At The Margin

Captain Hook

How can the stock market continue to set new rally related records week in and week out? Answer: As per our discussion last week, because at the margin, there have been enough bearish speculators, as measured by US index open interest put / call ratios, to continually squeeze prices higher. What's more, this, in itself is nothing new (sentiment largely drives market direction in fiat currency economies), and has been the primary driving force behind stock market direction for sometime now (decades). However because this is an X-wave top, meaning it will be more extreme than anything else we, the human race, have experienced since the decline of the Roman Empire, correspondingly, any rally (counter to the primary trend or not) can also be more extreme than comparables on a grand scale (outside the present Grand Supercycle). And in fact, that is what we have now witnessed in US stocks - the most intense post bubble rally sequence ever recorded. So, those looking at comparisons within more recent history, which includes any similarities within the present Supercycle sequence, will likely continue to be surprised.

So again, the stock market has rallied these past seven months not just because it was oversold, or because it's discounting the future, as many hair-brained talking heads on television would have you believe, but because of speculation, where due to the fact the stakes are so high (survival for many), the extremes will commensurately be as profound. What does this mean, 'the stakes are so high?' It means barring the speculation game, which apparently even Chinese pig farmers have now entered into in the metals markets (it's better than raising pigs while it lasts), our global fiat currency economy (think globalization) has not only resulted in the export of manufacturing jobs from Western economies to cheaper labor in the East, leaving little to do at home but speculate and bureaucratize; but more, even the 'peasants' in China have entered the speculation game now, perhaps out of greed (that's a given), but also because rising costs pressure them into doing so. Be that as it may however, from a contrarian's perspective, the fact Chinese pig farmers have entered the speculation game, likely putting them into the larger 'dumb money' category, cannot be taken as a bullish indication on the 'inflation trade'.

Additionally, these pig farmers should be taken as a microcosm of the larger speculative community in my opinion, telegraphing the message the big risk is not inflation at all, but the threat of a Kondratieff Winter sequence beginning as increasing strata of speculators are taken out of the game. This is what would sponsor a re-acceleration of margin debt contraction, which would cause further contraction in the larger credit cycle, increasing the possibility of a waking bear becoming a more permanent fixture in people's minds moving forward. In terms of process, and allowing for some seasonal strength to put the finishing touches on the sentiment backdrop if a seasonal inversion is to take hold, it should be noted while prices have recovered more than enough to end the bounce, it could take noodling around into April to close a time related gap. What does this mean? If stocks do not literally crash in the near future, which is possible based on other historical signatures by the way, then, the seasonal inversion pattern will likely not occur, with only increasing volatility during this timeframe, characterized by potentially more significant losses afterwards as next summer approaches. This possibility is evident in viewing an analog comparison of US stocks to the post crash Japanese bubble.

And in zooming in to examine the price action of key markets and relationships we are using for signals from yesterday, the possibility of further noodling around prior to a decided rally is also evident from the close on the Gold / Silver Ratio, finishing right on triangle support after attempting a stronger move higher. Here, the implication of such a close is a possible 'test failure', with renewed weakness still possible in putting in a 5th wave to complete the indicated zigzag on the chart below. So, please be aware this is still a possibility. And if it's going to happen, it should become evident today in my opinion, with the ratio falling back into the triangle, the S&P 500 (SPX) finishing back above 1070, gold moving off near-term support at $1040, and the dollar ($) unable to break above 76 on the cash market. The reason it could happen is stock market bears are not sufficiently exhausted are still shorting sufficiently to sponsor yet one more rally, along with the bearish $ fundamentals helping out of course. In this respect the $ is a one way bet for many based on the view the US consumer is out of the picture consumption wise for years. (See Figure 1)

Figure 1

The thing $ bears seem to conveniently forget when discussing it's fate however is that all the carry-trade money put out since March (minimally) needs to be paid back, putting a synthetic bid back into the formula at some point. And as per above, the timing associated with when we should expect a rally in the $ to reflect this is a function of speculator betting practices in stocks, which as you should know in reading these pages, is best measured these days in US index open interest put / call ratios. Right now it's too early to say which way things will break on a lasting basis just yet, however the closes today will be telling; and, weekly / monthly closes conclusive in this respect. I can tell you based on the fact total volume put / call ratios remain low despite the volatility in stocks over the past few days is supportive for the bearish case, along with the crash signatures in the Transports and bank index. Compounding this negative picture is rising interest rates in the face of such equity related price action, making it appear to be a 'credit worthiness' issue for the 'Banana Republic of America', which could also put a bid under the $ if the situation persists.

Unfortunately we cannot carry on past this point, as the remainder of this analysis is reserved for our subscribers. Of course if the above is the kind of analysis you are looking for this is easily remedied by visiting our continually improved web site to discover more about how our service can help you in not only this regard, but also in achieving your financial goals. For your information, our newly reconstructed site includes such improvements as automated subscriptions, improvements to trend identifying / professionally annotated charts, to the more detailed quote pages exclusively designed for independent investors who like to stay on top of things. Here, in addition to improving our advisory service, our aim is to also provide a resource center, one where you have access to well presented 'key' information concerning the markets we cover.

And if you have any questions, comments, or criticisms regarding the above, please feel free to drop us a line. We very much enjoy hearing from you on these matters.

Good investing all.

Captain Hook

Treasure Chests is a market timing service specializing in value-based position trading in the precious metals and equity markets with an orientation geared to identifying intermediate-term swing trading opportunities. Specific opportunities are identified utilizing a combination of fundamental, technical, and inter-market analysis. This style of investing has proven very successful for wealthy and sophisticated investors, as it reduces risk and enhances returns when the methodology is applied effectively. Those interested in discovering more about how the strategies described above can enhance your wealth should visit our web site at Treasure Chests.

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Your Ideal Job for the Greater Depression

David Calderwood

After my stint as Labor Czar during President Obama's second term...

Sorry, had to wipe the tears of laughter out of my eyes. Not that our maniacal rulers' actions are the least bit funny, just the notion that I would be invited, much less that I would accept such a job.

Liberty-minded people know the core tenet of the free market: Information is subjective, local, and time sensitive. No one can centrally plan because it is impossible to aggregate the necessary information.

This axiom is especially difficult for the modern citizen of the USA to swallow because everyone in the middle class has largely lived in a planned bubble of predictability for a lifetime.

Do well in high school, go to a good college, get good grades, graduate and work for a corporation that offers a pension, get an MBA at night (paid for by said employer), get promoted to middle management, be a team player, blah, blah, blah. Marry the hottie of your dreams, vacation in France this year, Greece the next, live in a 4,000 square foot house with a basketball court in the basement, have 2-1/2 kids and a nanny, a white picket fence, a Lexus SUV and a Mercedes.

It was all so simple, like the comfortable similarity of the homes and properties in a suburban subdivision. Who cared if colleges jacked their prices at twice the rate of monetary devaluation (AKA inflation)? A cottage industry existed to remind us that "college grads make millions of dollars more, during a lifetime, than do high school dropouts." Who cared if every second person was a salesman, an accountant, a journalist, a graphic designer, a "business major" or a "coms major" (whatever the heck that is)?

This lifelong illusion of predictability leaves us woefully unprepared for the abyss of reality. There is no book, blog, or Bozo who can produce a career path roadmap that, if leavened with hard work, will consistently and predictably yield a lifestyle to which we've all become accustomed. That's not how reality works. Reality is complex and somewhat unpredictable.

Complexity is scary. That's why most people prefer a predictable slavery to a "you're on your own" freedom. The former offers the illusion of security; the inescapable reality of potential failure is undisguised in the latter. Paradoxically, a lifetime of that illusion of security has turned the market's occasional, personal, decentralized failures into one vast mountain of inescapable, coordinated, catastrophic failure.

A weather analogy is useful: Normally it's sunny in some places and rainy in others, with an occasional storm and a rare hurricane or tornado. The mental children ruling us thought they controlled the weather and made it sunny all the time, everywhere, but instead all they did was accumulate the storms, the hurricanes, and the tornadoes for the future. The longer they were held in abeyance, the more destructive energy was accumulated.

Now a massive, Biblical-proportion economic storm is washing over the U.S. (and other places, too). All the predictability of the past no longer applies. U.S. citizens got exactly the weather control (and weather controllers) they asked for. Citizens wanted certainty, and the scum who aspire to power rode that collective desire to their goal. They delivered exactly what "the people" demanded of them, the collective delusion of predictability.

Now that the storm has begun, people still demand predictability.

I don't have a clue what you should do, occupation-wise. Anyone who claims such knowledge must be multiple times smarter than me; hopefully President Obama will appoint such a person as Labor Czar so they can tell me what to do, too. My fervent dream is to labor on the best of the available plantations under the whip of the most benevolent overseer. [Sorry...I paused to swallow some of the bitterness that backed up into my throat.]

I do expect that the unexpected will occur, that the best-laid plans will sometimes fail, that being five minutes late will really hurt, and that hindsight will rarely come with more "kicking yourself."

Paradoxes will be everywhere, and for a time the impossible may persist. Imagine a period when little pieces of mostly green colored paper, printable at nominal cost, surge in value against stocks, most bonds, commodities, real estate, and even precious metals.

It seems impossible, right?

Not if the ATMs stop working, banks drop like flies, and credit cards are declined when the credit/debt bubble's deflation accelerates. FedGov managers already have plans to go underground in style and let tens of millions of U.S. citizens incinerate in a nuclear war. Will they hesitate to abandon picayune promises like the FDIC and Medicare when circling their wagons becomes necessary?

These are uncharted waters. If you decide to take a crash course in personal navigation, you'll find me sitting next to you in class, desperately trying to figure it out as I go.

November 4, 2009

David Calderwood [send him mail] a businessman, artist, and author of the novel Revolutionary Language, selected January 2000 Freedom Book of the Month at Free-market.net.

Copyright © 2009 by David C. Calderwood

www.lewrockwell.com

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A Group of Satanic Trillionaires have Created the Goldilocks Matrix

Bob Chapman

(Editor's Note: Bob Chapman is one of my favorite pundits. When he gets on a roll, there are not many out there who are as insightful and aware of what's really going on in our country than he is. While terse, his appraisal of our current situation is alarmingly accurate. All I can say is "Okay Bob, now tell us what you really think." - JSB)

Our usurping, non-citizen, spendthrift President, together with our corrupt, elitist-bootlicking Congress of money-grabbing Dumbos and Jackasses, are spending us into a multi-trillion dollar hyperinflationary oblivion as their ratings by their constituents drop into the toilet bowl, ratings which are disgracefully the lowest in all of US history. With a diabolical "Robin Hood in Reverse" plan in place since 1913 for the extortion of money from the US middle class to reduce their serfs to poverty and abject slavery, the Illuminati have managed to use the Federal Reserve Act and US income tax, together with the Social Security Ponzi Scheme, phony, orchestrated wars for profit, socialization of bankster-gangster losses, the globalism/free trade/off-shoring/outsourcing/legal-illegal immigration agendas, and a totally bought-and-paid-for President, Congress, judiciary and regulatory agencies, to reduce US citizens to consumerist credit addicts, living pay check to pay check like narcissistic hedonists.

The future, dumbed-down serfs of the future "masters of the universe" (so-called), now watch completely meaningless sports games and trash-TV instead of getting informed and taking action to save their country from the group of satanic trillionaires who have created the Goldilocks Matrix which they now occupy. We ask our fellow citizens in the matrix: Do you want the blue pill, or do you want the red pill? So far, most Americans have unfortunately opted for the blue pill. As always, those who have opted for the red pill are going to have to save the blue pill idiots from the consequences of their own pitiful ignorance. People who take the red pill are subscribing to the IF to get the truth and are buying gold and silver like there is no tomorrow so they can live to fight another day when the worldwide financial system collapses, as planned, to pave the way for a one world police state. The bold people who took the red pills are going to be all over the Illuminati like flies on rice when that happens, and you can take that to the bank, if there is still a single bank left standing after the Quadrillion Dollar Derivative Death Star goes supernova.

After watching most of our manufacturing industries shipped overseas, we have been reduced to tapping on keyboards, greeting people at department stores, flipping burgers, providing menial healthcare services for pitiful wages and shoving stacks of paper to and fro, while producing little that has any lasting value. Our financial industry, which by and large is run by Illuminist crooks, are using insider trading information from the PPT, led by Goldman Sachs and their government-gifted, front-running trade algorithm, to gun for the fast and easy buck, thereby transforming our capital markets from places where we can invest in our future into gambling casinos complete with craps tables and roulette wheels. When they profit, they get outrageous bonuses, but when they have gambling losses, they pass them on to taxpayers via the sewer slime and pond scum in Congress and in the Executive Branch who are attached to marionette strings, with the Puppet Masters in our shadow government holding the sticks to which those strings are attached, causing them to bob and weave like the wooden dummies that they are.

While our financial industry pushes a lot of paper around, most of the paper produced is rife with fraud and deceitful schemes meant to enrich the evil Illuminati, as well as their henchmen on Wall Street, at Goldman Sachs North, aka the Treasury Department employment pool, and at Goldman Sachs South where money and employees from Goldman Sachs North are shared for a while, all at the expense of just about everyone else around the globe.

The bankster-gangsters are already in the process of creating the next subprime derivative bubble through Fannie and Freddie, the FHA (Federal Housing Administration), the FHLB (Federal Home Loan Bank) and the USDA (US Department of Agriculture), to the tune of many hundreds of billions of dollars. The new subprime real estate bubble, powered by artificially low interest rates, little or no down payment requirements and lax credit standards, together with an $8,000 first time home buyers credit, will be popped later as the next round of inevitable defaults gets underway, probably one to two years from now. This fraudulent subprime loan origination and securitization not only adds nothing to our economy, it will eventually help destroy our economy. The bankster-gangsters and their henchmen will get the goldmine of commissions, fees, spreads, salaries and bonuses, and you will get the shaft.

GS, which sometimes stands for Goldman Sachs, but which always stands for Gold Suppression, is having some public relations issues, and no wonder. The Vampire Squid marches on, continuing to suck the life blood out of all the "useless eaters," helping to prepare the way for a one world police state by assisting in the collapse of the world financial system while they make a filthy fortune along the way. Some day, they are going to choke on all the filthy lucre they have purloined from the public. Ahoy there, Captain Obama. There's a Vampire Squid swimming along the port side of the USS Banana Republic. Well then, what are you waiting for First Mate Geithner, hoist up the Jolly Roger in acknowledgement!

By the way, when is GS going to pay back the tens of billions that were given to AIG by taxpayers so that Goldman would not go under as the insured counterparty to credit default swaps guaranteed by AIG that had gone sour? They have a lot of nerve issuing bonuses when they still owe the government big-time from the AIG bailout! And they would not have been able to pay the bailout money back if their totally bogus mark-to-model balance sheets were to show true mark-to-market figures. They are just as bankrupt as all the rest of the "anointed" legacy banks and investment banks, with a lot of their toxic waste still off balance sheet and offshore in SIV's, structured investment vehicles, in VIE's, variable interest entities, and in OTC derivatives, which taken together expose them to tens of billions in losses if not hundreds of billions. And who knows what their credit default swap portfolio looks like even after the AIG bailouts. We wonder how much of their toxic waste has been pawned off on the Fed in exchange for treasuries under the Term Securities Lending Facility? And how much of this GS toxic waste has been pledged as collateral at face value for near zero interest Fed loan money which they have parked with the Fed at 3% or which they have used to buy equities on insider trading information as the leading PPT operative with their front-running trade algorithms as the stock markets have rocketed 60% in six months for the first time in history despite the fact that we face the worst economic scenario in our history? Of course, we can't tell, because GS won't disclose it and the Fed says it's a state secret. GS is simply ignoring the new Basel II and Basel III mark-to-market rules which now apply to them because they opted to become a bank to get Fed bailout largesse. Who is going to make them comply? The BIS? The Fed? The Treasury? The SEC? The CFTC? The FASB? The President? The Congress? The Supreme Court?

GS either owns, or is in cahoots with, all of the above. The whole system is laughable. We are now the laughing stock of world finance.

GS would have had to keep the bailout money from the TARP (Troubled Asset Relief Program), and the salary and bonus restrictions that go with them, in order to shore up their awful balance sheets if the terrible truth about their financial condition were made known. In addition, their profits are all totally illegal based on insider trading and government black box front-running algorithms, a gift from our government's bogus so-called regulatory agencies who sit on their fat duffs and do nothing about blatant financial scams like Madoff Ponzi schemes and the naked shorting of stocks. That is because GS and all of the regulatory agencies themselves are in on virtually all of these financial scams as silent partners. Trust us when we tell you, our regulatory criminals profit greatly from their inaction, whether from bribes, insider trading profits, shares in criminal booty and/or very lucrative jobs they just happen to fall into when they leave government service.

Incidentally, the Basel II rules were part of the overall plan to destroy our economy, much like the repeal of Glass-Steagall that allowed banks to get into investment banking activities again and the passage of the Commodity Futures Modernization Act which deregulated the OTC derivatives market. All these legislative machinations were put in place in order to create a new, less regulated, much larger and far more vulnerable and out-of-control (i.e. highly leveraged) financial system which, when broken, would accelerate the current financial crisis, making the implosion louder and the dive steeper.

The purpose in doing so was to destroy the old nation-state financial system and replace it with a satanic global financial system that would make the Vampire Squid look like a Shrimp or a Sea Horse by comparison. The current financial crisis in the US and around the world was not a failure of capitalism, but an intentional looting of the world financial system by Illuminist crony fascism sheep-dipped in capitalism. The old British Mercantilist System that has been surreptitiously adopted in the US via both the Federal Reserve Act (stealth tax on the masses by inflation of the money supply) and the US income tax (direct taxation of the masses) is a freedom-choking system of financial bondage which allows a nation's economic system to be hijacked by the wealthy and powerful. It is anything but free market capitalism. This is the very system of financial bondage that our Founding Fathers fought a very bloody and costly war to rid themselves of. They are rolling over in their graves.

Basel II, which was implemented by the ultimate Illuminist financial institution, the BIS (Bank of International Settlements) in Basel, Switzerland, is like an adjuvant to the crisis, preventing banks from lending again for fear that they may have to comply with mark-to-market rules, thus choking off our economy to pave the way for an Orwellian one world police state of feudality. Basel II is the perfect excuse for the legacy banks to stand on the sidelines while they gobble up government TARP money and refuse to lend to anyone but the "anointed." But remember, there is one system for the "anointed," and another system for everyone else. Thus, the Fed and corrupt US regulators will allow the anointed legacy banks to essentially blow off Basel II, and will only hold the feet of the non-anointed small fry to the Basel II fire. Thus, the big will get bigger, and the small will fail and get eaten by the larger. No wonder Obama and Geithner want the Fed to become the new super regulator, with even more power to decide which banks and corporations will live, and which will die. All the more reason to audit and get rid of the Fed. We do not need a drooling Head Fox guarding the henhouse.

While the resulting credit crunch was ongoing, the Fed "convinced" Congress to allow them to pay interest on member bank reserves held by the Fed. Credit, at near zero rates, is now being extended by the Fed to its "anointed" in exchange for their toxic waste as collateral, which proceeds are then being deposited with the Fed as reserves at a 3% rate of interest instead of being re-loaned, and we'll give you three guesses as to who gets to pay for this interest on reserves. That is a very profitable and risk free spread, but only for the "anointed," as the Fed can open and shut its discount loan window to whomever it darn well pleases, being a privately owned bank. The small fry can go scratch, and many have already succumbed. This will continue until the number of banks in our banking system is cut in half. The FDIC is beyond broke. They don't even have enough to cover but a tiny fraction of potential losses, much less to cover the losses from the failure of half of the banks in the entire system. Either the claims for lost deposits will not be paid, or so much money will be printed to pay those claims that the money received in payment will be virtually worthless, along with any and all remaining dollar-denominated assets. This is going to become a very big problem indeed in the not-too-distant future. The solution: Empty your bank accounts of all but one to three months of necessary household operating expenses, and buy gold and silver related assets with the rest, along with freeze-dried food, a water filter, and the means to defend your family from malefactors, both public and private.

This 3% interest on reserves is one of the primary reasons the Fed won't say which banks are getting the zero interest loans, because that would identify the Illuminist institutions who are scamming US taxpayers despite being bankrupt. These insolvent institutions should be liquidated in bankruptcy court, but instead public largesse is being used to keep them alive so they can feed their henchmen with salaries and bonuses, which would not otherwise be possible. In addition, these greedy Illuminist institutions are making a risk-free 3%, are hoarding their monetary reserves to sterilize them from having an inflationary impact on the economy in order to suppress gold and silver, and are cutting off the public from acquiring credit even though the public has bailed them out and is guaranteeing their loans from the Fed. Talk about moral hazard!

The near zero rates, and the huge spread on reserve deposits with the Fed, is being protected by currency swaps which the Fed and other foreign central banks have been exchanging with one another. This keeps foreign banks out of US credit markets so their demand for dollars won't bid up loan rates in the US. These swaps are also being used as conduits by the Fed to feed dollars to foreign banks so they can purchase treasuries, thus keeping treasury rates, and the mortgage rates that are tied into them, on the lower end of the spectrum, while at the same time the Fed uses its foreign currencies from the swap arrangements to weaken those foreign currencies by dumping them on the currency exchanges, thus strengthening the dollar and putting pressure on gold and silver. Needless to say, all the dollars and other foreign currencies used in these swap arrangements are being created out of thin air via monetization, which means that all major currencies are being debauched simultaneously, thus paving the way for a one world currency, while at the same time inexorably driving gold and silver to new heights against all currencies.

By giving the legacy banks the excuse not to continue lending due to the threat of Basel II mark-to-market rules, which rules were temporarily delayed by the FASB (Financial Accounting Standards Board) to delay recognition of losses so the Illuminists could continue to milk the system by originating and packaging their fraudulent loans and securitizations for profits to fund outrageous salaries and bonuses, the recovery of the US economy has been choked off for everyone except the Illuminists and their corrupt, "anointed," financial institutions. This choking off of credit also sterilizes the inflationary effect that would result if banks started lending again, because the fractional reserve banking multiplier would create a boatload of money out of thin air. In this manner, the Fed is able to feed money exclusively to its cronies in the financial system without stoking inflation to dizzying levels, while everyone else floats off into financial oblivion.

theinternationalforecaster.com

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De Nile is not just a river in Egypt

Doug Hornig

If You Thought the Housing Meltdown Was Bad

...wait until you see what's in the cards for commercial real estate.

