April 1930
In April 1930 everyone thought the market crash was over and the economy was in a “V” shaped recovery. Equities were flying and some of the zaniness of the 1920’s was returning. A financial crisis then hit Europe and the true leg of the depression started. Does that sound familiar to anything you have seen lately?
If that is the case then I have put together the chart from early 1930 along with where I think we are if we are going to repeat the patterns of the past.
Dow_1930
Words of wisdom
From this morning Breakfast with Dave. The daily newletter put out by David Rosenberg, of Gluskin Sheff
BAN THE BAILOUT
First we have governments bailing out banks (and auto companies and mortgage providers), homeowner debtors, and now we have governments bailing out governments. When does someone finally say — enough is enough! Oh no — bank ABC is too big to fail. Company XYZ is too complex to fail. And now country GRK is too interconnected to fail. Give me a giant break.
Look, Greece is not going to “fail”. They are going to default. There will be a debt restructuring. And there will be some recovery. Bondholders will take a haircut — why shouldn’t they? Why should Angela Merkel care if German banks own Greek bonds? Greece has been in default in its recent 200-year history almost half the time. So has most of Latin America come to think of it. What about Russia?
So Greece defaults, bondholders who knowingly bought these instruments knowing the historical record went for the yield and simply do not deserve a taxpayer-supported bailout of any kind. To actually come to the aid of Greece (especially after all the accounting gimmickry) would send a signal to investors that the best way to make money is buy the debt of the most risky and highest yielding enterprise because there will always be a bailout. Rewarding bad investment decisions is a huge mistake, in my opinion.
Let Greece default, the world will not come to an end, and whether or not the country gets a “bailout”, the fiscal drain is going be a pervasive drag on economic activity for at least the next five years. While there may be contagion risks — same deal. Investors who bought Club Med bonds with their stretched government balance sheets in order to stretch for yield don’t deserve to be bailed out either.
Taxpayers unite, wherever you live (because you too support the IMF). These are solvency issues we are talking about, not liquidity issues. This is about bad decisions, not market failure.
Words of wisdom indeed. If only our leaders had a clue!!
The LinkUs Hub – “The Hub”
ApartOfNY is proud to add the Linkus Hub, or “The Hub” to our menu bar. Please check it out .
The LinkUs Hub was started by GoodVibe Market Vibes, or GV, and is a great place to share and learn about trading. A couple of comments on the hub from Gv’s site are:
What is “LinkUs Hub” or “The Hub”?
“The Hub” is one of a kind financial discussion-room where our fellowship of traders and investors gather and communicate LIVE with each other 24×7 to discuss all things related to the market. We post our contributions for others to read when they also stop by later to drop their own work. Others will come later to do the same thing in a free flow of information.
What “The Hub” is NOT?
We don’t do chitchat. No empty debates either. Long useless talk? Nope! Unverified claims? Nada! Unreliable analysis? Zip! Unsupported opinions? Zero! Emotional baggage? Hell no! Whining? Never! Bragging. No chance! Immature behavior. Never! Personal attacks? On our DEAD bodies. Herd mentality. Not anytime we checked! 
So try it out. The Hub’s mission statement is “Share, Learn and Grow”.
We are entering stage II of the Debt Crisis
The story of Martin Armstrong is a constant reminder that we no longer live in a free country. He was one of the worlds foremost minds on economic strategy. Then he started telling a few too many truths. Now he is sitting in solitary confinement having to smuggle out manuscripts – who says we have no political prisoners. Anyways, his latest work is predicting that we are starting the next phase of the debt crisis. He also gives some advice that the politicians will never implement. A few paragraphs from his manuscript are
“I am writing this because it is urgent. We are entering Phase II of the Debt Crisis. When the Euro was being born, A special commission came to my London Lecture by special request. I explained that they had to adopt the original Fed Model so that each country had its own interest rate. That they adopted just as the 12 branches of the Fed, at first, had a separate interest rate to manage capital flow. Now the EC is in a dire position and a debt crisis at the sovereign level is starting to materialize. This will spread to US/State debt and the CFTC move to limit currency trading by the public from 100:1 to 10:1 can cause a liquidity crisis that backfires, magnifying everything.”
