Richard - The Resourceful Bear Blog

Posts tagged with "Love Grows Cold"

I Came Across A Goldmine ... Yes A Large Amount Of Currency ... And Something Of True Value

Monday, 3. November 2008, 06:16:40

I appreciate the fish and rice dinner provided courtesy of Chef Ryan, the Generous of Bellingham, and those who years ago built the food hall at F and Holly in Bellingham. The meal was cooked just right, and the fish flavored perfectly.

As usual to avoid a line, I arrived at closing; luckily there was some food left. I observed a man with a young daughter, five women and the rest men, mostly homeless, or those traveling through on the Ferry to and from Alaska. Probably half of the women who go for a meal there are pregnant; it's nice the facility provides a seperate table for the women -- it helps many feel more comfortable; by the time a woman arrives in Old Town Bellingham, the last thing she needs to come in contact with is more poor and incapable men; she needs a real man who will care, honor and provide for her.

With the chaos and misery that is coming, I strongly advise any woman of child bearing age be fitted with an IUD, to totally and absolutely preclude the risk of becoming pregnant; truly, love is going to grow cold; and the woman should take all means to protect herself. For those of you who have found a helpful sex partner, be thankful: the gift of sex one experiences, could be gone soon, as massive cultural, economic and relationship changes are coming, when martial law is ordered, in response to the world wide economic breakdown. Yes, be thankful for the sex, when the Lord comes in his Kingdom, relationships will be without sex; well that's what He said in Matthew 22:30.

On my bicycle, while out and about earlier in the day, I came across a goldmine ... yes ... a large amount of currency.

I am continually on the lookout as I ride my bicycle for what's ahead, like a board, a piece of carpet and especially glass -- there is lots of glass on the streets, as the WWU students drink and then smash their empty bottles on the street -- it makes for easy disposal, and countless new tires for Richard over the last seven years of bicycling here.

While looking ahead, I spotted what appeared to be a credt card, so I stopped and picked it up only to find it was a 2008-to-2009 student bus pass; that would be worth $120 to me, and that's a fortune.

Well I thought about keeping it; but will turn it in at WWU Lost and Found tomorrow, in hope it gets back to its owner.

Weatlhy, yes once very wealthy, with a speed boat for water skiing on Sloans Lake in the summer, car for snow skiing at Breckenridge, Vail, Aspen, Loveland Pass, Winter Park, Monark, etc. I did most all of them.

Had nice jobs on Denver's Wall Street, that is 17th Street, which was developed by Canadian investors, in the 60s and 70s, who bought cow-town hotels like the Shirley Savoy and Cosmopolitan. Yes, worked for Petro Lewis Oil Comapany as an accountant, and had money for lunch at world famous Duffy's Bar and Grill.

Now, I am old and poor, and soon with Obama to be in office, even poorer.

So I spend several hours a day, communicating about the importance of preserving one's wealth by investing in gold, the Liquidation Thesis, the fulfillment of bible prophecy by today's news events, and the Election of Grace.

God did the choosing from eternity past, well that's what the Bible clearly reveals -- His Word is clear, cogent and convincing on that topic.

God elected Jesus to
1) fulfill the Law; and
2) as his bosom buddy John said in John 1:17, provide Grace and Truth; so whatever the Law was, it isn't the present truth held forth by the Apostle Peter in 2Peter 1:12; and
3) reveal the mysteries of faith, that is, spiritual truths now presented in the New Testament and through His Holy Spirit.

God appointed three to form his church, that is, His called out ones at Ephesus: the jailer, the demon filled slave girl, who pestered Paul, and Lydia, a dealer in purple, who was wealthy from the commerce, that is, the trade of purple. While out one day doing her laundry, she overheard Pual communicating the Good News, and got convicted; and along with two other two, founded the church at Ephesus. It is significant that Paul was killed dead, yes stone dead, like in stoned to death dead at Ephesus, only to be resurrected by the Lord.

God developed and built the church at Ephesus for a number of purposes, the primary of which was to communicate the doctrine of the Election of Grace. And God, purposed to destroy the church by raising up preachers who would seek to draw men and women to themselves out of pride, vanity, and a love of money, and the things mammon affords, this being revealed in Acts 20:17-38.

