Reality Check

By Roger Wiegand   May 26 2010 4:12PM

We are seeing too much “Let’s Pretend” and fictional dancing around the economic Mulberry Bush. If some very important people cannot drag themselves out of a 50 year-old dead and dying paradigm, this world is going to get very ugly very fast. We say they don’t and further, it’s politically expedient not too.

Congress people, parliamentarians, economic morons, academic communists, dudes and dudettes continue their silly dance as if life goes on and all is well. They are stuck in the past while whistling past the fiscal graveyard. Nobody has the nerve to stand-up and tell the truth. Nobody has the backbone to tell the truth and face reality. There are a few in our industry but far too few.

The heat’s going up on the frog in the boiling water while we wish and hope that somehow we all don’t boil alive and can blunder through. People lack the nerve to turn-off the heat and jump from the pot. It’s just too comfy to pretend the old game prevails while smarter people clearly see the ugly, boiling, steamy ending. Think of a high powered pressure cooker heated to its stove-top-maximum-extreme. Think about what happens when you take the lid off without first relieving the pressure. That is what I see coming in these markets.

In the initial stages, we’ll get the usual trading moves and dead cat bounces. However, eventually, the bottom falls out and there is nothing for support but air.

This is when a huge rip-roaring crash arrives. It could be in June or July, it could be this fall or, next year. There are so many convoluted games in play, so much manipulation, that no one can say for certain. What I see for certain is that it simply cannot last and the old games are all played out-game, set, match.

History books are full of stories about similar idiocy and the dramatic aftermath. Change is quite difficult and the status quo easier to manage. If we do not collectively gird for economic war and get busy with realistic objectives there is no hope for a good ending. I suggest the one I see coming is beyond tears.

We are often correct on our shorter term forecasts and longer range predictions. Here are some more for all of us to ponder. You can disagree if you wish but I prefer to call it as it is and try to deal with reality and not wish and hope for a silly, long ago, 1950’s result or outcome.

Do not get mad at me for saying these things and for heavens sake leave politics, religion, race, culture and all the rest of the politically correct baggage out of this discussion. I am merely giving my opinion as to what I observe and see happening, and forecasting the outcome. Think of me more as news reporter and not some opinionated idiot; although some prefer that latter title.

Global corporations, central banks and the US Federal Reserve have been engaged in currency and bond manipulation to their advantage for decades. They have ruined the US Dollar with inflation and stolen literally trillions of dollars. This will continue until the system is entirely broken and there is nothing left to steal.

Our illustrious Treasury Secretary is running the world-over right now feverishly scrambling to get major, economic powerhouse nations on the right crisis reaction page.>

If just one of them goes the wrong way with an untoward move in the middle of a major crisis, the whole mess caves-in with terrible consequences. We suggest Timmy’s games work for the most part but we can count on one country finance guy or gal to step in it and implode the whole movie. It may not be this year but its coming. This is way too complicated for Timmy to control. There is a Black Swan out there and he is flying our way. Right behind him are a flock of his buddies soon to make some very naughty deposits on system finance.

Our latest and most serious financial conflagration is the crashing Euro and Euroland dissension. Most particularly, the European PIIGS nations are squealing the loudest and falling down first.

The provided bailout is not a bailout for squealing PIIGS but for crooked bankers on both sides of the pond trying to get their money back from all their previous bad loans still lingering in this bankrupt Club Med neighborhood.

We got word this past week the New York big boy banks have 81% of their Tier One Capital at stake in European debts. They must get it back or, go back to the well at the US Congress for a TARP II cover. Fat chance on that one politically.

Those bankers could care less about the Sheeple and Piigs. They want their loaned bread back or, they go under water on bank capitalization requirements. This mess then requires a TARP II for Europe to cover the crooks in New York City. Sound like Lehman familiar? Hence, this is a scam to repay those old loans using the IMF, World Bank, and central banks throughout the world taking taxpayer cash to cover bankers’ loans through the back door. This game is just a repeat of the US TARP I with new European players.

Global bond markets are 70 times larger than the collective stock markets and today, are in major mayhem and disarray. Previous US presidents have expressed great annoyance about the bond traders controlling the world. Sorry Prez; the guys with the money get the control. Right now their bond markets are going out of control with way too much supply and lots of bad credits.

The US is printing and dumping currency, bonds, notes, bills on other nations at a furious pace as they are broke and need the money right now. The interest on our debts is flat out wild. Finally, we are to the point where buyers of this trash are saying enough is enough. Yields have to go up to persuade them to buy more and in many cases there are not ANY buyers. When those yields rise to the extent others notice too much, a whole new and heightened level of fear begins.

Bad news lending day has arrived between European and USA banks. The Libor rate is way up signaling they do not like each other and do trust one another to pay back interbank borrowings. Once before during the Lehman event, Europe’s banks told their employees to not do business with New York out of repayment fears. We are in the same pickle again.

This is the key to Crash City. When all this trashy paper cannot be off-loaded and when the circle-jerk game of pass-the-paper between the Federal Reserve and US Treasury comes to a screeching halt; we are finished. They’ve already been up to these tricks trying to hide that news. Now its out in the open as both the fear levels and reflective VIX Index are flashing red lights.

This is all one big confidence game. When confidence wanes, worries appear. When confidence is lost we at the end of the road. We can see the road’s end but the time of arrival is as yet uncertain. Just when we think they cannot go on any longer, another detour is found and another Federal Reserve-Treasury scam appears to extend the party.

The current administration in Washington is worse than the last one and most of these people in all branches of the government are completely out of touch or clueless. Decisions are being made on facts of pure political gain for votes not the well-being of the United States and its taxpayers. While this has been standard procedure for years, its much gotten worse of late.

Now we are beginning to see things, that are in our view, are border-line treasonous that completely disregard the safety and future of all Americans. This is going to get very nasty very quickly.

We have zero confidence in even a pivotal election change this fall. The new bunch won’t be any different than the old bunch. Their only collective answer is to throw more money at any and all problems, scarf-up the votes and to hell with the Sheeple. We say these people are literally selling out America for personal gain.

This week it was obvious with rising VIX and precious metals markets’ that our financial earth was trembling. The smarter guys and gals are not buying the PIIGs bailout game story and voted with their sell buttons.

Little Timmy has been around the trading game for years. The word out of New York is he made all the “Save The Markets” S&P buy and sell decisions used to prop the main stock markets as a really keen member of the Plunge Protection Team. Since he smashed precious metals and propped mainstream stocks so well, he got promoted. Nice job Tim.

Timmy was the Federal Reserve Governor Of New York and close to the Wall Street trading action. Now that he is Treasury Secretary, he is the Fire Chief In Charge of our “Save The  Global Economic System Fire Department.” Sure doesn’t give me much comfort but obviously, this kind of work takes someone with weasel-like cunning, which he has so assiduously provided before.

His great companion and helper Chopper Ben Bernanke has certainly done his part. Problem for these guys is who becomes the fall guy on D-Day (Destruction Day?) We think Benny gets the blame despite his recent rhetoric learned so well from Mr. Alan (Obfuscation) Greenspan.

What Can We Do?

Most of us unless we are independently wealthy and can just disappear, have to keep working, striving and saving. I keep searching for ideas and reading books to discover new solutions. Unless you just leave your country, which for most of us is not a good idea, we have to shun the system. We can do this to the extent we can by staying out of debt, live on less, trade and invest in hard assets like gold and silver and hunker down for the storm .

My suggestion is to take care of yourself and your family and friends and do not ask anything of anybody, particularly any government entity for special support or services. While we cannot simply drop out of society, although some will, think through your situation to consider, security, provisions, trades, and investments.

We do not expect society and the system to totally breakdown but simply be struck with plenty of disruptions including price and capital controls, inflation, higher taxes, more job layoffs, and possibility of utility stoppages (bad weather) and bank closures for a few days. If you move through each day on credit cards (not cash) you are very vulnerable.

Traders and investors should be buying precious metals and select shares right now. In our newsletter we have a great list of trading and investing ideas for you. Meanwhile, you can never go wrong buying physical precious metals and holding them for security. We’ve had a constant run of nearly ten years in gold rising 15% per year so this remains a good trade. In the last twelve months, gold rallied over 34% and is going ever faster.

It’s not going to stop any time soon. In fact, we predict those annual percentages will rise even more and this offers us a fine opportunity arriving only once in 25 years on the historical cycles. Good trading! -Traderrog

Roger Wiegand
Editor Trader Tracks Newsletter
The Jay & Rog Blog at webeatthestreet.com

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Roger Wiegand is Editor of Trader Tracks Newsletter for gold, silver and energy traders. Roger provides recommendations for short and longer term traditional stock shares, futures and commodities trading with specifics for individual trades. See webeatthestreet.com for more information.

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