The International Forecaster:

http://day-trading-the-stock-market.blogspot.com/

By: Bob Chapman - Posted Sunday, 13 June 2010

The following are some snippets from the most recent issue of the International Forecaster. For the full 40 page issue, please see subscription information below.

US MARKETS

As we have noted before the rage of 1789 in France cost the heads of 300,000 tormentors out of 30 million Frenchmen. The question that presents itself is will something like this occur again in our times.

We suppose it could, but we won’t know until it begins to happen. The most likely location for such an event is in Greece, which has already experienced major demonstrations and rioting.

There is no question that in many parts of the world people are disgruntled and in many cases enraged with their governments and particularly with the financial sector. Not only has the populace been defrauded, but also the fraud and deceit continue unabated. In Europe almost every country is or will be subjected to austerity programs. In America we have rage pointed at Wall Street, banking, corporate America and government. The Tea Party movement addresses that in a number of ways from a great cross section of Americans. They see the blatant corruption tearing their country, republic and democracy apart. They do not want capitalism torn apart by the Council on Foreign Relations, the Trilateral Commission, the Bilderbergers and the Illuminati. They do not want fascism, socialism and Communism shoved down their throats. They do not want any new world order or a one-world government. In all countries there is a faction of more than 10% of the population that are willing to sacrifice their lives to make sure that doesn’t happen. They have seen the 1980s S&L crisis where billions were stolen and few went to jail. The same was true with the failures of the 1990s and into the new century. We saw LTCM and no one went to jail and then Tyco, Enron, Qwest and WorldCom. Then there was Michael Milken and Drexel, Burnham Lambert. He was charged with almost 100 crimes, pled to six, paid a $2 billion fine, spent two years in jail and got to keep $1 billion for his crimes. Today he basks in luxury as a reward. Then came the biggest scam of all and that was the Madoff caper.

Financial crime by sociopaths is still flourishing. That is because our system of jurisprudence doesn’t work. We have one set of rules for connected Illuminist, another for common white-collar criminals and another set of rules for us. Is it any wonder that the public is outraged at such crime? George Soros, Illuminist, is held up as a shinning example of financial acumen. He was convicted of stock fraud in Paris, appealed and lost and was convicted in Hungry as well. Why is that never mentioned when he appears in interviews and on television? It is because his elitist group controls these venues. The same is true of Warren Buffett whose firm, Berkshire Hathaway, was convicted of a $300 million accounting fraud and paid a $100 million fine. As you can see no one hardly ever goes to jail and those who do are not connected Illuminists do end up in jail. There is essentially never any payback. All the CFTC and SEC want are the fines to cover their expenses and to expand their staffs, and they only act when forced too. There has been very little payback and the public rightly wants revenge. Thus far they have gotten little or nothing from their well compensated representatives and senators, who generally are crooks and malfeasants.

All this doesn’t go down very well with real unemployment of 22-3/8%, soon to be 23-3/4%. As the public stands in these unemployment lines they watch the Fed feed money to financial institutions, which they created out of thin air, and the debt of which these same unemployed are responsible for. The banks, brokerage houses and insurance companies are illegally kept from bankruptcy and with these same funds reap unbelievable profits. At the same time incompetent executives receive outrageous compensation. The public is deeply disturbed and well they should be. Is it any wonder that incumbents have a 27% approval-rating going into next November’s election? That is the lowest number since 1994. It is interesting that those in both major parties share the disappointment. On the other hand unemployment benefits have been extended to two years. We suspect with this gang in the White House, House and Senate, that those benefits could go on forever as our sovereign debt collapses, such as Greece’s did. Voters see no morality, representation and integrity in both houses. Payoffs and fraud flourish and no one seems to care whether they get caught or not. Grab as much as you can as fast as you can and sell your soul if necessary. Of course, the SEC and CFTC are nowhere to be found as they protect the crooks running Wall Street, in banking and in insurance. There is little incompetence - they are all in on it. Remember the connected elite never go to jail. They are fined and the shareholders pay the bill.

The financial industry is loaded with fraud and always has been. Can you imagine a banker making loans to the completely unqualified and using 70 to 1 leverage, when 9 times deposits is acceptable? Can you image rating agencies rating paper as AAA when in fact it is BBB? Then there are the 35% overvaluations of assets that lead to bank failures and no one goes to jail. This is serious crime and these crooks just walk away Scot-free. What a system. The Bernie Madoff’s flourish and have no remorse having stolen from little old ladies. He complains they threw money at me, what was I to do? Refuse it you scumbag.

How can any professional not express dismay when banks such as Goldman Sachs, and JPMorgan Chase never have trading losses. We did that for 25 years and they and we know that is impossible. Worse yet, 80% of their clients lost money. Those trading profits made up 93% of profits at Morgan Stanley as well. As a professional we know the only way that can be accomplished is by screwing your clients.

We can count in as well naked shorting, front running (flash trading), theft, money laundering, fraud and rules that let players neither admit nor deny and pay a fine.

This is what your financial system has come too. You are controlled by a group of criminals.

As a result of this outright criminality we are being led into one of two solutions – either a plunge into deflationary depression or a systemic crisis that is approaching three years in duration. The direction taken by the Federal Reserve, the banksters and Wall Street is yet to be determined. Our guess is the inflationary onslaught has only begun. We are well aware that M3, money and credit, over the past 15 months, has been reduced from growth of 18% to a negative of 5.9%. That and other things were done to head off inflation, which is currently 2% officially, but unofficially is 8%.

We announced that an inflationary depression had begun in February of 2009, some 16 months ago. The US represents about half of world GDP so what happens in America will affect the entire world. In three months America will have experienced three years of recession/depression, the longest and deepest financial and economic contraction since the 1930s. A year ago the economy was headed downward and had it not been for $800 billion in stimulus and an additional $1.5 trillion injection by the Fed, we would currently be far deeper into depression. That means that we are seeing the end of the effect of stimulus and if it is not repeated the economy will falter and slip into deflationary depression. Each time the Fed and in part Congress allows this to happen it takes a much greater amount of money, credit and fiscal stimulus to keep the economy in positive territory and therein lies the seeds of hyperinflation.

In the 1973-75 recession we saw inflation. That was followed by further stimulus provided again by the Fed, which culminated in the economic blow-off of 1981, which in turn was followed by high interest rates and a deflationary recession. These two events tell you recessions/depressions can be either inflationary or deflationary. Compounding the problem is the accumulation of sovereign government debt, which has been and will continue to grow exponentially. That certainly is inflationary, but worse yet is it cannot be paid back no matter how high taxes are raised.

We need not remind you of the real estate collapse that is still in progress and the incumbent bonds many of which are close to worthlessness. These are deflationary events that over the past three years they have been covered up, massive injections of money and credit. Deflation was offset, or more than offset by inflation. As a result many corporations are carrying two sets of books. One set contains the toxic waste the other set the better assets. This has caused terrible problems especially in the banking system. This is the prime reason so many banks have problems. Eighty-one have fallen this year and that figure will more than double before the year ends. This is why the Fed wants to take over the FDIC. Once the FDIC is out of money, if they are regulated by the Fed, all the Fed has to do is create more money out of thin air to guarantee deposits. At the same time the Fed will attempt to monopolize the banking system. They will allow weak banks to fail and others to be absorbed until there are only 5, 10 or 15 banks in the country.

The reason we do not as yet have hyperinflation is that banks that have borrowed $2 trillion are not lending it into the system; they are depositing those funds with the Fed. If banks start to increase lending then inflation will jump because the funds will no longer be sterile, they’ll have been monetized, or if you may, inflationized. Now you can understand part of the reason banks have reduced lending by more than 20%.

In the absence of increased bank lending we also have an M3, the supply of money and credit, which is now negative. In fact, at a record low. That means a deepening recession/depression and a lower stock market. A correction in all probability similar to 1973-75. Whether we will see higher oil prices, as we did then, remains to be seen. A Middle East war could provide that element. In fact, recently we said there would be negative GDP growth in the 3rd and 4th quarters due to the lack of stimulus of one kind or another. States are in a terrible fix and unless the federal government comes forth with aid many states will become insolvent. This would add to the downward spiral. The government will have to come to the aid of the states otherwise the system will collapse. That as well means massive layoffs to add to the already growing unemployment situation. The government will become the lender of last resort and a bankrupt. A latter day version of Atlas Shrugged. All the while the Fed is creating money out of thin air funding these bankrupts, as inflation climbs. Keep in mind that with the assistance of the Fed the nation would already be insolvent, save for its status of the dollar as a reserve currency. The dollar is in the process of being dismantled, so that our elitists can usher in a new world currency eventually. An example is Greece has a very real problem, that probably only default can solve. Greece has 1% of the problem the US has and that will be reflected in the falling value of the dollar not only versus other currencies, but most noticeably versus gold. In fact, for the past four years all currencies have fallen in value versus gold. In time all currencies will be sold in part to purchase gold. Gold is again becoming the currency standard for the world whether the elitists like it or not. The professionals, the markets, and the central bankers know this and cannot control it, as hard as they try. All the taps can be turned on at a moments notice, so hold back on your decisions on which way the central banks are going to go.

http://news.goldseek.com/InternationalForecaster/1276412400.php

VIDEO - Fundamental & Technical Analysis of the S&P 500's Daily & Weekly Charts:

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Technical Analysis of the S&P 500's daily and weekly charts, plus a look at the important Economic and Earnings Reports due out next week...

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Happy Trading this week...
zigzagman

When to Bomb Iran?...

http://www.thedailybell.com/1122/When-to-Bomb-Iran.html

The Daily Bell - Thursday, June 10, 2010



Barack Obama Washington scored a major diplomatic victory when the U.N. Security Council passed a fourth round of Iranian sanctions today.

Many thought Russia and China would not back it. And it passed despite a third-world initiative by Turkey and Brazil that weakened a U.S. push for a compromise nuclear deal with the Islamic Republic. It shows that Washington, after its disarmament agreement with Moscow and a key multilateral accord on non-proliferation, is still on a roll. Yet all this does little to change the fact that Washington and its allies may be unable to stop Iran from getting a nuclear weapon — if Tehran wants one. The West may yet have to face the choice that diplomacy is designed to avoid — namely bomb Iran or accept Iran with a bomb. Or we may be heading to a scenario of containment — a Middle East version of the Cold War deterrence against the Soviet Union. – Politico

Dominant Social Theme: Maybe these sanctions will restrain a rogue country.

Free-Market Analysis: Sanctions alone will probably not restrain Iran's nuclear program nor its inevitable march toward a nuclear weapon. Iran's leaders have made a deal with Turkey and Brazil that will considerably vitiate any sanctions that are placed against that country. Additionally, Russia and China, while coming on board for this latest round of sanctions, may not be the most enthusiastic of supporters – and their lack of engagement may eventually undo the sanction program entirely.

What is odd about these sanctions, generally, is that the entire dialogue is focused on nation-states. Iran has determined to build up its nuclear capabilities – but that does not mean its citizens have. If Iran seeks and obtains nuclear weapons from whatever source, again that does not mean Iranian civilians are in favor of the policy. Here's some more from the article.

In fact it is clear from a Western vantage point that many Iranians are substantially at odds with their government on numerous issues including, perhaps, its nuclear policies. This does not however have any impact on the larger diplomatic conversation now under way. The sanctions that have just been passed, regardless of their ultimate impact, are certainly aimed at affecting Iran's larger economy. Thus whether Iranians support their current government or not, they will be punished. Here's some more from the article:

Iran claims its nuclear program is a peaceful effort to generate electricity. But no one in the West appears to believe them. Washington and its allies are convinced that Iran seeks at least the ability to make the bomb -- to be "one screwdriver away" from having a nuclear weapon. Few believe that sanctions alone can stop them. In addition, Iran has support from non-aligned nations in exercising its "inalienable right" to nuclear energy under the Non-Proliferation Treaty.

U.S. officials admit that the threat of sanctions may be more powerful than the actual measures. Iran has called this bluff before. And probably will again. What if Iran gets closer developing a nuclear strike capability? President Barack Obama has repeatedly said that he will do all he can to stop Iran from getting a nuclear weapon. But American generals have made clear that military action is not certain to succeed. Israel may act alone, but could well follow the Washington line.

For the powers-that-be, nation states are a most convenient method of control. A nation-state purports to speak on behalf of its citizens, though in fact an elected slate can pretty much claim whatever mandate it wants. Since "war is the health of the state," it is often to the benefit of such political leaders to keep tensions boiling, and even to create tensions where none exist. This is certainly a generic dominant theme – one featuring the "other."

The Middle East is a good example of a region where Western countries especially have kept tensions high for years and years – for more than a full century in fact. It even seems to us that the manufacture of the state of Israel was designed in a sense, by the West, to create a permanently dysfunctional zone.

The Iranian situation is complicated by Israel's determination that Iran should not be able to generate nuclear weapons. It is not at all clear that Israel will sit idly by while Iran builds and deploys such weapons. If Israel should strike at Iran – either sooner or later – the result would be the most significant military confrontation since World War II. The stakes are very high.

Conclusion:

Nations are not people and do not speak with one voice. The nation state itself is truly a dominant social theme – a deeply ingrained meme – and often people cannot see beyond their conditioning. Unfortunately, it is often the people themselves, and not their leaders, that bear the brunt of suffering in the event of war. And in the case of Iran, the determination to treat the country as a monolithic and "evil" entity is leading to the continual destabilization of the Middle East. If there is war with Iran, the destabilization could spread well beyond the Middle East.

Britain Is the First To Choose Deflation:

http://day-trading-the-stock-market.blogspot.com/2010/06/britain-is-first-to-choose-deflation.html

by Rick Ackerman - Wednesday, June 9, 2010

Over the last three years, the Federal Reserve has conjured up trillions of dollars of funny money in an attempt to breathe some inflation back into the economy. The attempt has cleared failed...

Now, it would appear, Britain has become the first country to throw in the towel on fiscal and monetary black magic. In effect, the country has decided to let deflation take its course, allowing the chips to fall where they may. In the essay below, Cameron Fitzgerald, a frequent contributor to the Rick’s Picks forum, takes a close look at the decision and what it will mean not only for Britain, but the world. He concludes with a list that spells out what to expect, and the kind of pain we will experience as the world’s financial system comes very slowly back into balance in the years ahead. If his predictions are borne out, the standard of living is about to fall sharply for billions of people around the world.

David Cameron's new Government in England announced Tuesday that it will introduce austerity measures to begin paying down the estimated one trillion (U.S. value) in debts held by the British Government. Lets let that sink in for a moment, for it is a stunning announcement. Now repeat it: England will introduce austerity measures in order to eliminate the deficit and begin paying down the national debt. And that being said, we have just received the signal to an end to global stimulus measures -- one that puts a nail in the coffin of the debate on whether or not Britain would “print” her way out of the debt crisis. That would have virtually guaranteed an eventual hyperinflation that would have spread to all Western nations, destroying the U.S. dollar as the world’s reserve currency in the process and ending several hundred years of Western economic dominance.

This is actually a celebratory moment although it will not feel like it for most. But wait. The U.S. did not say it would pay down its debts. And anyway, everyone knows that debt pile is too large to ever be repaid. They are wrong. And the U.S. does not need to send any particular message at this time anyway. The U.S. has been in a deflationary spiral since 2006, having discovered that nothing, not even oil flooding the Gulf, a nuclear North Korea threatening war, campaigns in Afghanistan and Iraq, nor threats that Israel might one day bomb Iran and shut down the oil pipe, can pump up energy prices enough to drive future inflation or save the economy the old-fashioned way. Not nearly enough to escape the gravity of the housing and asset collapse anyway.

Out of Ammo

We have run out of the ammo of cynicism and old-style politics. Debts will have to be paid. Creditor arrangements will be made, concessions granted, standards of living will decline and countries will be sent to the table to bargain in a cooperative effort to resolve credit imbalances. There will be horse-trades, payments out of key commodities and access granted where previously it has been denied. There will be recovery eventually and it is a better future than what a hyperinflation would bring us all. And yes, the bills will be settled. Time to rejoice.

To my way of thinking, the U.S. will not, cannot, resort to regular debt monetization, printing press economics or the eventual and guaranteed destruction of their currency, economy and way of life before attempting first to harness what appear to be insurmountable debts and obligations. Particularly if European nations and England (first among them) begin taking serious steps toward fiscal discipline and bringing in measures of restraint. Many will argue against my theory. They will all be wrong. And so the English have opted to go with the devil they know. They have chosen a path that means their economy will contract, perhaps significantly. Where unemployment will surge as public sector layoffs and the elimination of programs are required to harness the debt bomb are enacted and all spending is carefully scrutinized, fleshed away, even eliminated.

Minimal Safety Net

Everything could conceivably be on the chopping block short of core government services, social service spending, basic medical services, pensions and the safety net itself. The debt is just so big that nothing less than all the efforts of Government and the cooperation of the majority of the public in accepting restraint will allow it to work. But what does this mean in the wider picture when one of the leading members of the G8 has deliberately chosen the path that signals a deflationary trend? Possibly even bringing on a global depression as an outcome of that choice?

As I said, the English have chosen the devil they know, and that is economic contraction. The last serious bout they experienced on that front was of course during the 1930's and again following the Second World War, but over the years Britain has seen many recessions. Some were deep, and folks may recall the Maggie Thatcher days of fiscal restraint, elimination of public programs and a sell-off to the private sector of everything from coal mines to railways and airlines.

Hyperinflation ‘Devil’

The devil the British does not know is hyperinflation -- not up-front, ugly and in their faces, anyway, but only anecdotally from the experience of others. No major modern economy in the West has ever hyperinflated. The exception, Germany, did so only under duress brought on by destructive and debilitating reparations following the First World War. Nobody wants a repeat of that. So this is actually a relatibrly safe move from that standpoint.

Those other nasty outcomes are already too well-known from readings of the history books out of the Weimar Republic. A complete destruction of the currency there resulted from ill-conceived “fixes” followed by a total failure of the financial, investment, banking and insurance systems. Printing press solutions led to widespread public misery and hunger. Bond and debt defaults were manifest and eventually the worst insult was when the country was saddled by an inability to borrow and rebuild following its confidence crisis. Last came radicalism and political instability as the people demanded solutions to all their problems.

Social Collapse Possible

We know too that hyperinflation can lead to chaos and social disorder. Nor is social collapse out of the question under that scenario -- particularly with so many people dependent on our existing system, and as the population ages and becomes more dependent on fewer folks of working age. No Brit wants that either. No Brit Government could survive it. The debt must be paid and the burden of that pain will be shared by all. It is the right decision. But at a high cost.

I think it is worth it. The likes of Russia, India, Brazil and China have been working in concert to develop an alternative world reserve currency, buying up gold in earnest, ostensibly to back their claim with real wealth under IMF auspices and the terms of Special Drawing Rights (SDRs). Success will give them the kind of collective bargaining power that until now has gone automatically to the U.S. because of the dollar’s status as the world’s reserve currency.

So, will we just sit back, punish our creditors through an inflationary default and thus hand them the power and influence to control a new and developing reserve currency; or will we defend our position, pay off our debts fairly (or by concessions) and retain the rights we hold dear? Let’s first ask ourselves the following question: Why must hyper-inflation be the only alternative to deflation? Answer: Because governments all over the globe have already tried stimulating their way out of the recent credit crisis and recession to little avail. They have attempted fruitlessly to generate even mild inflation despite huge stimulus efforts and pointless spending. All they have to show for it is massive additional debt and an unfolding currency time-bomb.

No Buying Our Way Out

Clearly, we cannot buy our way out our debt burden. It is that simple. It has been tried and it does not work. We cannot dig our way out of a hole either. So instead, consumption, the driver of our Western economies, remains sluggish at best, real estate is badly overpriced almost everywhere and personal indebtedness is strangling the middle classes while unemployment continues to rise and the tax burden and obligations grow by the day. It is an unsustainable exercise that will not end well. We now know it will not work, cannot work and won't likely be tried again in any significant way except by insane self-serving governments and those that have just run out of creative solutions. It is time to just pony up and pay the piper. This is simply the better (and only reasonable) solution to all the alternatives. But it will mean a long, slow and deliberate winding down until solvency is within reach. It will mean cities, states and counties will go bankrupt and not be rescued.

And it will be painful. Public spending will be cut. Consumption could decline precipitously. Unemployment numbers may skyrocket and bankruptcies will stun readers of daily blogs like this one. It will put the brakes on growth around the world. Oil prices will fall along with the prices of most other commodities. Gold could soar while food costs rise as a relative percentage of daily expenditures. The Dow will crash and there will be ripple effects across the European union and eventually the globe. Hardest hit will be major exporting nations like China and India who depend on Europe and the Americas for their bread and butter income. Aid programs to the Third world will be gutted, and I cannot yet imagine the consequences that will bring to the poorest people on earth.

Announcement ‘No Coincidence’

The significance of the decisions announced Tuesday will impact every nation on earth. And this is not happening in a vacuum, nor is the timing of the announcement just weeks prior to the G8 and G20 meetings coincidental. The statements made today are designed to lead and they will. The EU is also attempting to bring spending and fiscal controls to its member states. Greece is only the first to face the specter of a declining standard of living, much higher taxes and interest rates, controls imposed from outside its borders, and seriously reduced government spending. But the idea proposed now by the Cameron Government has real traction and will gain momentum. Britain is signing on voluntarily and has done so before, its back is to the wall and no good options other than strategic default. I applaud them.

And the idea will spread. But with a twist this time: Instead of protectionist stances between governments, there will be more free-trade arrangements implemented. Access to markets will open, not close. Canada itself is undertaking to establish a major trade agreement now with the European Union that would include among other things greater labor mobility and freedom from past employment barriers between the partners. Structural change is in the air too. It will also be in the interests of all nations to cooperate and not enter into conflicts or trade wars.

This Is the Big One

Anyone who thinks that the massive debts piled up by governments can be discharged easily while we go through a mild recession is flat-out wrong. This is the big one. Markets may respond positively at first, but then that sinking feeling will bring on some very bearish sentiments. This could well occur over the next few weeks. A major global economic contraction will without a doubt take the steam off almost all stocks as reality begins to set in. This is the expected outcome. It will come as a big surprise, though, to all who were certain that uncontrolled spending, stimulus and debt monetization would be the solution chosen by governments to satisfy the electorate. While spoiled and self absorbed, the electorate is not stupid. They will get on board with a solid plan if it is presented in a way that assures them their core interests are protected and offers hope and a better future.

A major reckoning is now a foregone conclusion. The word reset comes to mind -- and then a long, slow grind from the depths of debt insanity, followed perhaps by an agonizing return to prosperity and economic health. A decade may well be too optimistic a time frame to bring balance back to the old world and economies of the West. Let's get used to it. We are all in this one together.

So deflation it is. It will come to Canada eventually, too, so let’s start having a real debate about what that will look like and get familiar with the idea. We have already experienced stark restraint in this country in a program that was masterfully crafted by Jean Chretien and Paul Martin in the 1990's. Sanity was brought back to this country after three hard years of belt tightening. But this next phase will be a much more bitter pill to swallow. We need to look to our leadership to guide us through the crisis as it unfolds. The inflationist's camp can now leave the room because none of us can stand to hear their anguished cries, angry foot-stomping and teary, selfish objections. So pathetic.

What to Expect

Here is a very short list of what can be expected -- and trust me, this is a much more palatable list than the ones I have analyzed involving an unthinkable and devastating hyperinflation. So put away the placards and protest signs. We all need to get on board with paying down debt like any responsible citizen debtor would do. We owe big-time and this is but a taste of how it may cost us:

*Major employment reductions amongst those working in the public service
*Health care services that are rationed. Fewer nurses, health practitioners and support staff
*Larger class sizes in schools and large reductions in the number of teaching positions
*Reduced public pensions and benefits, including social service payments
*Interest rates that will gradually rise and eventually settle at around six percent
*Strikes, labor unrest and supply chain breakdowns
*Widespread unemployment affecting virtually every sector of the economy. None will be spared
*An expansion of public works programs, green initiatives
*Civil disobedience, arrests, targeting of threatening movements by security agencies and government
*Increasing taxation, particularly on the wealthy and buoyant businesses
*Shortages of all kinds and the loss of variety on store shelves
*An erosion in standards of living for most but particularly for those who are indebted
*Cutbacks in military spending, defense, coastal patrols and overseas engagements
*Cherished programs that Government usually support being completely eliminated
*Larger police forces, prison expansions and a judiciary that is strained to the breaking point
*Cities, states and counties denied bailouts, forcing them to bankrupt
*A reduction in services that protect the environment, animal rights and special interests
*Closures of universities
*The list could stretch on and on, but you get the picture.

It will be a very difficult and long-lasting correction that will purge waste and inefficiency from the system. Few will be happy, but the alternative is just too distressing to consider. The only thing that will give you true immunity in the mean time is a fat blanket of cash. Be sure to have some.


Be liquid. Pay off debts. Rejoice in your good decisions. And live free...

http://news.goldseek.com/RickAckerman/1276063200.php

The Biggest Shock of All:

http://day-trading-the-stock-market.blogspot.com/biggest-shock-of-all.html

Weiss Research Group - Martin D. Weiss, Ph.D. - June 07, 2010

Why did the specter of collapse in far-away Hungary help sink the Dow by 323 points on Friday ?

And why did similar scenarios in Greece, Spain, and Portugal trigger the Dow’s 1,000-point Flash Crash one month earlier ?

Is it because those countries are so important to the future of America’s blue-chip corporations ?

Not quite!...



http://www.cnbc.com/id/15840232?play=1&video=1511573004

It’s because investors around the world are finally waking up to some shocking realities:

Shock #1 is that these countries are canaries in the coal mine — the first of many that could suffer the wrath of investors fed up with runaway deficits.

Shock #2 is that, in the UK and the US, federal deficits and total debts, as a percent of GDP, are similar to — or even larger than —those of Greece, Spain, Portugal, or Hungary.

Shock #3 is the recurring revelations of official deceptions. Investors suddenly discover that unemployed were counted as employed … that government debts were disguised as capital … that far bigger federal deficits were camouflaged. And it is these revelations that trigger the biggest selling panics, that are the final nail in the coffin for companies and entire countries.

But Shock #4 is the biggest and most dangerous of all — not just random deceptions by a few companies or a few countries, but a global deception in the credit ratings that investors rely on for nearly ALL companies and countries!

With gathering momentum right now, investors are beginning to realize they can’t trust the ratings issued by established agencies like Moody’s, Standard and Poor’s, and Fitch.

But this is not merely bad news for the agencies themselves. It’s also a powerful force that can drive global stock and bond markets into a nosedive.

When companies are downgraded, their share and bond prices automatically fall.

So think about what it means when the grading system itself, encompassing thousands of ratings on trillions of dollars in securities, crumbles!

It implies, in effect, a collective downgrade of nearly ALL the securities in the world — every rated corporate bond, municipal bond, and even government bond in existence!

Needless to say, this transformation is too massive to happen overnight; it will progress in three phases...

Phase 1: Widespread Loss of Confidence in The Leading Rating Agencies...

In the first phase, regulators, analysts, and investors begin to raise serious questions about the validity of ratings:

Is a bond really triple-A? Or is the rating agency just maintaining the high grade because it wants to protect a good client that’s paying fat fees for its ratings?

Beyond triple-As, what about the hundreds of thousands of corporate, municipal, and sovereign bonds that currently boast other “investment grade” ratings? How many are really speculative grade — junk — in disguise?

Right now, Congress is asking these questions daily, attacking the rating agencies and getting ready to take action against them as part of the upcoming regulatory reform.

And the assaults on the rating agencies by independent commentators are even more strident …

In “Answers on Credit Ratings Long Overdue,” Andrew Sorkin of the New York Times puts it this way:

“Raise your hand if you can explain why anyone still believes in credit ratings. … How could century-old institutions like Moody’s Investor Service give their triple-A blessings to subprime junk? … How can we prevent these institutions and their sometimes cockamamie judgments from endangering our financial system again?”



http://www.cnbc.com/id/15840232?play=1&video=1511573004

In his testimony before Congress on Wednesday, Warren Buffett (a major shareholder in Moody’s) said the agencies ought to be forgiven for their sins — particularly for giving junk mortgages triple-A ratings.

But that same evening, on a Kudlow Report segment, “The Future of the Credit Rating ‘Cartel‘,” both the CNBC host and commentator said flatly that …

The ratings issued by Moody’s and S&P are “garbage.”

CNBC commentator Don Luskin added:

“Shame, shame, shame on Warren Buffett for saying the rating agencies are to be forgiven. … We’ve got the Obama administration talking about bringing criminal charges against BP. Why don’t we bring criminal charges against the rating agencies …?”

On the same CNBC segment, I was asked for my solution, which I’ll get to in a moment. But first, let me tell you my forecast regarding the next phase …

Phase 2: Massive Investor Selling...

Here’s what I see happening …

* Until and unless the rating agencies abandon their conflicted business model, extreme doubts about credit ratings will spread like wild fire.

* Investors will scramble to reassess the risk in the trillions of dollars of rated securities they own.

* They will decide, independently, what the true ratings should be, effectively issuing their own downgrades on thousands of securities.

* And, they will SELL.

This forecast takes no particular foresight. As illustrated by the recent barrage of attacks on the rating agencies, the global risk reassessment has already begun. And as illustrated by recent sharp price declines — in sovereign bonds, corporate bonds, derivatives, and common stocks — the selling has also already begun.

Phase 3: Capitulation by the Rating Agencies...

My next forecast, however, does require looking further ahead:

The day will come when, due to overwhelming pressure from regulators, investors, and even some debt issuers themselves, the leading rating agencies will have no choice but to cave in.

Moody’s, S&P and Fitch will announce downgrades for hundreds of major debt issuers in one fell swoop. Or they will seek to wipe the slate clean by revamping their rating scales, effectively downgrading nearly ALL of the bonds they rate.

I have no doubt this will happen. The only major uncertainty is: when?

* Will it be before millions of investors each make up their own minds about what every rating should be?

* Or will it be after investors make up their own minds — when there is such a sorry state of confusion and panic that the rating agencies are FORCED to act to restore a semblance of credibility for themselves and the companies they rate?

Either way, we can now see the makings of an all-out selling panic — first in corporate bonds, then in the most vulnerable common stocks. It is the natural outcome of the global downgrading of ratings and rating agencies themselves. It’s coming very soon. And it’s going to hit hard.

Too Late for Easy Solutions...

At Weiss Ratings we don’t take a dime from the companies we rate. We’re not even beholden to the companies for the supplemental data we request. If they choose not to give us the information, we rate them based exclusively on publicly available data.

However, we also believe that no one should tell our competitors what business model to use. Rather, as we proposed to the SEC more than seven years ago — and as we proposed again to Congress last week — the U.S. government must cease blessing these conflicted rating agencies and stop requiring investors to rely on them.

If this solution had been implemented years ago, the rating agencies might have had time to adjust, the mortgage ratings fiasco might never have happened, and the market debacle I am forecasting would be far less likely.

Today, however, it’s too late for moderate or easy solutions. If the government does not act as proposed, the markets will. There really is no choice.

The Next Big Question…

If even a company’s supposedly “investment grade” bonds are suspect, how can anyone trust their shares?

The answer to this question is about to come very soon. So if you haven’t done so already, be sure to batten down the hatches.

Heed “Our Sixth Warning: Dow in Danger!” Move swiftly. Do not procrastinate.

http://www.moneyandmarkets.com/the-biggest-shock-of-all-39316?FIELD9

VIDEO - Fundamental & Technical Analysis of the S&P 500's Daily & Weekly Charts:

http://www.viddler.com/explore/zigzagman/videos/24/

Technical Analysis of the S&P 500's daily and weekly charts, plus a look at the important Economic and Earnings Reports due out next week...

This video is viewed best in Full-Screen Mode...Click the four arrows in the bottom right corner...Press the Escape key on your keyboard to exit back to Normal Mode...

Happy Trading this week...
zigzagman

Chaos of the Bilderbergers?:

http://www.thedailybell.com/1106/Chaos-of-the-Bilderbergers.html

The Daily Bell - Friday, June 04, 2010 – by Staff Reporter

The Bilderberg group will convene in Sitges, Spain, a resort community 30 km from Barcelona, on June 4-7. ... Intending to prolong the global economic downturn for at least another year, the Bilderberg group hopes to take advantage of the situation to set up a "global ministry of finance" as a part of the UN. ... The debt crisis in Greece that currently puts in jeopardy the entire European financial system provides a pretext for drastic measures, and both the crisis and the measures are vivid illustrations of the strategy that employs chaos to reorder the existing arrangements. The deliberately generated chaos is tightly controlled by financial institutions, major banks, and hedge funds and serves as an efficient mechanism of governance and social restructuring. – Global Research

Dominant Social Theme: All is being decided, so calm down.

Free-Market Analysis: The Bilderberg group is meeting in Spain and unlike other years there has been relatively speaking a good deal of coverage of the meeting. We have already speculated that the reason has to do with the alternative 'Net press's relentless scrutiny. Thus, for the first time, the power elite has responded by placing some articles in the mainstream press as well.

The article, excerpted above, is certainly not "mainstream" but it is written by Olga Chetverikova and has a certain academic flair. The brief author bio at the end of the article describes Chetverikova as having a "Ph.D. in History," and explains she is "Assistant Professor at Moscow State Institute of Intentional Relations of the Foreign Ministry of the Russian Federation." Here's some more from the article:

EU mitigation measures are paving the way for the supranational institutions ... On May 21, the EU finance ministers adopted at a meeting chaired by European Central Bank president Jean-Claude Trichet and European Council President H. Van Rompuy the German plan of much greater budgetary coordination including penalties for states that break the EU budgetary rules. The sanctions will include suspending the voting rights of repeat offenders, withholding the funding for infrastructural development, etc. It was also proposed to subject national budgets to EU screening prior to their being debated in national legislatures. A report will be prepared by June 17 – notably, the date of the EU summit – outlining a common Eurozone policy. Other, yet more ambitious projects like full control over Eurozone national budgets by a triumvirate comprising the European Commission, the European central bank, and the Euro Group are also discussed.

The downsides of the rescue packages are the worst part of the problem. Invoking the threat of financial collapse, the EU countries serially introduced extremely unpopular austerity regimes with salary and pension freezes for state employees, welfare cuts, increased retirement ages, etc. Greece was the first but not the only country affected. The German government plans to cut spending by Euro 10b annually in 2011-2016. France abolished the annual pension for low-income families. Under the IMF pressure, Spain is launching a comprehensive reform including pension indexing freeze, pay reductions and employment cuts in the state sector, the abolition of payments to support families with recently born children, etc. Great Britain, Italy, and others are following the lead.

The consequences of the measures are hard to gauge considering that Europe is already facing serious poverty and unemployment problems (the unemployment has reached 10% of the economically active population and continues to grow, and at least 80 mln people are currently below the poverty line). Most likely, the shadow world government – the Bilderberg group – will administer to the public the dose of social problems carefully calculated to enable the elites "to offload troubled assets", retain control over the situation, and divert protests from the actual sources of problems that trigger them.

We've been grappling ourselves with these suppositions. Hamlet-like we have considered and reconsidered whether the EU crisis was in a sense planned or if it was an inevitable evolution. These things are never clear cut from the outside; perhaps it doesn't matter in terms of our analysis. We are aware that the EU elite did eventually expect the EU to travel to this parlous point. However, we maintain, as we have in the past, that the current downturn and the scrutiny of the internet itself has made it a good deal harder for the elite – the real elite (not merely the political one) – to implement further centralizing measures without a good deal of pushback.

From out point of view the anger is intense and will build over time along with "austerity" measures. Interestingly, Chetverikova seems to agree with us somewhat. She writes, above: "The consequences of the measures are hard to gauge considering that Europe is already facing serious poverty and unemployment problems (the unemployment has reached 10% of the economically active population and continues to grow, and at least 80 mln people are currently below the poverty line)."

This is a crux point. Ordinarily, the economic downturn would be attributed to the failure of capitalism and the usual leftist/populist claptrap would be rolled out. But this time the power elite is making its bid for expanded world governance when awareness of the REAL mechanisms of control is at an all time high. We have not been able to understand the haste with which the elite has acted of late.

The best reasoning we can come up with is that the elite realizes what is obvious – that its control is slipping generally as insight into its manipulations rises. It's still strange. Ramming through centralizing measures at a time of such heightened sensitivity is only going to aggravate the situation in our opinion.

When one looks back on the 20th century these days, one is astonished to find – if one is an active reader of alternative Internet sites – that the history of the 20th century is increasingly to be seen as one of falsehoods and disguises. It was, after all, money power that perhaps created the Soviet Union, generated two world wars and a slew of minor ones and generally inflicted upon the globe waves of socialism, environmentalism and fiat-money disasters.

Because we have been reading Dr. John Coleman lately, we would tend to place a good deal of these events directly at the feet of the Rothschilds who evidently and obviously dominated the 20th century and much of the 19th as well. Even the Bilderberger meeting, itself, strikes us as a conference, to a degree for high-level functionaries. These may be asked for advice but are probably being told what is in store for them in the upcoming 12 months.

Certainly, the elite is an admixture of the specific families and individuals plus a few institutional (religious) power centers. But the Rothschild's money-power has likely grown precipitously to unbelievable of amounts as a result of the fiat-money mechanism. The result is that the real decisions are taken by a tiny handful with their own agenda and motives.

Being human, even the elite can miscalculate. Did the power elite move too fast in the teeth of a great communication revolution? We tend to believe the current downturns in the West are stronger and more intractable than was anticipated – and that the elite will have a harder time controlling them. We think various elite dominant social themes are misfiring and that keeping them running smoothly may be difficult.

Conclusion: Historian Chetverikova writes, "Most likely, the shadow world government – the Bilderberg group – will administer to the public the dose of social problems carefully calculated to enable the elites ... retain control over the situation, and divert protests from the actual sources of problems that trigger them." We are not so sure. We will continue to scrutinize the memes of the elite to see how they are being received and whether any of them are eroding further. By their conversations ye shall know them.

BP Disaster Caused by a Nasty Mix of Government Impotence and Corporate Rule:

http://www.alternet.org/economy/147081/hightower%3A_who_the_hell%27s_in_charge_here_bp_disaster_caused_by_a_nasty_mix_of_government_impotence_and_corporate_rule?page=entire

"What we're witnessing is not merely a human and environmental horror, but also an appalling deterioration in our nation's governance."



Many news reports about the Gulf oil catastrophe refer to it as a "spill." Wrong. A spill is a minor "oops" — one accidentally spills milks, for example, and from childhood, we're taught the old aphorism: "Don't cry over spilt milk." What's in the Gulf isn't milk and it wasn't spilt. The explosion of BP's Deepwater Horizon well was the inevitable result of deliberate decisions made by avaricious corporate executives, laissez faire politicians and obsequious regulators.

As the ruinous gulf oil blowout spreads onto land, over wildlife, across the ocean floor and into people's lives, it raises a fundamental question for all of us Americans: Who the hell's in charge here? What we're witnessing is not merely a human and environmental horror, but also an appalling deterioration in our nation's governance. Just as we saw in Wall Street's devastating economic disaster and in Massey Energy's murderous explosion inside its Upper Big Branch coal mine, the nastiness in the gulf is baring an ugly truth that We the People must finally face: We are living under de facto corporate rule that has rendered our government impotent.

Thirty years of laissez-faire, ideological nonsense (pushed upon us with a vengeance in the past decade) has transformed government into a subsidiary of corporate power. Wall Street, Massey, BP and its partners — all were allowed to become their own "regulators" and officially encouraged to put their short-term profit interests over the public interest.

Let's not forget that on April 2, barely two weeks before Deepwater Horizon blew and 11 people perished on the spot, the public's No. 1 official, Barack Obama, trumpeted his support for more deepwater oil drilling, blithely regurgitating Big Oil's big lie: "Oil rigs today generally don't cause spills." He and his advisors had not bothered to check the truth of that — they simply took the industry's word. That's not governing, it's aiding and abetting profiteers, and it's a pathetic performance.

But that was only the start of Washington's oily confession that it has surrendered control to corporate arrogance and avarice.

With an unprecedented volume of crude gushing from the well and the magnitude of the disaster multiplying geometrically by the day, who was in charge of coping with that? Not the White House, not the interior secretary, not the EPA. As we saw when Wall Street's greed exploded our economy, the polluting scoundrels were left in charge!

While BP's dapper CEO issued patently ridiculous statements (such as, "Everything we can see at the moment suggests that the overall environmental impact of this will be very, very modest."), our government blindly went along with BP's false assertion that only some 5,000 barrels a day were pouring from the well, when independent experts were shouting at the White House that the correct volume was up to 19 times that much.

Finally, almost a month after the blowout, Obama ordered a moratorium on drilling new offshore wells and on granting environmental waivers to the oil giants. Bravo, Mr. President! But ... his moratorium was simply ignored. Days after his order, oil companies were handed at least seven more drilling permits and five waivers.

Last week, with 63 percent of the public disapproving of his meek deference to BP, the president of the United States of America was reduced to convening a press conference to insist that he was "engaged" and, behind the scenes, was "monitoring" BP's efforts.

Wow, monitoring! Excuse me, but who's the president here? Obama should personally take charge —-cancel all of his social and political events, convene an emergency response team of the best scientific minds in the world, announce a clear plan of clean-up actions, install all relevant Cabinet officials in a Gulf Coast command center to direct the actions, make daily reports on progress to the public, fire a mess of failed regulators and go to Congress with sweeping legislation to replace America's oil dependency with a crash program of conservation and renewable energy sources.

Oh, he should also wring a few corporate necks. Instead of monitoring these criminals, prosecute them — and put the public back in charge of our government.

Jim Hightower is a national radio commentator, writer, public speaker, and author of the new book, "Swim Against the Current: Even a Dead Fish Can Go With the Flow." (Wiley, March 2008) He publishes the monthly "Hightower Lowdown," co-edited by Phillip Frazer.

US Economic Recovery of Lies:

http://thedailybell.com/1096/US-Economic-Recovery-of-Lies.html

Slow-motion recovery keeps unemployment high...

High unemployment isn't going away. The slow pace of economic growth shows the recovery is too weak to generate enough jobs for 15.3 million unemployed people. Layoffs are contributing to the problem. That's evident from an elevated number of weekly claims for jobless aid. Two government reports Thursday offered new evidence on all of those fronts. For many Americans, it doesn't feel much like a recovery. The unemployed face fierce competition for job openings. Those with jobs are watching their paychecks shrink. A growing number of people are at risk of falling into foreclosure. And only people with the most stellar credit are likely to get a new loan. "We're out of recession, but the recovery is not going to bring a whole lot of smiles," said Joel Naroff, of Naroff Economic Advisors. – AP

Dominant Social Theme: Growth is hard to come by and patience wins the day.

Free-Market Analysis: The trouble with economic reporting in the West is that it simply does not tell the truth. This AP story is a good example. Its main point is that the American "recovery" is not going to be strong enough to provide enough jobs for the 15.3 million unemployed. Now this supposition has two problems. First of all there is no "recovery" as it is commonly understood, and second we assume that the 15 million out-of-work figure is based on a 10 percent unemployment rate. In fact, that figure is very much in dispute because of the way American federal government analysts count – and then don't count – the unemployed. Many savvy observers believe that the unemployment rate is twice as high, at 20 percent, and we believe it to be even higher than that.

Anyway, as far as the US recovery itself goes, this is a most misleading conversation within the mainstream press. Even during less severe downturns, Western economies have continually degraded and this is no ordinary downturn as we have pointed out many times. This time around the fiat money system basically collapsed. The entire system has been on life-support for about two years now. What kind of extrication can be expected from such a quandary?

We figured that to save the system, central banks would have to pump an aggregate US$100 trillion into Western economies over a period of time. We're not sure how far along they are, or if they'll reach that figure but the amounts of debt-based money that has been created and loaned out or stuffed into commercial bank coffers is staggering. It hasn't all circulated but watch out (for hyper-inflation) if it does. Of course, that was before this latest sovereign debt crisis. Since central banks do all sorts of things they don't report – engaging in various kinds of swaps and derivatives trading, who knows what the final number may be. Here's some more from the AP article:

The economy grew at a 3 percent annual rate from January to March, according to a new estimate released by the Commerce Department Thursday. The new reading, based on more complete information, was slightly weaker than an initial estimate of 3.2 percent a month ago. Consumers spent less than first estimated. Same goes for business spending on equipment and software. And the nation's trade deficit was a bigger drag on economic activity. Those factors led to slower growth last quarter than first estimated.

In a separate report, the Labor Department said the number of newly laid off workers filings claims for unemployment benefits fell to 460,000 last week. But the latest level of claims is actually higher than it was at the start of the year. By this point in the recovery, economists had hoped claims would be in the 400,000 to 425,000 range. That would signal more robust job growth was on the way.

Sounds grim? It gets worse. This article was written just as first quarter American growth was revised DOWN – adjusted from an annual rate of 3.2 percent to just 3 percent, according to the Commerce Department. The expected growth rate was to have been about 3.4 percent. It certainly didn't get there.

In fact, there are plenty of statistics that could be marshaled to put this current recovery into focus. But when one starts to do that a trend emerges, and it isn't a pretty one. We recently came across an article in the socialist Monthly Review. The article, "Capitalism, the Absurd System – A View from the United States," was co-written by Robert W. McChesney, whom left-wing Utne Reader in 2008 listed as one of their "50 visionaries who are changing the world".

The article has some fascinating charts, including one that shows GDP growth shrinking from four percent in the 1940s to a little over one percent in the 2000s. The chart is attributed to the Bureau of Economic analysis and we're not sure if it adjusted for inflation. There is another telling chart in the article, showing how wages have fallen. The article describes the trend this way: "Worker productivity is much greater than it was back in 1975, but very little of this increased wealth actually goes to workers themselves. ... The wages of U.S. manufacturing workers have fallen rapidly during the last three and a half decades as a share of value added in U.S. manufacturing. The median wage of all nonagricultural workers has stagnated over the same period."

Given this context, it is interesting to see how the article explains the non-performance of Western capitalism – specifically in the United States – by turning to Marx for enlightenment as follows: "Marx's work provides searing insights on how to understand a society that, at the surface, appears to be one thing but, at its deeper productive foundations, is something else. Marx argued that a core contradiction built into capitalism was between its ever-increasing socialization and enhancement of productivity, and its ongoing system of private appropriation of profit."

Of course Marx never did seem to explain adequately how workers were deprived of their share of a growing pie of profits, and when it comes to explaining how current capitalist trends mighty be countered, the authors are similarly fuzzy: "Mere state ownership of key productive forces is not enough to create a socialist society; the people must exercise a sovereign rule over these productive forces and society as a whole, and the society must be organized to promote collective needs."

As usual, we wonder who exactly will "exercise a sovereign rule over these productive forces." Additionally, we would ask, when it comes to the organization of society "to promote collective needs," exactly who will be doing the organizing. This is always where collectivist solutions tend to fall down. They get hazy about who is going to provide the leadership that will lead the people to the promised land.

We think we can explain all this a little more succinctly using some free-market thinking. The problem with Western economies for at least the past 100 is central banking. It is central banks, by overprinting money that cause first booms and then busts. The power elite, rarely if ever mentioned in Marxian analysis, stands behind the central banking system – which began as an Anglo-American invention but has now spread around the world. As US Congressman Ron Paul has pointed out, the central bank is an engine of centralization. After every boom cometh a bust and after every bust more businesses go bankrupt and more of the middle class is washed away.

That's why the AP's statement about the American recovery certainly stretches the truth. (Of course it's not fair to pick on AP – the recovery meme is a promotion of the power elite and is virtually everywhere these days throughout mainstream US media.) The point is that Western recoveries under a central banking regime are inevitably fainter and fainter. Each recovery is weaker than the last while crises grow stronger and deeper.

As we recall Bell feedbacker F. Beard recently pointing out, the system is set up so that people "buy at the top" – take out loans and generally expand portfolios during the good times and then are faced with certain consequences when the economy turns sour. The problem is always the same: Loans are suddenly under water as debtors discover that the equity of their investments is worth less than what they owe. Bank lenders know the inevitability of this. Many borrowers do not.

Is the current economic crisis is some sort of turning point? In the past the power elite has shoveled money at commercial banks and securities firms – and then proclaimed a recovery when the stock market began to move up. Even when the recovery was weak and limited the elite could rely on the mainstream media to forcefully proclaim victory over recession, inflation, deflation, etc.

But with stock markets rising and the media crowing, it was never really possible to examine the extent of the damage in a prolonged or realistic way. That's changed now. The Internet has allowed real discussions of the economic fraud of the so-called modern capitalist system. And the system itself has so badly failed in the past few years that it is probably much more difficult to cover-up the damage this time.

Conclusion: For those apt to defend the system, the next few years likely shall prove both difficult and unforgiving. We anticipate continued conversations about alternative forms of money and different ways of approaching the economy. The elite of course shall suggest further centralization and central banking control. But we have a feeling that this will be a hard argument to make. The mainstream press has lost credibility as regards these matters. Articles such as this one published by the AP will be an increasingly hard sell to an increasingly informed public.

VIDEO - Fundamental & Technical Analysis of the S&P 500's Daily & Weekly Charts:

http://www.viddler.com/explore/zigzagman/videos/23/

Technical Analysis of the S&P 500's daily and weekly charts, plus a look at the important Economic and Earnings Reports due out next week...

This video is viewed best in Full-Screen Mode...Click the four arrows in the bottom right corner...Press the Escape key on your keyboard to exit back to Normal Mode...

Happy Trading this week...
zigzagman

Euro Crisis to Set One World Currency?

http://www.thedailybell.com/1084/Euro-Crisis-to-Set-One-World-Currency.html

Friday, May 28, 2010 – by Staff Report

Is Europe heading for a meltdown?... This financial crisis is worse than the sub-prime crash of 2008 because the sums are so much bigger and it is governments that are in dire straits. Edmund Conway explains the dangers. Mervyn King, the Bank of England Governor, summed it up best: "Dealing with a banking crisis was difficult enough," he said the other week, "but at least there were public-sector balance sheets on to which the problems could be moved. Once you move into sovereign debt, there is no answer; there's no backstop." In other words, were this a computer game, the politicians would be down to their last life. Any mistake now and it really is Game Over. Or to pick a slightly more traditional game, it is rather like a session of pass-the-parcel which is fast approaching the end of the line. – UK Telegraph

Dominant Social Theme: The wise men of Brussels and the courageous citizens of the EU will muddle through.

Free-Market Analysis: As the money crisis seems to grow worse in Europe, we have begun to wonder if there are parallels to the 1907 financial panic in the United States that gave rise to the Federal Reserve. The dominant social theme way back then (assuming an active power elite, and we do) was along the lines of "The US banking system is too fragmented and a lender of last resort is badly needed." JP Morgan assembled his rich friends in the library of his exquisite New York mansion and bailed out the market, but only six years later, the Federal Reserve was born, the bastard child of false market-insolvency rumors and a knobby-nosed father (Morgan, himself).

There is, in fact, still speculation today that Morgan's camp planted the initial rumors of instability that swept the market and triggered the crash of 1907. Why on earth would he do such a thing? To generate the eventual result: the creation of the Federal Reserve and its passage by the US Congress. This is one perspective, anyway, the "paranoid one" that you will not find in most mainstream history books or college texts.

Back to our larger theme. We have written in the past (see – IMF Plotting Gold Backed SDRs) that we did not see how on earth the power elite was going to get from fairly abstract monetary concepts like SDRs to an actual worldwide consensus for a more globalized currency (and a global warming – "carbon" – currency seems, as well, to be a non-starter, at least currently). In fact, we have speculated that the elite could decide on a gradualist approach, setting up a thesis/antithesis dialectic between global money and regional money to move the conversation gradually in the direction of a worldwide currency. But perhaps there is a faster way. Let us see ...

The European financial crisis started with Greece and, it's true, Greece's problems are moderate ones for the EU given its size and amount of debt. But this crisis has not been resolved despite the supposed US$1 trillion that has been set aside to discourage "wrong way" speculation in Greek debt. We saw yesterday that the larger market was up because of statements from Chinese leaders that they were not going to sell euros and were perhaps to continue to be a net purchaser. So this is what market confidence has come to: China, a rigid, neo-communist state with a raging property inflation problem is seen by "the market" as a lynchpin of the Western capitalist system. What a hoot. You can't make this stuff up.

Anyway, from our perspective, a hypothetical path to a world currency (with some speed) would involve certain very specific elements. It would include, obviously, a very serious sovereign wealth crisis spreading from country to country thoughout at least the Southern half of Europe. This crisis, hypothetically, would be averted by heroic Brussels bureaucrats but not before a significant amount of financial pain was inflicted – good and hard as H. L. Mencken might say. It might even involve the dissolution of the euro and the shrinking of the EU itself. But the pay-off for the power elite would be the ability to float a scenario that proposes a worldwide currency to avert additional difficulties going forward. Here's some more from the article excerpted above:

Strip away the details – the breakdown of the euro, the crumbling of the Spanish banking system to take just two – and what you are left with is the next leg of a global financial crisis. Politicians temporarily "solved" the sub-prime crisis of 2007 and 2008 by nationalising billions of pounds' worth of bank debt. While this helped reinject a little confidence into markets, the real upshot was merely to transfer that debt on to public-sector balance sheets.

This kind of card-shuffle trick has a long-established pedigree: after the dotcom bust, Alan Greenspan slashed US interest rates to (then) unprecedented lows, which helped dull the pain, but only at the cost of generating the housing bubble that fed sub-prime. It is not so different to the Ponzi scheme carried out by Bernard Madoff, except that unlike his hedge fund fraud, this one is being carried out in full public view.

The problem is that this has to stop somewhere, and that gasping noise over the past couple of weeks is the sound of millions of investors realising, all at once, that the music might have stopped. Having leapt back into the market in 2009 and fuelled the biggest stock-market leap since the recovery from the Wall Street Crash in the early 1930s, investors have suddenly deserted. London's FTSE 100 has lost 15 per cent of its value in little more than a month. The mayhem on European bourses is even worse, while on Wall Street the Dow Jones teeters on the brink of the talismanic 10,000 level.

It is obvious that the sovereign crisis can inflict considerable pain. And it seems to have just begun. Yet perhaps our scenario is too simplistic, too conspiratorial. We ourselves have maintained that the problems with the EU and the euro are probably in excess of whatever the elite had expected – and they did expect a crisis of this sort, one that was supposed to drive the EU into a closer political union. The idea, however, that the power elite could engage in cold-blooded manipulations of whole countries is fairly difficult to countenance. On the other hand, there are historical speculations that JP Morgan, at the height of his wealth, controlled in some sense up to half of the profitable enterprises in the United States. Wealth can be concentrated and great wealth begets wealth, especially because the current fiat money system that tends to collapse the middle class.

Assume somehow that the unrolling sovereign crisis is indeed a prelude to a fear-based promotion seeking a worldwide currency (and perhaps some sort of worldwide central bank to go along with it) and one begins to see the outlines of an especially audacious dominant social theme. Perhaps this theme would be buttressed with other fear-based promotions – local and regional wars, even confrontations that utilize small nuclear devices.

We're just speculating here, of course, for our window on power elite activities extends only to a modest comprehension of how elite promotions might operate. Yet even in stating this, we should also point out that these themes are promoted by a vast array of institutions – media properties, think tanks, NGOs and assorted non-profits, not to mention governmental entities. To accept the idea of dominant social themes is to accept that the elite has tremendous influence worldwide and especially in the West. We're past that point of course. We do accept it.

We would also point out that to try to force the issue now of a truly global currency would be audacious in the extreme. Citizens of the Anglo-American axis are up in arms over the poor economy and Europe is smoldering as well. Never has a sociopolitical awakening swept the West as it has now – courtesy of the Internet and its continual truth-telling. There is more and more anger over central banking, the West's serial wars, the over-taxation and the general dysfunction of regulatory democracy.

Does what we have proposed skirt the fringes of reality? If the powers-that-be were ready to tolerate a protracted series of sovereign crises in Europe – and it may be there is not much more to arrange -- alongside perhaps some unsettling wars, it might be possible to traumatize citizens of the West enough to make them amenable to global solution. This solution in our estimation might include the return to some sort of gold standard, but unfortunately not a market-based one. The elite would try to insist on a standard that it could in a sense control and continually manage – at least in our opinion.

Conclusion: All this is no doubt far fetched. But the Panic of 1907 and the subsequent erection of the Federal Reserve – if one accepts the relationship between the two – provides us with a template for the same sort of manipulation on a bigger scale (assuming one believes in the possibility of JP Morgan's market manipulations). However it is also true that this article itself is evidence of the difficulties that the elite would face in implementing the kind of program we have suggested. After all, if we are able to anticipate it, it has occurred to others as well. This is perhaps the elite's biggest challenge in the era of the Internet. It is most difficult to promote an audience, if it comes to that, aware of your intentions and the permutations of your strategies.

32 States Now Officially Bankrupt: $37.8 Billion Borrowed From Treasury To Fund Unemployment; CA, MI, NY Worst:

http://www.zerohedge.com/article/32-states-now-officially-bankrupt-378-billion-borrowed-treasury-fund-unemployment-ca-mi-ny-w

Submitted by Tyler Durden 05/21/2010

Courtesy of Economic Policy Journal we now know that the majority of American states are currently insolvent, and that the US Treasury has been conducting a shadow bailout of at least 32 US states.

Over 60% of Americans receiving state unemployment benefits are getting these directly from the US government, as 32 states have now borrowed $37.8 billion from Uncle Sam to fund unemployment insurance. The states in most dire condition, are, not unexpectedly, the unholy trifecta of California ($6.9 billion borrowed), Michigan ($3.9 billion), and New York ($3.2 billion). With this form of shadow bailout occurring, one can only wonder how many other shadow programs are currently in operation to fund states under the table with federal money.The full list of America's 32 insolvent states is below, sorted in order of bankruptedness (in billions of dollars):

California $6,900
Michigan 3,900
New York 3,200
Penn. 3,000
Ohio 2,300
Illinois 2,200
N.C. 2,100
Indiana 1,700
New Jersey 1,700
Florida 1,600
Wisconsin 1,400
Texas 1,000
S.C. 886
Kentucky 795
Missouri 722
Connecticut 498
Minnesota 477
Georgia 416
Nevada 397
Mass. 387
Virginia 346
Arkansas 330
Alabama 283
Colorado 253
R.I. 225
Idaho 202
Maryland 133
Kansas 88
Vermont 33
S.D. 24
Tennessee 21
Virgin Islands 13
Delaware 12

VIDEO - Fundamental & Technical Analysis of the S&P 500's Daily & Weekly Charts:

http://www.viddler.com/explore/zigzagman/videos/22/

Technical Analysis of the S&P 500's daily and weekly charts, plus a look at the important Economic and Earnings Reports due out next week...

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Happy Trading this week...
zigzagman

CYCC - Cyclacel Pharmaceuticals to Report New Sapacitabine Phase 2 Interim Results in MDS at the American Society of Clinical Oncology Annual Meeting:

http://finance.yahoo.com/news/Cyclacel-Pharmaceuticals-to-pz-4081723539.html?x=0&.v=1

BERKELEY HEIGHTS, N.J., May 21, 2010 (GLOBE NEWSWIRE) -- Cyclacel Pharmaceuticals, Inc. (Nasdaq:CYCC - News) (Nasdaq:CYCCP - News) announced that new interim data from an ongoing, multicenter, Phase 2 clinical trial of oral sapacitabine, the Company's lead product candidate, will be presented at an oral poster discussion during the 2010 American Society of Clinical Oncology (ASCO) Annual Meeting in Chicago, Illinois on Monday, June 7, 2010.

The Phase 2 study is evaluating sapacitabine administered as a single agent in older patients with myelodysplastic syndromes, or MDS, after treatment with hypomethylating agents.

Oral poster discussion details are as follows:

"A randomized phase 2 study of sapacitabine in MDS refractory to hypomethylating agents"
Date/Time: Monday, June 7, 2010, 2:00 P.M. - 6:00 P.M. Eastern Time
Abstract Number: 6528
Location: E450a

Discussion time: 5:00 P.M. - 6:00 P.M. Eastern Time
Location: E354a

Sapacitabine Phase 2 study in MDS:

The MDS study is designed as a protocol amendment expanding the fully enrolled Phase 2 trial of sapacitabine in acute myeloid leukemia, or AML, to include a stratum of patients with MDS refractory to hypomethylating agents. Patients with MDS often progress to AML. The primary objective of the MDS stratum is to evaluate the 1-year survival rate of three dosing schedules of sapacitabine. Secondary objectives are to assess the number of patients who have achieved CR or CRp, PR, hematological improvement and their corresponding durations, transfusion requirements, number of hospitalization days and safety. The MDS study uses a selection design with the objective of identifying a dosing schedule which produces a better 1-year survival rate in the event that all three dosing schedules are active.

The abstract is available online at:

http://abstract.asco.org/AbstView_74_54011.html

The Government as Identity Thieves:

Dr. Ron Paul Tuesday, May 18, 2010

http://www.thedailybell.com/1056/Ron-Paul-The-Government-as-Identity-Thieves.html

The spotlight remains on the Greek sovereign debt crisis as the riots continue. The terms of the Greek bailout from the IMF and Eurozone countries remain contentious with citizens on all sides. Europeans hate having their governments throw public money away as much as Americans do. The Greeks are not happy about having their taxes raised while their pensions and salaries are cut. Meanwhile, it is rumored by the Financial Times, AFP and others that Greece may spend more than it saves from austerity measures on arms deals with Germany, France and the US as a potential condition of receiving bailout funds. If true, it is certainly not unprecedented for the global military industrial complex to benefit from deals made by their friends in the central banking community. After all, war is the health of the state. The last thing big government proponents want is for peace to break out in the world.

This free flow of fiat money from around the globe to Greece will not really save Greece as much as it will grant a temporary reprieve to central bankers from the consequences of their mistakes. Sadly, this will come at the expense of the Greek people and taxpayers in Europe and America. Taxpayers are of no consequence to either European or American central bankers. Even the mere desire for complete information on what they are up to in our name is rebuffed, as we saw last week in the Senate with the failure of Senator Vitter's amendment containing my language to fully audit the fed. The hubris of powerful and secretive central bankers seems to know no bounds.

If someone incurred debts against you as an individual, without your knowledge or consent, you would call it identity theft. You would call your bank for a full accounting of the debts incurred in your name, and after some verification, those debts would be declared invalid and you would not be held responsible for them. Furthermore, if the culprit was found, they would be prosecuted and sent to jail.

Not so with governments and central banks. Governments that are supposed to be of the people and for the people routinely incur debts against the people. Some governments even borrow money to oppress their citizens, and then expect them to pay for their own oppression with interest. With a fiat monetary system, the sky is the limit for how much debt a government can place on the backs of the people.

We have reached the point in the United States where the debt our government has accumulated against us is mathematically impossible to pay off. Harder times, likely due to a wave of hyperinflation, will eventually find its way to our streets and I am fearful of how Americans will react. My hope is that we will come together peacefully and help each other, and that enough of us will be aware that the blame rests securely on the shoulders of the Federal Reserve and the special interests. They should not be looked to for salvation. They should not be given more power. Rather, they should be stripped of the powers that allowed them to create this mess in the first place.

Resistance to public transparency regarding public debts should be denounced in the strongest of terms, and the central bankers that incurred them should be seen as no better than common identity thieves.

VIDEO - Fundamental & Technical Analysis of the S&P 500's Daily & Weekly Charts:

Technical Analysis of the S&P 500's daily and weekly charts, plus a look at the important Economic and Earnings Reports due out next week...

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Happy Trading this week...
zigzagman

Waddell is the Mystery Trader in Last Thursday's Market Plunge:

http://www.reuters.com/article/idUSTRE64D42W20100514

(Reuters) - A big mystery seller of futures contracts during the market meltdown last week was not a hedge fund or a high frequency trader as many have suspected, but money manager Waddell & Reed Financial Inc, according to a document obtained by Reuters.

Waddell sold on May 6 a large order of e-mini contracts during a 20-minute span in which U.S. equity markets plunged, briefly wiping out nearly $1 trillion in market capital, the internal document from CME Group Inc said.

The e-minis are one of the most liquid futures contracts in the world, providing holders exposure to the benchmark Standard & Poors 500 Index. The contracts can act as a directional indicator for the underlying stock index.

Regulators and exchange officials quickly focused on Waddell's sale of 75,000 e-mini contracts, which the document said "superficially appeared to be anomalous activity."

Gary Gensler, chairman of the Commodity Futures Trading Commission, said in congressional testimony on Tuesday that it had found one sale was responsible for about 9 percent of the volume in e-minis during the sell-off in the U.S. markets.

Gensler said there was no suggestion that the trader, who he did not identify, did anything wrong in only entering orders to sell. Gensler said data shows that the trades appeared to be a bona fide hedging strategy.

The CME document shows that during the sell-off and subsequent rally, other active traders in e-minis included Jump Trading, Goldman Sachs, Interactive Brokers, JPMorgan Chase and Citadel Group.

During the 20-minute period, 842,514 contracts in e-minis were traded while Waddell from 2 p.m. to 3 p.m. traded its contracts, CME said. The CME document did not provide a break-out of Waddell's trading during the crucial 20 minutes.

Overland Park, Kansas-based Waddell did not comment. CFTC also declined to comment.

A CME spokesman, who declined to comment on the document, said the Chicago-based futures exchange operator never discusses customer activity.

"We found no evidence of improper trading activity or erroneous trades by CME Globex customers," said CME spokesman Allan Schoenberg.

Waddell's contracts were executed at Barclays Capital and later given up to Morgan Stanley, according to the document.

CME said it spoke to representatives from both banks on May 6 and planned to speak to Waddell representatives the following day. The firm oversaw $74.2 billion in assets as of March 31.

Morgan Stanley told CME that it "did not have concerns regarding the activity," the document said, because Waddell "would typically use equity index futures to hedge macro market risk associated with the substantial long exposure of its clients."

'QUITE A SHOCK TO THE MARKET'

Gensler said the contracts were sold between 2:32 p.m. and 2:51 p.m., the height of the meltdown.

The market for e-minis on May 6 fell more than 5 percent in a little more than 5 minutes starting at 2:40 p.m. -- the height of the crash, the document said. The e-minis began to recover before stock prices turned higher.

An order the size of the Waddell contract would be a big trade to execute on a normal day, said a trader whose firm is active in S&P 500 futures market. About 50,000 contracts are typically traded in an hour, the trader said.

"To get rid of 75,000 contracts, that's a lot of trading even if the market is healthy," the trader said. "But when suddenly the market changes and there's not as many bids there to trade with, 75,000 is going to cause quite a shock to the market."

"That's an enormous position for anybody, whether it's a hedge or whether it's a trade. It's a big position, no doubt about it," the trader said.

(Additional reporting Matthew Goldstein)

(Reporting by Herbert Lash and Jonathan Spicer. Editing by Robert MacMillan)

Cap-and-Trade: A Scam Based on a Scam...

http://canadafreepress.com/index.php/article/23046

The Canada Free Press
By Alan Caruba
Tuesday, May 11, 2010

It is almost beyond comprehension that Sen. John Kerry (D-MA) and Sen. Joseph Lieberman (I-CT) will introduce the Cap-and-Trade Act on Wednesday, May 12th, for consideration by the Senate.

It is being passed off as a “climate bill” with provisions for more oil drilling, but it is an assault on reality, on science, on common sense, and on any future economic growth of the nation.

The nation’s prisons are filled with men still claiming to be innocent after trials filled with evidence of their guilt. Denial of the truth is their last resort and this metaphor reflects what is happening in the utterly corrupt community of “global warming” liars and their associates in the U.S. government.

Recently 225 “scientists” wrote a letter defending global warming. It was published in the journal “Science”, one of the many such publications that have become as corrupt as those at the center of the global warming scam.

Based on last November’s leaked emails among those most responsible for the data at the heart of the global warming scam, it was revealed that the United Nations Intergovernmental Panel on Climate Change had been systematically publishing false climate information and analysis.

Moreover, the photo used to illustrate the “scientists” letter was photo-shopped to show a polar bear on a small piece of ice surrounded by water. The deception included the fact that many of the signatories to the letter lack credibility. Among the first 20 listed, none work in the field of climate science.

As reported by Tony Hake of Climate Change Examiner, “Pediatric surgeons, an expert in the Maya and Olmec civilizations, a chemist that studies bacteria, and a ‘computer pioneer’ with Microsoft, an electrical engineer, the chairman of a biotechnology firm, and even an expert studying corn are but a few of the 225 experts that signed the letter.”

Dr. Gerhard Kramm, an atmospheric scientist at the University of Alaska Fairbanks, fired off a letter disputing the usual claim that human activity is causing carbon dioxide emissions that are, in turn, causing global warming. “Until today, there is no scientific evidence that an increase of the globally averaged near-surface temperature by less than one Kelvin during the last 160 years can be linked to the increase of the atmospheric concentrations of so-called greenhouse gases.”

There is no global warming. Whatever warming occurred followed the end of a mini ice age that began around 1350. Around 1850 the Earth’s temperature increased about one degree Fahrenheit to its current level.

The United Nations has been the locus of the greatest hoax perpetrated in the modern era, codified in the bogus Kyoto Protocol, an international agreement that many nations signed onto in1997. The Clinton administration signed the agreement, but did not implement it due to a Senate resolution that unanimously rejected it.

The real aim of the global warming scam is the prospect of selling “carbon credits” in exchanges around the world, in effect selling air!

Cap-and-Trade Act: Constitute the greatest tax on energy use in the history of the nation

If the Cap-and-Trade Act is passed at the urging of the Obama administration, it will constitute the greatest tax on energy use in the history of the nation and it will energize exchanges, such as the one in Chicago, set up to buy and sell the carbon credits.

As reported by Investor’s Business Daily on May 7, “The carbon trading system being pushed here has spawned crime and fraud across the pond. Cap-and-Trade is not about saving the planet. It’s about money and power, and absolute power corrupting absolutely.”

The European Emissions Trading System is a warning to America. IBD described it as “a scam built upon a scam.” British and German law enforcement authorities have been busy arresting miscreants “as part of a pan-European crackdown on carbon credit VAT tax fraud.” And VAT, a valued added tax, is being advanced in the United States as a way to raise money to pay off our ever increasing debt.

“Last December,” reported IBD, “Europol, the European criminal intelligence agency, announced that Emissions Trade System fraud had resulted in about five billion euros in lost revenues as Europe’s carbon traders schemed to avoid paying Europe’s VAT and pocket the difference. In announcing the raid, the agency said that as much as 90% of Europe’s carbon trades were the result of fraudulent activity.”

The entire global warming theory has been a scam, a hoax and a fraud from the day it was first put forth. Its advocates, corrupt scientists, corrupted science journals, and all of the environmental organizations are hoping the same Congress that foisted Obamacare on Americans will do the same with Cap-and-Trade.

Buffett defends Goldman, joins greed Conspiracy:

By Paul B. Farrell, MarketWatch

http://www.marketwatch.com/story/buffett-defends-goldman-joins-greed-conspiracy-2010-05-11

May 11, 2010, 3:33 a.m. EDT

ARROYO GRANDE, Calif. (MarketWatch) -- Warning: Bears taking over. Time to short Buffett's new "Baby Berkshires," short Goldman, short Moody's and other favorites of Uncle Warren.

Why? Behind the façade, the lovable, good ol' Uncle Warren strumming his cute little ukulele, ostensibly supporting reform, there's a dark force that's part of the toxic Goldman Conspiracy fighting to keep alive everything that's wrong with Wall Street, everything that got us into this mess, everything that will trigger another meltdown that even Uncle Warren says: "I can guarantee it."

Buffett belongs to the past while the news screams of a new world order ... Riots in Greece, more coming when the other PIIGS demand EU bailouts ... conservatives regain Britain ... unregulated BP's greed is spilling millions of gallons of oil destroying Gulf states, confirming Foreign Policy magazine warning of the "End of the Age of Oil" ... the Dow's techno-fear-driven irrational 1,000-point plunge as technicians turn bearish, ending the year-long bull rally ... even Hank Paulson's changing his tune, warning the Financial Crisis Commission that we need stronger reforms than Dobb's Senate bill.

Meanwhile, out there, seemingly oblivious of the gathering storm is an aging Woodstock hippy, good Ol' Uncle Warren strumming away on his ukulele, an over-the-hill rock star basking in the adulation of 40,000 adoring shareholders at their annual meeting in Omaha's Qwest Center ... a scene reminding us of Nero fiddling as Rome burns ... of the string quartet playing on the deck of the sinking Titanic ... of a Shakespearean tragedy with a raging, blind King Lear trapped, in denial of his role in America's collapsing empire.

Yes, folks, Uncle Warren has a bad case of denial. Remember, not too long ago Buffett was calling derivatives "weapons of financial mass destruction." And yet, there he was on stage at his love fest last week defending Wall Street's most toxic companies, trapped in denial, defending the greedy culture that got America into its current mess:

Praising Moody's "business mode," and by inference all rating agencies that blindly rubberstamped Wall Street's toxic debt, setting up the last meltdown

Defending Goldman Sachs bad behavior despite the fraud suit and a possible criminal indictment (while hiding his own conflicts of interest as a big investor in both Moody's and Goldman)

Praising Goldman's CEO Lloyd Blankfein ... by far Wall Street's greediest fat-cat banker who paid himself $68 million of his stockholders profits last year

Defending Goldman with a bizarre argument that Goldman is no more guilty than the other Wall Street banks, a tacit approval of the bad behavior of all Wall Street banks in the Goldman Conspiracy

Worse, ol' Uncle Warren also tried deflecting attention from Wall Street's corrupt business model by blaming government regulators for the meltdown, another example of Uncle Warren's blind denial, ignoring the fact that in the past year Wall Street spent over $400 million on lobbyists and campaign cash to make absolutely certain regulators, Congress and the Obama team all played along with Buffett's songs that guarantee Wall Street controls Washington regulators

Ironically, all this comes from a man who once lectured Congress on "Moral Integrity: I want employees to ask themselves whether they are willing to have any contemplated act appear on the front page of their local paper the next day, read by their spouses, children, and friends ... Lose money for my firm and I will be understanding; lose a shred of reputation for the firm, and I will be ruthless"

Yes, Buffett's in denial ... just like his banker buddies ... so short Buffett, short Baby Berkshire, short Goldman, short Moody's. Why? They are all "shorting America," piling on debt that's pushed our debt-to-GDP ratio to 92%, past the IMF's 90% danger zone.

Main Street's also in denial ... forget hedger John Paulson's crooked subprime deals that made him and Goldman billions ... forget the hedgers in Michael Lewis' new "The Big Short" ... it's not the hedgers shorting America, it's the bosses inside Wall Street banks, their greedy co-conspirators inside Washington and now Uncle Warren, a nice guy who once thought derivatives were evil "weapons of financial mass destruction," but who's now defending every weapon Wall Street will use to stay in "business as usual," beating Main Street's 95 million investors, a corrupt business model destroying from within.

Wall Street's denial is blinding: Buffett and his merry band can no longer see how blind they are. They just keep strumming the same ol' tunes. Well folks, until they stop shorting America, we'll just keep reminding you of the debt their business model is creating.

So here are my best estimates, mostly from reported resources, of the huge debts Wall Street is dumping on America, the big bubble they're already blowing, driving the global economy headlong into another meltdown that will trigger the Great Depression II. And likely, with all this debt, soon you can bet taxpayers will stage a revolution making Main Street American streets far worse than Athens:

1. Federal government debt ... $14.3 trillion

Federal debt limit doubled since 2005 to $14.3 trillion limit. Bush/Cheney wars pushed U.S. deep into a debt hole. Military kills 54% of budget. Expect 4% deficits through 2020.

2. Treasury and Fed cheap-money policies ... $23.7 trillion

The Fed's shadowy printing presses have created an estimated but unaudited $23.7 trillion in credits, grants, loans and guarantees, backed by taxpayers. Pure profit.

3. Social Security's rising debt ... $40 trillion

Soon we must either cut benefits or raise taxes 40%. Delays worsen solutions. By 2035 Social Security and Medicare will eat up the entire federal budget, other than defense.

4. Medicare's unfunded debt ... $60 trillion

Going broke faster than Social Security. Prescription-drug benefit added an unfunded $8.1 trillion. In 5 years estimates rose from about $35 trillion to over $60 trillion now.

5. Annual health-care costs ... $2.5 trillion

Costs rising faster than inflation. Burden increasingly shifted to employees. Recent Obamacare plan would have cost $90 billion annually, paid to Big Pharma and insurers.

6. Secretive global derivatives trading ... $604 trillion

Wall Street resists all regulation of their gambling casino that leverages the combined $50 trillion GDP of all nations by a 12:1 ratio. Warning: Less than 2% of Wall Street's derivative bets triggered the last meltdown. Buffett "guarantees" it will happen again.

7. Population growth of 50% vs. Peak Oil demands ... $30 trillion

United Nations says global population is increasing from 6 billion to 9 billion by 2050. China and India need 500 new cities each. Billions more humans want autos, using up limited resources, shifting more costs to America, as commodity price increases and new resource wars.

8. U.S. dollar losing as reserve currency ... $20 trillion

As China's economy rockets past America's, the dollar will be replaced as the chief foreign reserves. The shift will devalue the relative worth of all America's assets.

9. Global real estate losses ... $15 trillion

Commercial real estate is bloating 25% of U.S. bank balance sheets. Dubai Tower, world's tallest, is empty. China collapse will upstage, further depress America's market.

10. Foreign trade and ownership ... $5 trillion

Foreigners own more than $2.5 trillion of America. China holds over $1 trillion Treasury debt. $40 billion new deficits added monthly. Total climbing at $400 billion annually.

11. State and local budget and pension shortfalls ... $3.5 trillion

Shortfalls of $110 billion in 2010, $178 billion in 2011. On top of more than $450 billion in annual shortfalls in local government employee pension funds. L.A.'s near bankruptcy.

12. Corporate pensions plus 401(k) plans ... $3.2 trillion

Only 30% of Americans have enough to retire. There's $2.7 trillion in 401(k) plans. And 92% of corporate pension plans are underfunded, with defaults guaranteed by taxpayers.

13. Consumer card debt ... $2.5 trillion

Americans are still living beyond their means. Even with a downturn, consumer debt rose from about $2.3 trillion to $2.5 trillion. Fat Cat Bankers love it, yes, love making matters worse by gouging cardholders and mortgagees, blocking help in foreclosures and bankruptcies.

14. Lobbyists annual costs ... $1.4 trillion

Wall Street bankers, Corporate CEOs and Forbes 400 Richest spend billions to influence elected officials, regulators and bureaucrats with lobbyists and campaign donations to exercise power over government. Voters are easily manipulated, but it takes lots of cash.

The total of all 14 categories of debt is a mind-blowing $825 trillion that includes "apples and oranges," jet fighters, derivatives and insurance fees, credit cards, autos and mortgages. There are more, and of course these are just estimates. Given the lack of transparency on Wall Street and in Washington, our debt is likely over $1,000 trillion.

What must you do? Wake up, drop your denial, get active, demand guys like Uncle Warren, his fat-cat buddies and Obama's team snap out of their denial, fight a return to the old greedy, toxic, destructive culture ... demand that your elected reps in Washington pass 1930's-style financial reforms ... or America will soon trigger a bigger meltdown, a new Great Depression II and no longer be the world's leading superpower.