So this just keeps the party going a tiny bit longer as Cheshire pointed out...

[Jagshemesh]

Robert,

Just wanted to say I greatly appreciate your input and knowledge.  Thanks for the updates.  I look forward to them and read them religiously.

Thanks,

Josh

[Chesire]

If we're looking at potentially one million foreclosures, yet there are over one hundred million homes, we're looking at a 1% foreclosure rate. Perhaps this view is naive, but this would not strike me as some great calamity. Perhaps I've been missing deeper issues as I read over the material Matt posts in breaking news and read what others here have posted.

and 25 dollar wheat calls in march

and 25 % property value drop

and 25 % cut in state revenues

and 25 % rise in fuel prices

and loss of buying power

and subprime bailout of how much ? 13500 and change for all 150 million employed americans  just for BOFA and how much are the other banks going to ask for ?

and FDIC getting ready for bank closures and runs

and and and and  the one million foreclosures  are just icing on the shit sandwich at this point.

[pagancelt]

I've got that, but right now all we're hearing from the Fed and the government is about the mortgage meltdown, and how IT is affecting the Wall  Street investment banks, they're not talking about the skyrocketing costs for everything except cheap plastic pumpkins from China. I'm beginning to think this is all a smokescreen to divert attention from where the actual crises is, and leading the happy lemmings off the cliff.

[rdenner]

You have to understand the SCALE at which the U.S. consumes oil and just about EVERYTHING ELSE. Even a 1% reduction in US demand is a 1/4 of a million barrels of oil. If there was just a 1% WORLDWIDE reduction in usage it would be close to a million barrels.

I think the ultimate demand destruction they are looking for is going to be a hell of a lot more than just 1% though. I would guess at a minimum they are looking for 10%.

As to the best method to get to that demand destruction? Well I am all for the truthful method, but understand what that means. If EVERYONE was made aware of the fact that things were going to get very hard in the near future, the whole system would collapse nearly over night. Again it is the problem of SCALE.

Think about what happens in the Northern United States every time an Asshat Weatherman gets on the 6:00 news and Says "OMFG there is a snow storm coming".. Like programmed little lemmings, people rush to the store and buy milk and bread and whatever else and the store has a run on it.

Think about that effect on a nationwide basis and how chaotic that would be. People cashing out stocks and retirement funds in an attempt to get garden supplies. Garden supplies would quickly become scarce and prices would soar and people would panic. AND THAT'S JUST ONE LITTLE EXAMPLE!!

Again, I don't like it, but I understand that they are systematically and as slowly as they can, reducing the American lifestyle.

And as an aside, I HATE IT WHEN I USE THE WORD "THEY". It just sounds so conspiratorial.

I use the term THEY to acknowledge that there are people who see this economy and country and world at a much higher level than all of us. That is a fact. There are people at the heads of Corporations and governments and Banks that undoubtedly see things that you and I will never get to see and hear and learn things that we can only speculate about.

When I use THEY, it is in regards to these people. They don't necessarily have to be part of some massive conspiracy, but just all seeing the same BIG picture and reacting accordingly...

Anyways, back to my point... If you think about my strategy for keeping my family and me ahead of the coming strife, it might help illuminate the course I think they are pursuing. I try and keep us JUST AHEAD of the wave. Like selling my home 10 months before the bottom fell out of the market, or getting INTO a better house (better area and better prospects) before the financing fell through the floor. Things like that. But sometimes you get caught. Like me waiting to long to buy wood for my planters or buying hand tools while they were still dirt cheap.

If you take this idea and expand it up to the thinking level of a Government or a Global Bank or Corporation, I feel that they are doing the same thing. Trying to JUST STAY AHEAD of the wave. But they have the added BIG PROBLEM of making sure that the majority of the people don't look up and say "HOLY FUCK, THERE IS A GIANT WAVE!!” And then have everyone panicking and going crazy...

It's a very fine line I feel they are walking and so far they haven't slipped in any big ways yet, evidenced by the fact that they haven't had to use any of their CONTROL mechanisms on the masses yet (think Patriot Act and all the crap that's come out since 9/11).

So IF they can just keep slowly pushing us down and keeping us from panicking for as long as possible it will keep things moving along, albeit at a much slower pace..

Not sure if this made sense, but its the reality I am basing my preps on, and is why I watch things so closely..

Robert

[Jeromie]

Bravo Robert!!!!   The big guys are not dumb.  They are very factional. Colluding ever so slightly the dumb way puts you in the slammer for 260 years after giving everything to the lawyer. But , never forget.... almost all of them are employees too!   Study the business of being an employee . When you do you can fit all this together. 

The headless state.

[pagancelt]

Makes sense, Robert. Lemming is as lemming does, I guess. Reminds me of the Tommy Lee Jones line in "Men in Black" when Will Smith asks why the aliens aren't made public because people are smart. "A person is smart, people are a mob," I think that's the line. Either way it makes sense. Do you see an all out economic collapse coming, or do you think "they" are actually clever enough to pull off a controlled depression?

[Chesire]

Makes sense, Robert. Lemming is as lemming does, I guess. Reminds me of the Tommy Lee Jones line in "Men in Black" when Will Smith asks why the aliens aren't made public because people are smart. "A person is smart, people are a mob," I think that's the line. Either way it makes sense. Do you see an all out economic collapse coming, or do you think "they" are actually clever enough to pull off a controlled depression?

I think we are about to find out. Controlled or uncontrolled it is going to suck much ass for 70 % of the population  and thats a conservative wild ass guess