And now, God is doing a new thing in world today, because of the love of money. He has created and commisioned the four riders of Revelation Chapter 6:1-8, that is the four horsemen of the Apocalypse, to go forth globally carring out his end of the age plan.

Here is an artist's rendition of the four horsemen as a group.

The first rider, that is the first horseman, goes forth on a white horse; he has a bow, but no arrows and conquers globally; he effects bloodless economic and political coups, by doing such things as nationalizing banking, via the creation of the TARP facility by the Federal Reserve, and the provisions of "loans" of monies to insurer AIG, to cover its credit default swap derivatives positions. The scripture reference is Revelation 6:1-2: "I watched as the Lamb opened the first of the seven seals. Then I heard one of the four living creatures say in a voice like thunder, "Come!" 2I looked, and there before me was a white horse! Its rider held a bow, and he was given a crown, and he rode out as a conqueror bent on conquest."

The second rider, that is the second horseman, is on a red horse signifying violence. The scripture reference is Revelation 6:3,4: "When the Lamb opened the second seal, I heard the second living creature say, "Come!". Then another horse came out, a fiery red one. Its rider was given power to take peace from the earth and to make men slay each other. To him was given a large sword."

The third rider, that is the third horseman, is on a black horse signifying increasing famine, inflation and financial death. The scripture reference is Revelation 6:5-6: "When the Lamb opened the third seal, I heard the third living creature say, "Come!" I looked, and there before me was a black horse! Its rider was holding a pair of scales in his hand. Then I heard what sounded like a voice among the four living creatures, saying, "A quart of wheat for a day's wages, and three quarts of barley for a day's wages, and do not damage the oil and the wine!"

The cry to not "damage" the oil and wine could represent attempts to safeguard the pockets of abundance against plundering. An alternative meaning is that there is practically no oil and wine left; that would also fit with the admonition that what is left not be harmed—lest there be none left at all.

Financial death being seen in the Yahoo Finance chart of EFA, VTI, TLT, GLD, XOM and IYF which shows the rise and fall of debt facilitated growth that came under the laissez faire, neoliberal, Milton Friedman, capitalism which was based on a floating rate currency exchange, interest rate differential investing, and free trade system.

I cover the galloping rise of chaos in article Pakistani Investors Stone Exchange as Stocks Plunge: the fourth rider, that is the fourth horseman is on a pale green horse.

Here is an artist's rendition of the fourth horseman riding the pale green horse symbolizing chaos.

The scripture reference is Revelation 6:7-8: "When the Lamb opened the fourth seal, I heard the voice of the fourth living creature say, "Come!" I looked, and there before me was a pale horse! Its rider was named Death, and Hades was following close behind him. They were given power over a fourth of the earth to kill by sword, famine and plague, and by the wild beasts of the earth."

God is doing away with bulls and bears world wide via the rising of a western world government, as a prelude to the Beast System, foretold in Revelation 13:1-4. Here is an artist's rendition of the seven institution led, world wide oligarchy, that is, beast system. This monster is spread out world wide: it occupies all the ten world regions as proposed by the Club of Rome in February 1974 as documented in the footnote 1. The North American Continent was established as one of these ten regions as documented in footnote 2.

And God is nurturing and developing a Beast Governor, that is a one world ruler, as held forth in Revelation 13:5-10; his word, will and way will rule the nations; there will be no national sovereignty.

And God is preparing a Beast Banker, that is, a Seignior, who also acts as world religious leader, as described in Revelation 13:11-17; he will lead a global monetary authority, which will provide unified regulation of banking globally; he will install a global seigniorage wealth and commerce system (footnote 3); he will have the authority to settle payments on all debts and derivatives; as economic conditions worsen all wealth will be rented out to him.

Soon there is coming a total worldwide financial system breakdown, and eventually, once currencies are totally burned out (footnote 4); then the Banker will demand that all take the charagma, meaning mark, or stamp, or tattoo upon, or ethching in, or badge of servitude, (footnote 5), prophesied in Revelation 13:17: "And that no man might buy or sell, save he that had the mark, or the authority of the beast, or the currency of his name."

Because of the love of money, God who is Sovereign, is doing away with the rule of law, and appointing the rule of men, who are desperately trying to preserve prosperity, financial liquidity and stability. As outlined above their efforts will fail.

