Friday, November 12, 2010

Bernanke Steers QE2 Over Cliff

All week pundits, economists and investors have been concerned about the effects of the great Federal Reserve experiment, Quantitative Easing, Round 2, A/K/A QE2, which got underway this morning with an $8 billion injection of fresh scads of cash delivered through repurchasing of Treasuries from Primary Dealers.

While for weeks and months the arguments have centered around how high the additional liquidity would take the stock markets and how low yields on bonds would go, today's efforts resulted in exactly the opposite. Stocks were hammered across the board and bond yields rose to multi-month highs. The Fed's expressed purpose was to lower bond yields to induce more house buying, using the completely flawed logical argument that lower rates would kick-start housing.

Just a few words for Mr. Bernanke (as opposed to the words Donald Trump would use: "you're fired"): people need money and jobs to buy houses. Even if interest rates were zero (oh, I'm sorry, they already are), they're not buying, because they can't afford to and the banks won't lend BECAUSE THEY HAVE NO JOBS AND NO MONEY.

Now, even a moron, a simpleton, a dunce could see this is the case in America, where real unemployment hovers around 18-22% nationally, and in some places, like most of California and Southern Florida, it's even worse. Without people earning paychecks, how, pray tell, are they going to buy homes?

No, I'm afraid that what I warned about yesterday, that if the stock market didn't make gains, that if bonds yields didn't go lower, that if gold and silver didn't rise, then all bets are off because this is just more of a massive fraud, the same one denied and overlooked by the Fed for years. The housing menage is what's fueling all of the madness and the money from QE2 is going directly into the coffers of Bank of America, JP Morgan Chase, Wells Fargo and Citigroup to cover up massive defaults and losses in mortgage backed securities.

The Justice Department - if we had one - should be investigating the banks and the Fed for malfeasance, fraud, securities fraud and treason, for they are surely the biggest national security risk on the planet, yet they go on their merry way, printing money to cover up their crimes while the rest of the world is supposed to just play along with them.

I say it's OVER! It's high time for the Congress to step in and shut down the Federal Reserve and all of the aforementioned banks. Obviously, Mr. Bernanke either doesn't have a clue as to what he's doing or he knows exactly what he's doing and is lying to the congress and the public. Or he's telling the congress and they're all lying to the public. And, in case somebody happens to know the whereabouts of of our invisible Attorney General, Eric Holder, please call 1-800-WAKE-THE-F--K-UP!

Let's see stocks lose more value next week when the Fed starts pumping more money on a daily basis into the primary dealers (those aforementioned banks again) and they invest it in repairing their bottom lines. Or maybe they'll make the stock market go up a little to quiet everyone down. Of course, they can always claim that it's those damn Europeans - the Irish, Italians, Spaniards and Portugese, to say nothing of the lay-about Greeks - or the Chinese, who won't devalue their currency and are running inflationary policies, that are causing all the dislocations in the market.

Ben Bernanke should be behind bars with Henry Paulson, Tim Geithner and the heads of all the largest banks. There's no good outcome to their policies, except to make life tougher for most Americans while covering up the crime of the century, the housing/mortgage/securitization/foreclose scam that's been at the heart of the US and global financial problems since 2007.

It's time to put down the trading tools and pick up the handcuffs. Unfortunately, nobody is home at DofJ and the other regulatory agencies are likely equally complicit. It's getting to the point at which some very drastic and draconian measures are going to need to be taken by the American people - if we can find a few with enough courage - to fix this mess before it goes any further.

The longer the Fed is allowed to print money out of thin air and cover up its own crimes and those of many of its member banks, the worse the solution will be. We don't have until 2012 to wait for the election of Ron Paul as President. We probably don't even have another six months before the United States of America is reduced to a pile of stinking rubble by a gang of criminals masquerading as bankers in suits. It's completely disgusting.

Market action needs few words. Here are the results for today:

Dow 11,192.58, -90.52 (0.80%)
NASDAQ 2,518.21, -37.31 (1.46%)
S&P 500 1,199.21, -14.33 (1.18%)
NYSE Composite 7,623.24, -100.00 (1.29%)

The headline numbers hardly tell the real damage show by the internals. Advancers were absolutely routed by declining issues, 5283-1193, a better-than 4:1 ratio. New highs continued to descend, but remained somehow ahead of new lows, 211-64. Volume was again a joke, hardly enough to entertain more than a small brokerage. The entire market is being manipulated by the Fed and primary dealers (the banks), down to the high-low figures. If, however, these turn around, with the lows overwhelming the highs, that would serve as a clear sell signal (for the three guys still trading in these absurd markets), but would also raise warning flags - as though there aren't enough of them already - about the US and global economy and the likelihood of a double dip, as soon as this quarter.

With the housing market about as screwed up as a an ADHD head-banger on ecstasy because of the foreclosure moratorium, which started in October and has not really ended, the drain on the economy will be evident in 4th quarter GDP. If the government claims anything better than 1% growth for the 4th quarter (we won't know until the end of January, which is likely to already be too late), it will be another statistical lie, like most of the others they produce.

Jobs aren't being created, incomes aren't rising, and the economy limps along on the back of transfer payments like social security, veteran's benefits, disability payments, welfare and food stamps. The private sector is reeling already and a poor Christmas season could be the final knife-thrust that makes the economy tilt over and die.

NASDAQ Volume 2,039,983,750
NYSE Volume 4,865,655,000

The good news is that oil was also slammed to the earth, losing $2.93 (3.34%), to $84.88. Most other commodities also suffered deep declines, such as cotton, live hogs, corn, wheat, soybeans and live cattle. It's almost as though the force of deflation came back with a vengeance in opposition to the policy missteps of the Federal Reserve. Real damage was seen in the precious metals, though these moves were more likely caused by JP Morgan meddling in silver and profit taking in gold. Silver was last quoted at $26.05, down $1.63, a huge move. Gold fell $40.30, to $1368.60.

If, on Monday, the sun rises in the East and the markets are open, we may be in for more downside, the result of decades of corruption and fraud coming home to roost. Or, the manipulators in charge could just manufacture a rally out of thin air.

They print money, don't they?

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