That's right, the next train wreck will be in commercial real estate. Couldn't be worse than last year's residential market crash? That remains to be seen. But it's coming soon, probably as early as the second quarter of next year, and there's nothing that can prevent it. The government will intervene, trying desperately to delay the day of reckoning, and may even succeed. For a while. But make no mistake about it, that train is going off the tracks no matter what.

Every part of the sector - from multifamily apartment buildings to retail shopping centers, suburban office buildings, industrial facilities, and hotels - has accumulated a huge amount of defaulted or nonperforming paper. It's an impossible, swaying structure that cannot long stand.

Just ask Andy Miller.

Andy is one of the most knowledgeable people around when it comes to commercial real estate. Co-founder of the Miller Fishman Group of Denver, he has spent twenty years buying and developing apartment communities, shopping centers, office buildings, and warehouses throughout the country. He's also worked extensively - especially lately - with asset managers and special servicers (those who handle commercial mortgage-backed securities, or CMBS) from insurance companies, conduits, and the biggest banks in the U.S., advising them on default scenarios, helping them develop realistic pricing structures, and making hold or sell recommendations.

It isn't easy. Commercial real estate sales are off a staggering 82% in 2009, compared with 2008, and last year was worse than '07. No one is selling at depressed prices, but it hardly matters as there are no buyers, either because they're afraid of the market or can't meet more stringent loan requirements. Two years ago, the value of all commercial real estate in the U.S. was about $6.5 trillion. Against that was laid $3-3.5 trillion in loans. The latter figure hasn't changed much. But the former has sunk like a bar of lead in the lake, so that now between half and two-thirds of those loans will have to be written down, Andy estimates.

"If the banks had to take that hit all at once, there wouldn't be any banks," he says.

And it's actually worse than that. As even average citizens became aware during the subprime meltdown, loans in recent years were bundled into exotic financial vehicles that could be sold and resold, a class generically known as conduits. These commercial mortgage-backed securities, while less well known than their cousins built upon home loans, are nonetheless ubiquitous.

Three guesses who were among the significant buyers of CMBS. If you said banks, banks, and more banks, you got it. Thus these folks are sitting not only on their own malperforming loans, but on a whole lot of everyone else's toxic junk, too.

This is how bad conduits are: A 3% default rate last year jumped to 6% in 2009 and is expected to double again, to 12%, in 2010. An entity that takes a 12% hit to its portfolio - and this includes countless banks, pension and annuity funds, international institutional investors, and others - is in deep, deep trouble.

The real tsunami is coming, probably in the second quarter of 2010, Andy estimates. Because that's when banks will have to start preparing for the wave of mortgages that were written near the market top and are maturing in 2011-12. Unlike home loans, commercial loans tend to be relatively short-term in nature (average 5-7 years), because - outside of apartment building loans backed by Fannie or Freddie - there are no government programs to subsidize longer-term ones. These guys mature in bunches.

According to a recent Deutsche Bank presentation, the delinquency rate on commercial loans as of the end of 2Q09 was greater than 4%. Of these, they expect that north of 70% will not qualify for refinancing. Imagine what will happen to the estimated $2 trillion in commercial mortgages that mature between now and 2013.

And even that is not the end of it. There's a second huge wave on the way in 2015-16.

Problem is, instead of trying to meet this inevitable challenge head on, asset managers have decided to believe in such phantoms as the tooth fairy, honesty at the Fed, and an economic turnaround powerful enough to bail them all out. De Nile is not just a river in Egypt.

To be fair, it's difficult to envision what an intelligent, aggressive response would look like, given the breadth and depth of the crisis, and the lack of resources available to deal with it. Miller recently met with a group of asset managers from a number of different, prominent banks. They reported that they're completely overwhelmed and can't even begin to cope with the sheer volume of problem loans on their calendar. It's so bad that they're now dealing with some borrowers who haven't paid a cent in a year and a half.

What do you do if, as Andy thinks is the case, 85-90% of the entire commercial real estate market is under water relative to its financing? What happens to a property when its value drops way below the loan, a seller can't get enough money to get out, a buyer can't raise enough money to get in, and the bank can't afford to foreclose? Simple. It just sits there, carried along on the bank's books at some inflated "mark to fantasy" price that makes the institution's balance sheet look passable. The industry even has a catchphrase for the situation: "A rolling loan gathers no moss."

In the case of a retail store, a bankrupt tenant walks away. Andy looked at just the part of Phoenix where his firm does business and found 90 vacant big box stores, with an aggregate floor space of 8 million square feet. If Christmas season is as lackluster as cash-strapped consumers are likely to make it, there will be many others to follow.

The hotel business is terrible. Overbuilding based upon travelers who went into debt to finance lavish vacations is taking its toll on tourist destinations. At the same time, business travel has seriously contracted. Flights into Las Vegas, which caters to both, have been slashed so much that even if every seat on every remaining flight were filled and visitors stayed for an average number of days, the hotels still couldn't break even. In industry parlance, banks are now engaged in "extend and pretend," i.e., giving hotels three- to six-month loan extensions in the hope that things will somehow improve in the near future.

Office space is doing okay in central business districts, but not faring well elsewhere. Some estimates tab the national office vacancy rate at over 16.5%, compared with 12.6% in January 2008. It exceeds 20% in parts of Atlanta and San Diego, and in many places in between.

Multifamily apartment buildings - and the very creaky Fannie and Freddie are carrying a load of them - may be the next to topple. As values deteriorate and landlords are faced with loans coming due, there is no incentive to fix whatever goes wrong. If, for example, you have a $10 million loan maturing in two years, and the property value has declined to $6 million, why would you spend half a million to fix leaky roofs? The question answers itself. Yet, as capital spending needs are not attended to, the apartments deteriorate. Which leads to working-class tenants replaced by meth labs. Which leads to even lower property values. And so on. In the end, when the banks are forced to take possession, they will be left with either expensive repair jobs, or the cost of demolition and a total write-off.

As the overall commercial real estate crisis escalates, the banks will do the same thing they did last year: run to the government, palms outstretched.

How will Washington respond? Good question. On the one hand, further bailouts will further infuriate the public. But on the other, the political sentiment will be that allowing the banks to fail will have even more dire consequences.

The Fed has already tried to let some of the relentlessly building pressure out of the balloon through TALF (Term Asset-Backed Securities Loan Facility). But that hasn't worked, because TALF only backs the most senior, creditworthy bonds in a CMBS pool. Those aren't the problem. The problem is the junior notes no one wants.

In order to increase market liquidity and get conduits moving again, the government will likely be forced to create a guarantee program similar to the FHA, Miller thinks, whereby short-term money (on the order of 5-7 years) is made available. Will that just push our problems five to seven years down the road? Quite possibly. But what is being purchased is time, the only thing left to buy. The hope, of course, is that it's enough time for the real estate market to stabilize, prices to return to more "normal" levels, and the world to turn all hunky dory.

Rock, meet hard place. Let all the troubled banks fail, and the consequences will range from some excruciating but short-term pain, to a plunge into full-bore depression. Prop them up with yet more newly printed fiat money, and anything from high to hyperinflation will inevitably result, along with the possibility of extending the problem well into the next decade.

Both are frightening prospects. We don't want either, but realistically, we're going to get one or the other. Let's be clear, it won't be the end of the world. However, it will be the end of the world as we know it. That makes it imperative to prepare for the new one that's coming.

The editors of The Casey Report, supported by real estate pro Andy Miller, have been warning of the coming commercial real estate debacle since September 2008. This one's rather easy to time - because they know when the loans will come due. And as subscribers can testify, accurately predicting big trends is the forte of Doug Casey and his expert team. To learn how you can profit from making the trend your friend, click here.

www.caseyresearch.com

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Berlin Wall Street

Bill Bonner

In 1949, the Soviets and the Allies divided Germany into two parts. One part followed a traditional capitalistic path to reconstruction. The other part took the socialist road. Remarkably, they kept this test going for 40 years.

Of course it was misery for many of the test subjects. People were so eager to get out of the East German control group, they risked their lives jumping over the barbed wire. Then, when the wall was down, the population of East Germany collapsed...more than one out of every ten people moved to the West!

But it was a great experiment for economists. Too bad they didn’t learn anything.

What they should have learned is that when it comes to making people materially better off, government spending is a poor way to do it. It’s great for the few favored firms who help Washington raise and spend its trillions. It’s great for Goldman, in other words,

But what if you don’t have an inside track with the government? Well, you’re out of luck. You get to stand in line to buy inferior goods and services - produced by government-owned industries and protected monopolies. That was what the East Germans did. And, of course, you get government bureaucrats telling you what to do...and preventing you from improving the quality of your life.

That’s what they did in East Germany. And that’s what they’re doing, now, in the United States of America - in a less obvious, less heavy-handed fashion. Who owns the biggest auto company in the US? Who provides the finance for the finance industry? Who controls the health care and education industries? Who’s the biggest employer? Who finances our houses? Who runs our banks?

Well...you know the answer.

But here’s another question: who’s headed for bankruptcy? Same answer.

What can you do about it? All you can do is to anticipate where this is heading...and position yourself to profit. Or, at least position yourself to protect your assets.

In that regard, you may want to replace the FED with the GLD, if you know what we mean. The Fed is derelict in its duty to protect your paper dollars. GLD - an ETF for gold - is a very simple way of doing your own central banking.

But should you buy GLD now? Ah...they don’t make it easy, do they?

So, should you buy gold now?

A quick answer: it depends.

If you’re buying gold for quick profits, you will probably be disappointed if you buy it now. The price has been going up for weeks. It’s probably ready for a rest.

Also, gold moves up with stock prices - both anticipating an inflationary recovery. We think this will turn out to be a mistake. There is no real recovery underway. And no inflation either.

If and when stocks collapse, gold will go down too. At least for a while.

But if you are buying gold as the Chinese and the Indians are buying it - as a monetary reserve, not a speculation - there is no time like the present. Sometime in the future, we wish we could tell you when, gold at $1,100 will seem like a giveaway.

Until tomorrow,

Bill Bonner
The Daily Reckoning

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning.

dailyreckoning.com

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“enormi tensioni"

Obama: tensioni se Usa e Cina non bilanceranno economie

 

di Simon Denyer e Caren Bohan Continua a leggere questa notizia

Foto/Video correlati

Altre foto su Barack Obama

Gli Stati uniti vedono la Cina come un partner vitale e un concorrente, ma i due paesi devono ripianare i disequilibri economici o rischiano "enormi tensioni" nelle loro relazioni.

Tre giorni prima di partire per un viaggio di nove giorni in Asia, il presidente Usa Barack Obama in un'intervista a Reuters afferma che i due Paesi più potenti del mondo devono lavorare insieme sulle grandi sfide del globo e che ogni competizione fra loro deve essere leale e amichevole.

"Sui temi critici, che si tratti del cambiamento climatico, della ripresa economica o della non- proliferazione del nucleare, è molto difficile che noi riusciamo ad avere risultati o che la Cina ci riesca senza lavorare insieme", ha detto Obama.

Parlando nello Studio Ovale, il presidente ha avvertito che le relazioni economiche tra i due Paesi sono diventate "profondamente sbilanciate" negli ultimi decenni, con un crescente gap commerciale e un enorme parte del debito Usa in mani cinesi.

Obama ha detto che nel corso del suo viaggio parlerà con le autorità cinesi della delicata questione dello yuan -- che l'industria Usa considera ampiamente sottovalutato -- come uno dei fattori che contribuisce a tale squilibrio.

http://it.notizie.yahoo.com/4/20091110/tts-oittp-obama-intervista-ca02f96.html

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Il Mondo all'incontrario

 

Ad agosto il "mini-boom" della produzione industriale italiana venne strombazzato da tutti i gossip-tiggì e dai fiction-giornali, censurando rigorosamente il dato anno su anno che rimaneva ampiamente negativo ed evidenziando il +7% mese su mese.
E noi "banda di pessimisti" come sempre ad eccepire con i nostri disfattisti "se e ma": dicevamo che era un'aberrazione statistica ferragostana...e lo diceva in verità anche l'Istat senza che nessuno o quasi lo riportasse.
Ma si sa, le bugie hanno le gambe corte...
Scommetto che questa news tinta di rosso troverà molto meno spazio nei mass-media tinti di rosa....
LEGGETE BENE TUTTO, soprattutto le parti in grassetto ed in rosso.
Industria: Istat, Produzione In Calo a Settembre del -5,3%
10 novembre 2009
Produzione industriale in calo a settembre.
L'indice, segnala l'Istat, ha registrato una riduzione del 5,3% su base mensile, la piu' ampia dall'inizio della serie storica nel 1990.
L'andamento di agosto rimane positivo ma e' stato rivisto da +7% a +5,8%. Nel terzo trimestre la produzione e' risultata in aumento del 4% rispetto ai tre mesi precedenti. L'incremento segue la riduzione del 3,3% registrata nel secondo trimestre. Si tratta del primo dato positivo dal primo trimestre 2008.
Su base annua l'indice corretto per gli effetti di calendario e' sceso a settembre del 15,7%, mentre nei primi nove mesi del 2009 la variazione rispetto allo stesso periodo del 2008 e' stata negativa per il 20,3%.
Guardando ai principali raggruppamenti di industrie, l'Istat segnala variazioni congiunturali negative del dato destagionalizzato per i beni intermedi (-7,9%), per i beni strumentali (-5,6%), per i beni di consumo (-4,1%), per l'energia (-3,9%).
Considerando la dinamica tendenziale su settembre 2008 i dati corretti per gli effetti di calendario segnalano un calo del 21,2% per i beni intermedi, del 20,4% per i beni strumentali, del 10,5% per l'energia e del 5,5% per i beni di consumo.
A livello dei singoli settori di attività economica, l'indice della produzione industriale corretto per gli effetti del calendario ha registrato, rispetto allo stesso mese dell'anno precedente, variazioni tendenziali positive per i prodotti farmaceutici (+5,9%) e per le industrie alimentari, bevande e tabacchi (+0,2%).
Le diminuzioni maggiori si registrano per i macchinari e attrezzature n.c.a. (-27,5%), per la metallurgia e prodotti in metallo (-25,2%) e per i mezzi di trasporto (-20,2%).
Nel confronto tra i primi nove mesi del 2009 e il corrispondente periodo del 2008 le diminuzioni più ampie hanno riguardato la metallurgia e i prodotti in metallo (-32,1%) e i macchinari e attrezzature. (-31,8%). L'unica variazione positiva ha riguardato i prodotti farmaceutici (+2,5%).
Il rallentamento della produzione riguarda anche il settore automobilistico. A settembre, l'Istat comunica che il dato corretto per gli effetti di calendario ha segnato una flessione del 7,9% (dato grezzo -7,6%) su base annua, mentre il dato relativo ai primi nove mesi ha segnato un calo del 29% (-29,5% dato grezzo).
A parte il fatto che si è tornati al livello di luglio dopo l'aberrazione statistica del +7% (rivista a +5,8%) di agosto, sbandierata da tutti i gossip-tiggì come una roba stellare...
A me dei dati m/m non me ne frega una cippa (mese su mese): non sono significativi anche perchè sono molto volatili. Contano solo per cercare d'intuire le "prossime tendenze", le micro-variazioni in fieri....ed anche il questo caso il dato di settembre è NERO.
Contano invece i dati a/a (anno su anno) o quelli sui primi nove mesi 2009 confrontati a quelli del 2008: in questi dati SI SOMMANO LE VARIE PERFORMANCES MENSILI che essendo il larghissima parte NEGATIVE presentano delle BEN PIU' SIGNIFICATIVE RAMAZZATE DA -20%....-30%....
IN CERTI SETTORI PARLIAMO ADDIRITTURA DI 1/3 IN MENO RISPETTO ALL'ANNO SCORSO, RIPETO 1/3 IN MENO!
E combinazione i settori più in rosso sono i settori che contano, quelli che pesanti, quelli che indicano il futuro di un'economia...come macchinari ed attrezzature, metallurgia, mezzi di trasporto, energia...
Notare anche l'auto a -30% mentre si sbandiera un +15% di immatricolazioni in Ottobre 2009 grazie agli incentivi...
Vedi i titoli e gli articoli della Fiat-Stampa...
L'auto in Italia continua a correre
NO COMMENT (come pure No comment sullo sbandierato Indice OCSE)
Non a caso tre giorni fa un DATO STRUTTURALE come questo è stato ignorato:
Terna: in calo ad ottobre i consumi di energia elettrica ..
Complessivamente il fabbisogno dei primi dieci mesi del 2009 ha registrato un calo del 7,1% rispetto allo stesso periodo del 2008.....
Dati in ROSSO come quelli sopra citati sono GLOBALI e caratterizzano le maggiori economie mondiali (chi più chi meno)
Pensate che sono così ROSSI anche se tamponati da IMPONENTI INCENTIVI STATALI.
O stiamo anticipando LA MAGGIORE RIPRESA DELLA STORIA...
Oppure siamo al DISALLINEAMENTO totale: i dati macro peggiorano e tornano indietro, la disoccupazione e la sotto-occupazione salgono...mentre le borse e tutti gli assets accelerano ancor più al rialzo.
Questo sta succedendo proprio perchè l'economia debole è garanzia ancora a lungo di SOLDI GRATIS PER SPECULARE.
E di tutto questa ORGIA all'economia reale arrivano solo le BRICIOLE, gli avanzi.
QUESTO GIOCHINO paradossale RISCHIA DI ANDARE AVANTI ANCORA A LUNGO visto che è "coperto" dai RESISTENTI e LONGEVI DEBITI PUBBLICI "più forti del mondo"....
IERI LA DIMOSTRAZIONE LAMPANTE DELLA BOLLA: al G20 dichiarano di mantenere le misure eccezionali di sostegno perchè finanza ed economia sono ancora DEBOLI (ripeto DEBOLI) ed IMMEDIATAMENTE LE BORSE corrono o stabiliscono nuovi RECORD di periodo (non è così semplice ma schematizzo).
E' veramente una FARSA: ed a fare soldoni sono soprattutto le banche, le banche d'affari e le case d'investimento, insomma tutta quelle entità che SE NON LE AVESSIMO SALVATE NOI CON I NOSTRI SOLDI (debito pubblico=soldi dei contribuenti / debito pubblico sfondato=cazzi nostri e dei nostri figli e nipoti) non dovrebbero nemmeno esistere nella forma in cui le vediamo oggi trulle trulle...
Visto che sono sopravvissute grazie a NOI, i mega-utili che fanno speculando dovrebbero andare soprattutto a NOSTRO VANTAGGIO...ed invece.....invece lo vediamo tutti cosa sta succedendo.
Del resto quando la via della nazionalizzazione temporanea e funzionale è stata scartata a vantaggio delle lobbies finanziarie, si sapeva benissimo incontro a COSA si stava andando e quale colossale moral-hazard si stava mettendo in piedi, non solo per l'oggi ma soprattutto per il domani.
Ma adesso mi taccio: ormai mi sembra di essere solo un PREDICATORE mezzo matto che parla al vento...perchè tutti sbavano dietro alle Borse, dietro alla speculazione, dietro all'enalotto e dietro al win-for-life...
I pesci grandi per farsi la Bentley turbo, la villa in Costa Azzurra, lo Yacht da 50 metri e la fornitura perenne di escort & cocaina.
I pesci piccoli invece per mantenere un minimo di benessere o per mantenersi sopra alla linea di galleggiamento, anche se spesso questo benessere è rappresentato dal continuo ricambio di beni voluttuari: è la CULTURA DELL'AVERE che ormai ha totalmente cancellato LA CULTURA DELL'ESSERE.
E si capisce anche perchè il laureato in Filosofia è finito a fare marketing e selezione personale invece che diventare il Maestro di Alessandro Magno....
Mentre scrivevo è uscito un altro importante Dato Macro con la marcia indietro e sotto le attese: secondo LA NUOVA LOGICA PARADOSSALE DELLA BOLLA vorrà dire che le borse accelereranno al Rialzo...
Notare come l'indice delle condizioni correnti sia salito: avrà qualcosa a che fare con il fatto che gli investitori tedeschi hanno capito che nel Breve l'orgia può continuare con la benedizione di DIO e del G20?
Ma POI.....
Germania: indice Zew in calo ben oltre le attese a novembre