…
“Please Forward this to Politicians everywhere
(1) We freeze all National Debt
(2) We issue coupons whereby the debt will be redeemed for local currency to be invested in the domestic economy debt or equity
(3) Each Nation then establishes its own currency pegged to (Euro). The US debt is swapped for coupons that may be spent domestically
(4) All direct taxation must end. No Income Tax, Gift, Inheritance, Capital Gains or Property Tax. All local Gov’t funds itself by Retail Sales Tax.
(5) Fed Gov’t prints the cash needed instead of accumulative deficit each year as % of GDP. Add up interest paid 1986-2006 – The US debt, other than interest, would have been $300 Billion. Printing, if controlled, will not be a FIAT nor hyperinflation. We need a steady growth of money supply to expand and keep pace with population.”
To Read all the details, and I reccommend you do, go to http://www.scribd.com/doc/28670605/Martin-Armstrong-From-the-Hole-3910
Market Update
on the 15th of March, 2009 Ben Bernanke appeared on 60 minutes. One of the opening questions was:-
PELLEY when I called and proposed this interview about a year ago, your representative laughed out loud. And said, “The Fed chairman never does an interview.” I wonder why are you doing this?
BERNANKE Well, it’s an extraordinary time. It’s an extraordinary time. This is a chance for me, I think, to talk to– to America directly.
In extraordinary times what would our government do to turn things around. Answer: Anything they can, legal or illegal. Since March 2009 have we been dealing with a Managed Market for a Managed Economy.
Now many have suggested that the Fed (or PPT) is buying SP500 futures every monday night. I say nay – they are a pretty dour group and news would somehow have come out. Addittionally Gld and Oil have also gone up, along with most world markets and I cannot see the Fed trying to cause the price of Oil and Gold to go up. Of course if they printed a couple of hundred billion dollars and gave it to a few key banks, with the guidance to put it in the markets – then that wold account for all asset classes rising in unison.
Now that’s over then let us look at one of my predictive charts from last July:
As you can see, in this chart, I thought that we wold get back up to the major trend line of the bear market at 114 – we reached just over 115 so I was out by around $1. I did think the rally would complete by late November 2009 and, in terms of the SP500, it appears to have ended in mid January 2010 – which means I was out by about 6 weeks.
Now let us have look at the Major Bear Market trend Channel:
As you can see there have been several attempts to get out of the channel, including Oct 2007, spring 2008 and last Friday (March 4 2010). In prior attempts this initial escape was marked with an immediate (within a week) push-back into the channel and a decent sell off. If we take a close up of the last 60days action then we can see how important Fridays action was:
SPY Short Term
As you can see we gapped up to above the line in the low-volume Thursday night futures market. This meant that this critical resistance line never had a chance to be tested and upon opening all of the stops above it started to triggered. This resulted in a low-volume melt-up all day with a buying frenzy in the 3.30 to 4pm purchase-before-mutual-fund-Monday-ramp-up. This means that the SPY closed (both day and weekly) above the line. The volume was nothing to write home about and the market ended up extremely overbought with negative Divergences abound. For the bear case to remain intact the Bear Channel needs to be reentered early next week.
So what does this foretell – next week we either Crash like 1987 / 1929 or we move further into the world of make believe.
The End of the world as we know it
I saw this video over on Reformed broker. If this is true then Nat Gas companies are gone, Oil Companies are dust (or sand) and utility companies could be dead and buried. It could change everything and start a new era – without many companies from the past era. Definitely worth watching…
Watch CBS News Videos Online
Elizabeth Warren on the Banks
Elizabeth Warren does tend to speak the truth, and so is very interesting to listen to.
Spend, Spend, Spend
unlimited
For the pdf please select the “unlimited” link, below, and print…
Please feel free to print this and put in your own number….
You Don’t have to wear Rose-tinted-glasses to work here
…but it helps.
Apparently the CNBC advertisers do not like bad news or stark reality. As a result the CNBC people try to make everything look good. Nouriel Roubini was on CNBC this morning and rebuffed their pretend economy and used facts to tell it how it really is. Video below:
