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Major dislocations are coming. Tremendous disruptions are coming. Price discontinuities are coming. Price chart patterns might be rendered useless soon. Last week, the case for a grand Paradigm Shift was made, covering many elements in order to paint a mosaic. Taken in isolation, any one point is important in its own right, but not enough to convince of a structural change. Taken in entirety, the many points create a full picture that is more easily recognized. The ruinous events of the Wall Street banks last September and October surely served as an extreme event loaded with profound disruption.
All Paradigm Shifts result in extreme disruption. That is the essence of Paradigm Shifts. The entire table changes, like its shape, its seats, its location, even who sits at the table, and in particular who sits at the head of the table. Big disruptions are to come from the COMEX pit of corruption, the central nexus for controlling illicitly the price structure for gold, the USDollar, and the USTreasury Bonds. The COMEX in all likelihood is the weakest link in the US-UK chain of corrupted financial markets. For many months my view has been that gold fights the political battles, while silver gathers more than its share of rewards and spoils. Gold has a long history of experience fighting grand battles. It can be placed in dungeons, but not for more than a couple decades. The rot in financial systems without golden foundations forces gold to the surface!
In a research note today, Citigroup analysts estimated that "more than $75 billion of CMBS market capitalization has been lost" since the S&P request for comment on changes to their U.S. CMBS rating methodology was issued two days ago. S&P noted: Our preliminary findings indicate that approximately 25%, 60%, and 90% of the most senior tranches (by count) within the 2005, 2006, and 2007 vintages, respectively, may be downgraded. Citigroup commented that the changes were "a complete surprise", "flawed", lacked "justification" and the "S&P methodology changes do not seem rational or predictable".
Ouch.
Long-term interest rates are jumping, with yields on 10-year treasuries now up to 3.73%. Apart from the significant impact on the real economy (e.g. higher mortgage rates ), this development is also placing into doubt the validity of a long-standing leading indicator, i.e. the yield spread between 10-year and 2-year treasury bonds
Right now the spread stands at 273 basis points (2.73%), the widest ever. Many analysts, therefore, are predicting the economy will turn around in short order and start growing smartly once more. To judge from the shop-talk in the various dealing rooms I contact on a regular basis, the 10-2 spread is the single most fashionable indicator right now. I think this to be a grave mistake.
When putting pieces of a very large, global puzzle together, it is easy to fall into the trap of accrediting everything that happens as part of a conspiracy against all of humanity. This tendency is used by the Real Rulers as a tool to isolate and mock those who do try to track the very real conspiracies that really are going on. The super-secret Bilderberg meetings as well as the follow-up even more secretive Rockefeller population control meeting are of greatest interest. Today, I wish to tie some important events and people into one package so it illuminates how this business is working out or rather, how it is FAILING. For the other secretive contra-system run by the communists, is surging forwards.
One of my major thesis I have developed here is how the communist and the capitalist worlds of the post-WWII global power systems has undergone tremendous warping and shifting in the last 25 years as classical communism coupled with harsh totalitarianism has slowly collapsed or changed while the capitalist NATO/US Pacific alliance went off the cliff due to the ravages of ‘free trade’.
This is the New World Disorder. Whoever figures out how to exploit this disorder wins control of the planet earth for the next 100 years.
John Mitchell was the Attorney-General during the Nixon administration. His wife - Martha Mitchell - told her psychologist that top White House officials were engaged in illegal activities. Her psychologist labeled these claims as caused by mental illness. Ultimately, however, the relevant facts of the Watergate scandal vindicated her. In fact, psychologists have now given a label - the "Martha Mitchell Effect" - to "the process by which a psychiatrist, psychologist, or other mental health clinician mistakes the patient's perception of real events as delusional and misdiagnoses accordingly".
George Monbiot recently wrote on Cif that "the neoliberalism forced upon governments by corporate power and the Washington consensus; the terror of the tabloid press – all combine to create a political culture which cannot respond to altered realities without collapsing." Consider how such institutional inflexibility affects our response to climate change, the limited resources and the asymmetric lifestyles we now lead. Monbiot asserts that our civil liberties are being assaulted as a means of suppressing dissent, and that is most certainly one intention. However, at the risk of sounding like a conspiracy theorist, here is an alternative analysis of what is happening to our civil liberties.
Discussion of the 50% Retracement Rule,
potential future price levels, time studies, key dates, Fibonacci, Gann, Astro numbers, Robert Rhea's Great Depression analysis.
Rogue economist Max Keiser writes, "Max Keiser is on the edge of the financial news where future financial scandals, market crashes and monetary crises begin. Be there before it happens: On the Edge with Max Keiser. I've got Alex Jones lined up for next week - should be pretty interesting Anyone watching the show should get some psychic satisfaction as I symbolically water Timothy Geithner on the show this week. I used a doll dressed up like a pirate or 'banker' as pirates are called in the U.S. The emphasis on prosecuting the harshest criminals in America should really be focused on the Fed and the Treasury. Clearly, they have abandoned any pretense of any sort of system of checks and balances for the banking system and are simply aiding and abetting the continued fleecing of America in ways that Bin Laden could only dream about if he were still alive. "
At the moment, the economic dynamic is exceedingly complicated. An understatement, I fear. The crosscurrents in the data and the markets are treacherous, and I suspect will have Fed officials scratching their heads. Hold steady with existing plans? Step up the liquidity provisions? More actively engage plans to tighten policy? The latter option seems almost inconceivable; for the moment, the debate will focus on the issue of further easing. At this point, I think the Fed will sit tight, allowing further easing to come from the already active TALF program, rather than expanding outright purchases of Treasuries.
Bottom Line: I want to believe that the rapid reversal of Treasury yields is a benign, even positive, event. This is likely the Fed's view; consequently, the will hold steady on policy. Challenging this benign view is that the reversal appears to be lock step with a return to dynamics seen in 2007 and 2008 - exceedingly low US rates encouraging Dollar outflows, stepping up the pace of foreign central bank reserve accumulation and putting upward pressure on key commodity prices. I worry that policymakers have forgotten the external dynamic that was hidden by the crisis induced flight to Dollars last fall. Indeed, capital outflows (indicated by a foreign central bank effort to reverse those flows) would signal that much work still needs to be done to curtail US consumption to bring the global economy back into balance. Policymakers are unprepared for this possibility.
If you have any info that would help, please contact me at my private email address: bailout@michaelmoore.com