10 novembre 2009
Cattive notizie per l'economia tedesca sono arrivate questa mattina dall'indice Zew che ha restituito una lettura deludente.
Sulla base dei dati forniti dallo Zew Institute si è appreso che nel mese di novembre l'indice che misura la fiducia degli investitori tedeschi si è attestato a 51,1 punti in calo rispetto ai 56 del mese precedente.
L'indicazione si è rivelata peggiore delle stime degli analisti che puntavano ad una discesa meno marcata a 55 punti.
L'indice relativo alle condizioni correnti è salito da -72,2 a -65,6 punti. P.S. Come tutti sapete questo non è un BLOG di Trading e speculazione: infatti chi vuole mettere in pratica "queste attività", pragmaticamente deve seguire l'onda e dunque il proseguimento della somministrazione di Droga Gratis è un'OTTIMA NOTIZIA...foriera di un bel Dow Jones almeno ad 11.000 punti per fine anno.
Link en passant

Crisi: Uil, In Dieci Mesi Ricorso Cig +387% Agi (10/11/2009 12:08)

Crisi: Confesercenti, Per 87% Italiani Peggio Non Passato Agi (10/11/2009 12:06) INCREDIBILE! Ma hanno intervistato solo gli affezionati lettori di questo Blog?

Consumi: Abi, Aumenta Ricorso a Credito (+10%) Nel 2008 Asca (10/11/2009 11:59)

Consumi: Abi, 26% Famiglie Italiane Hanno Un Debito Medio Di 10mila Euro Asca (10/11/2009 11:46)

Crisi: Confesercenti, Misure Governo Insufficienti Per 65% Italiani Asca (10/11/2009 12:18)

Lavoro: Confesercenti, 94% Italiani Teme Di Perdere Il Posto Asca (10/11/2009 12:27)

Agricoltura: subito stato di crisi Ansa (10/11/2009 12:47)

 

http://lagrandecrisi2009.blogspot.com/2009/11/il-mondo-allincontrario.html

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