If one counts using the Mayan calendar, modern man has been around for about 6,000 years.

Mankind's prosperity is debt based -- it has come throught securitization, that is financialization of debt, such as CDOs, LDOs, and LBOs.

Elaine Meinel Supkis writing in Financial Black Holes relates that "modern capitalist banking systems create increasing DEBT and not increasing wealth!" And she relates, "the desire is for all systems to be over 100% in debt!"

And now, through nationalization of banking by TARP and purchase of Fannie Mae and Freddie Mac, provisions of "loans" to insurance company AIG, provision of commercial paper, provision of dollar swap facilities, and lowering of the interest rate to 1%, Americans are enslaved to Wall Street's debt as well as exposed to the Derivatives Beast it has created.

Man's financial system cannot be saved, despite as Ferguson Oliver relates that zero percent interest rates are on their way. They could be days off in Japan, weeks off in the US and, maybe, months off in the UK.

Earlier last week, former MPC member and extremely illustrious economist, Charles Goodhart, told Channel 4: "Interest rates will go down from now, by how far and how fast nobody knows… They could go to zero. They went to zero in Japan in the 1990s when the Japanese had a recession or depression which went on for a long time and was quite severe."

Then the bond marketplace, independent of Federal Reserve action declared a defacto interest rate hike: the interest rate on the ten year US Government Note, $TNX, increased to 39.70 ... $TNX

The three month chart of DXKSX, compare to ^tnx, hyg, and iyf, reflects the breakdown of trust that occurred between lender and debtor on Septemeber 11, 2008, that is 9-11-2008, when banks discovered they could not sell stock to obtain capital.

Clearly a run on the US Treasuries is underway ... DXKSX.

The lack of trust increased even further, as the SEC has thrown out the fair value rule, and the accountants have withdrawn the mark-to-market standard of FASB 157, and replaced it with mark-to-fantasy assumptions of management: this resulted in a cardiac arrest in lending and a dramatic fall of stock value world wide.

Without trust the worldwide financial system can only breakdown further.

The inevitable world wide financial system collapse, when it does occur will be a fulfillment of bible prophecy of Revelation 13:4

Mankind has had six one thousand year days to develop a workable financial system; mankind's time is up.

In the late 1700's America's Founding Fathers came out strongly for Liberty, Independence And Freedom, and presented rights existing in law with Benjamine Franklin making the statement: "Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters."

I hold that only one is virtuous, one one is righteous, only one is wise, that being the One, Jesus Christ The Lord,

God has a better plan than man and the rule of law, that being the rule of God. It's called the Peace and Prosperity of the Kingdom of Heaven as Allen Ross reveals; and it is coming soon, where Jesus Christ will be ruling and reigning for a 1,000 years from his Temple in Jerusalem as foretold by Ezekiel in Ezekiel 47-48. The prophet is emphatic on the orientation of the temple: it faces east Ezekiel 47:1.

The Prosperity will be administered and overseen by God's elect, that is, appointed caretakers.

The real thing of value that I found today was the time to communicate my thoughts here in the Resourceful Bear Blog.

Footnote 1: The Club of Rome made the call for regional governance in February 1974.
The Club of Rome is the premier think tank comprised of approximately 100 global leaders including scientists, philosophers and political advisors which envisioned totalitarian regional governance and a unifying global ethic --a world consciousness to solve interlocking world problems; and it relates this through published material such as 'Mankind at the Turning Point', and 'The First Global Revolution':

"Therefore we have concentrated out efforts in this report on a number of vital worldwide issues whose mastery we consider essential for man's survival and for an eventual transition into sustainable material and spiritual development of humanity."

"If the human species is to survive, man must develop a sense of identification with future generations and be ready to trade benefits to the next generations for the benefits to himself. If each generation aims at maximum good for itself, Homo Sapiens is as good as doomed."

"In order to achieve balance between regions in global development a more coherent regional outlook must be developed in various parts of the world so that the "preferable solutions" will be arrived at out of necessity rather than out of good will... we are talking about a regional sense of common destiny that will find its expression through appropriate societal, economic concepts and objectives... Such a regional outlook will create a "critical mass" necessary for the practical implementation of new and innovative ways of functioning in cultural, economic, and agricultural areas, especially on the rural level."

Footnote 2: North America is one of of the ten regions of global governance called for.
This region of global governance was announced by George Bush, Vincente Fox and Stephen Harper at Baylor University on March 23, 2005; this triumvirate committed the continent to global principles of security and prosperity as provided in the Security and Prosperity Partnership of North America, the SPP. The leaders called for initiatives of a continental economic congress, and supra regulatory body, that being the North Amrican Competitivenss Council, the NACC, to be supported by Working Groups and Stakeholders who work in harmonizing the institutions and regulations of once formerly sovereign and independent nations into a homeland for the continent's peoples. This North American Union, NAU, is what I call CanMexAmerica.

The Canadian think tank, Frazer Institute, makes a case for The Amero as the North American Continent's Currency relating: "In sum, the alternative methods for creating the benefits of a monetary union have a number of defects and basically are inferior substitutes. If a Canadian consensus emerges that flexible exchange rates are to blame for many of the country's economic ills, monetary union is the preferred alternative institutional arrangement".

Footnote 3: Seigniorage means top dog bank note system.
Seigniorage comes from the Scottish and Bank of England financial system which was devised to maintain the value of currency, The History of Seigniorage Wealth by Elaine Meinel Supkis, February 7, 2008 Money Matters Blog.

Footnote 4: Eventually, there will come an end to paper currencies.
Andy Sutton relates in FinancialSense.com article Anatomy of a Disaster – The Next Stop: "The magnitude of the final quantity of money that must be created is astronomical. From the standpoint of the authorities, it would be best if we continued to go into neverending debt. This way money could be multiplied through the banking system in an ‘orderly’ fashion. The next choices are handouts (think ‘stimulus’ packages), and direct monetization of debt (think outright purchase of new Treasury issues). The multiplier method leads to a ‘slow burn’ inflation such as what we’ve experienced to this point. However, there is an actual moment in time when the population cannot continue to accumulate debt at a level that will perpetuate the fiat system. Then we move to the latter two options which have a much greater likelihood of creating hyperinflation and the eventual end of the paper currency. We have now reached the tipping point where debt accumulation on a meaningful scale cannot continue. Therefore, we are left to watch the remains of the current liquidation of assets then reap the whirlwind of rampant, undisciplined monetary creation".

Footnote 5: Charagma is described by David Deschesne Editor, Fort Fairfield Journal.
The article A Mark in the Right Hand or in their Forehead, Fort Fairfield Journal, July 6, 2005 provides an explanation of Revelation Chapter 13:16-17.

Keywords
currencyofhisname, fulfillment of bible prophecy, end time, last days, events, news, unifiedregulationofbankingglobally, one world government, gma, oneworldgovernment,

A Lack Of Trust Between Lender And Debtor Is At The Root Of The Lending Gridlock

Monday, 6. October 2008, 04:07:13

Love Grows Cold, Chaos

Introduction
A Lack of trust between lender and debtor is at the root of the lending gridlock.

And there are a number of factors causing economic dysfunction.

The factors of economic dysfunction include:
1) Different interest rates between central banks. The US is at 2%, the ECB 4% and the Bank of Japan is at 0.5%; and the BoJ loans aggressively to the well connected. These of late have gone short the EUR/JPY, causing the yen carry trade, better termed the euro carry trade, to unwind, unleashing many deflationary hurricanes.

Interest rate differential investing took the Australian natural resource investing shares up, and then down as can be seen in the ongoing Yahoo Finance chart of Australia stocks, and the metal mining shares, and the Australian Dollar. The Elliott Wave 3 Down is always more sharp than the Elliot Wave 3 Up. Currency traders in London, Hong Kong, Brussels, and the Caribbean Cove Islands became super wealthy on the wave up and also on the wave down by borrowing at 0.5% interest from the Bank of Japan lending window. The ongoing Yahoo Finance Chart of EWA, XME, and FXA shows the recent dissolution of stock wealth caused by currency traders as they work interest rate differentials to their advantage ... EWA, XME and FXA

The chart of the yen carry trade, that is EURJPY, FXE:FXY, shows the power of interest rate differential working in reverse ... FXE:FXY

2) The interest rate on the 10 Year US Treasury Note, $TNX, and the 30 Year US Government Bond, $TYX, are too low; that is they do not reflect the risk of default on home ownership. And they do not reflect the true cost of capital.

Government interest rates being low discourage saving, and encourage speculative investing in gold.

But you know, now that the US Government has nationalized the housing industry by acquiring the two private lenders, Fannie Mae, and Freddie Mac, and will become title owner of foreclosed homes given the passage of EESA, the default risk of loss of capital investment has gone down considerably now that the risk has been passed on to the US taxpayers.

And the interest rate on the 10 Year note could go lower. I personally want to go 250% long the 10 Year interest rate, with the Direxion mutual bond fund DXKSX; but am restrained from doing so by the knowledge that EESA provides the authority for the Federal Reserve to go to zero percent interest rate. And I am very troubled by that prospect.

Unfortunately, we live in a topsy turvy world where down is up, and left is right. The Cat In The Hat has unleashed a party globally. Will it return to set things right? Or will a global monetary authority, GMA, arise to provide unified regulation of banking globally?

3) The 911 of capitalism, investing and lending occurred on September 11, 2008, when banks and other financial institutions found that they could not obtain capital by selling stock.

The banks started to turn off the spigots of lending, driving corporate finance officers and Treasurers to the press to moan bitterly.

The reason banks became unable to sell stock on September 11, 2008 include:
1) no one knows the true value of the CDOs, level two assets, and level three assets on the banks balance sheets.
2) no one knows how much asset, that is debt, is kept off balance sheet in QSPEs, and SIVs.
3) no one knows what exposure to counterparty risk the banks have to the settlement of Lehman Brothers credit default swaps.
4) tax rules of accounting started to disfavor investing in banks.
5) interbank lending became non existent because banks are unsure if their peer is going under.
6) few believe the S&P and Moody's ratings on suretors and guarantors such as Radian Group, RDN, Ambac, ABK, and MBIA, MBI.
7) few believe the S&P and Moody's rating on mortgage backed securities.

4) Most tax free municipal bond funds and bond funds want to own short term municipal debt and short term US government debt, and nothing else, the demand being reflected in the short term government bond ETF SHY moving higher, and the debt ETFs, and the tax free municipal bond mutual funds and municipal bond ETFS lower beginning 9-11-2008, when banks could not sell stock to obtain capital; these caused all lending markets to become "dis-eased".

Debt ETFs include LQD, HYG, CFT and EMB which will likely continue to loose value; and the principal value of the tax free municipal bond mutual funds like USSTX, will likely continue to fall, as interest rates rise. And the municipal bond ETFs such as MUB and TFI will likely continually go lower as well ... Chart of SHY, LQD, HYG, CFT, EMB, and MUB.

Jeremy R. Cooke of Bloomberg in September 30, 2008 article reports: "U.S. state and local government bonds are headed for their worst quarterly performance in as much as 14 years as a wave of Wall Street consolidation undermines support for the municipal market. Tax-exempt bonds have fallen 3.15 percent since the end of June, according to Merrill Lynch & Co.'s total-return Municipal Master Index. The quarter's decline may exceed the 3.18% drop in the second period of 2004, which was the steepest since the 5.75% decline in the first three months of 1994."

Jeremy R. Cooke of Bloomberg in October 3, 2008 article reports: "U.S. states and municipalities were all but shut out of the tax-exempt bond market for a third week, as borrowers managed to sell less than 15% of a typical week's new fixed-rate issues, data compiled by Bloomberg show ... 'This market has run into trouble again,' T.J. Marta, a fixed-income strategist at RBC Capital Markets ... said ... 'The most recent dislocation will exacerbate the negative developments already taking place for state and local government finances.'"

Michael McDonald in October 2, 2008 Bloomberg article repots: "Massachusetts Governor Deval Patrick said he is seeking budget cuts amid financial market turmoil that forced the state this week to cancel plans to borrow money to fund operations. The governor, citing a $223 million shortfall in tax collections, ordered a spending reduction of 7%. The state this week canceled the sale of commercial paper as investors boycotted the markets."

These reports tell me that the municipal bond market has utterly broken down. This is a silent neutron bomb that is going to cause massive layoffs in state and local governments; these governmental units will basically have to go into shut down mode; except for some low level of law enforcement there will be a swift shut off of services.

Cynthia Koons of Dow Jones in October 2, 2008 article reports: "The junk bond market suffered its largest monthly decline in more than 20 years last month ... The widely quoted Merrill Lynch Master II index was down 8.3% for September, spelling year-to-date returns of negative 10.6% ... 'Underlying it all is just a breakdown of ordinary banking, the nuts and bolts of the credit markets, counter-party approvals, and the commercial paper market,' [Marty] Fridson said."

Denis Maternovsky and William Mauldi in October 3, 2008 Bloomberg article report: "Developing nations' borrowing costs jumped to the highest in four years compared with U.S. rates while stocks headed for the worst week since 2002, as the global banking crisis drives investors from emerging markets ... The extra yield investors demand on developing-nation bonds over Treasuries increased 14 bps to 4.45 percentage points, the highest level since 2004, JPMorgan Chase & Co.'s EMBI+ Index shows."

5) We have arrived at the point where the government is the 'only lender' and 'last lender of resort'. As mentioned above banks have turned off their spigot of liquidity. The TAF, TSLF, and PDCF stock market rally ended May 19, 2008. Ever since, all liquidity that has been supplied by ongoing TAF and recent $600 billion emergency liquidity injection, has been trapped. Scott Lanman of Bloomberg details the injection: "Commercial banks and bond dealers borrowed $348.2 billion from the Federal Reserve as of yesterday, an increase of 60% from the prior week amid a worsening credit freeze. Loans to commercial banks through the traditional discount window rose about $10 billion to $49.5 billion ... The total surpassed the previous record after the 2001 terrorist attacks. Borrowing by securities firms totaled $146.6 billion, up from $105.7 billion. Under a new emergency program announced September 19, banks borrowed $152.1 billion as of yesterday to buy commercial paper from money-market mutual funds, more than double a week ago."

I believe that the $700 billion of EESA bailout liquidity will be evaporated, that is vaporized, as soon as it is injected.

6) Cash hoarding by banks and corporations as reported by October 2, 2008, The Economist Print Edition article World On Edge that reports: "Banks used to borrow from each other at about 0.08 percentage points above official rates; on September 30th they paid more than four percentage points more. In one auction to get dollar funds overnight from the European Central Bank, banks were prepared to pay interest of 11%, five times the pre-crisis rate. Astonishingly, rates scaled these extremes even as the Federal Reserve promised $620 billion of extra funding.

Bankers have always earned their crust by committing money for long periods and financing that with short-term deposits and borrowing. Today, that model has warped into self-parody: many of the banks’ assets are unsellable even as they have to return to the market each day to ask for lenders to vote on their survival. No wonder they are hoarding cash.

This is why those politicians who set the interests of Main Street against those of Wall Street are so wrong. Sooner or later the money markets affect every business. Companies face higher interest charges and the fear that they may one day lose access to bank loans altogether. So they, too, hoard cash, cancelling acquisitions and investments, in order to pay down debt".

Capitalism, investing and lending is a dead thing. It has been replaced by state corporatism, that is state corporate rule.
Corporatism has come by three means:
1) Announcement of framework agreements, declaration of initiatives, and provision of working groups and councils. Two cases in point being the Declaration of EU US 2008, at the White House, and the Security And Prosperity Partnership Of North America, the SPP at Baylor University. The former has generated a demand that Iran reveal its nuclear ambitions or face confrontation. The latter has produced the North American Competitiveness Council, the NACC, as well as various Working Groups.
2) Ruling, that is edict, of governmental agency. A case in point being that of the SEC to abandon 'fair value accounting rules' on October 2, 2008, which will only make the credit dis-ease greater. Another case in point being the ban on short selling; I lost a whopping 30%, when I was forced to close out of my investment in the 200% inverse of the financial sector SKF as a short covering rally took financial stocks massively higher.

3) Legislative granting to rulers unprecedented authority and power. A case in point being the granting to the chairman of the Federal Reserve, dramatically new authority and power in the passage and signing of Emergency Economic Stabilization Act, which provides the TAPR facility. The truth about EESA is that it is a weapon of mass financial destruction.

The fairy tale neoliberal laissez fair economic policies of Milton Friedman died September 11, 2008. The age of asking "free to choose" is gone. I once thought as a child, but now being an adult, I put the childish ways and thinking aside.

Who is trustworthy?
Trust is a two way street.

Lenders, being capital impaired, have become untrusting.

And debtors, seeing high interest rates, consider banks to be untrustworthy.

Reports of distrust include
1) ... Philip Blenkinsop and Michele Sinner in October 4, 2008, Reuters report: "Belgium and Luxembourg scrambled on Saturday to find a buyer for the remains of troubled financial group Fortis and mulled a further nationalization after the Netherlands took over its Dutch units.

The break-up of the cross-border banking and insurance group, less than a week after a first rescue attempt in which the three governments injected 11.2 billion euros ($15.4 billion), highlighted the ferocity with which the global crisis has swept into Europe.

Luxembourg's economy minister said French bank BNP Paribas was one possible bidder for parts of Fortis and a solution had to be found by the end of the weekend.

"BNP Paribas is one among many possibilities," Jeannot Krecke told Luxembourg's RTL radio station.

"Now we have to return to the solution we were looking at last Sunday, that is to find a strong partner because the Belgian government is the main shareholder of Fortis Luxembourg Dutch media were split on Saturday over the government's decision to put the Dutch units under state control.

Calling it a baffling move, leading financial daily Het Financieele Dagblad said in an editorial: "In one move, ABN AMRO and Fortis have become the most trustworthy banks in the market. This is an unfair competitive advantage during the current credit crisis."

But left-wing daily De Volkskrant said the move was unavoidable due to the uncertainties swirling around ABN AMRO and as depositors withdrew their money.

Fortis, a Belgian-Luxembourg group, is now made up of Fortis's banking and insurance activities in Belgium, Fortis Banque Luxembourg, international operations, notably banking in Poland and Turkey, and asset management arm Fortis Investments".

2) ... Nouriel Roubini on Friday Oct 3, 2008 in article Financial And Corporate System Is In Cardiac Arrest: The Risk of the Mother of All Bank Runs relates: "Several hundreds of billion dollars in emergency liquidity support to the financial system by the Fed and other central banks in the last week alone have not been enough to stop the seizure of liquidity in interbank markets and the shut down of financing for the corporate sector as counterparty risk is now extreme (no one trusts any more in this crisis of confidence even the most reputable and trustworthy financial and corporate counterparties".

3) ... See Think Feel in article Seizure relates: "Short-term money markets remained in turmoil, heightening the likelihood the credit pullback may harm the broader economy.

Inside markets that are hidden to most Americans -- the overnight Treasury repo market, the short-term commercial-paper markets and the floating-rate municipal bond markets -- action was unfolding that will soon affect how companies meet payroll, pay vendors and make investments.

These markets allow companies with ample reserves to squeeze out a few extra dollars by investing the cash in securities with life spans of just days or weeks. All that cash helps keep the economy lubricated by distributing money to other firms that need short-term loans to buy inventory or meet payroll.

Some distressing signs emerged Thursday from one of the most important of these marketplaces, the commercial-paper market, where companies borrow money for periods of just a day to up to a year. The market contracted by $61 billion in the week ended Sept. 24, its largest decline since August 2007, when investors fled over some of the first warning signs of the subprime-mortgage crisis. In the latest week, banks and other financial companies accounted for most of the decline, as they took $50.3 billion of paper off the market.

The decline follows a $52.1 billion shrinkage in the week ended Sept. 17, which reduces the overall market to $1.702 trillion".

And continues citing (“Debt Market Distress Spreads; Commercial Paper Shows Signs of Tightening as Investors Flee.” Liz Rappaport and Anusha Shrivastava. Wall Street Journal: September 26, 2008. pg. C.1)

"NOTHING ELSE MATTERS if markets cease to function. That is the end of capital-ism as we know it.

We have long put our trust in the notion that value and worth were established by the invisible hand of buyers and sellers exchanging in an efficient nexus of supply and demand.

If we see markets ceasing to establish reliable indications of value and worth, if market prices appear capricious and disconnected from reality, we lose confidence in the validity of the market mechanism. We hold back from participating; there is no market, and we can't see anything.

Once this unreliability and invalidity catch hold in the minds and hearts of those who otherwise would be market participants, markets seize-up and a market-based economy falters and halts.

If this occurs in money markets, then other markets likely will freeze too.

Faith, hope, belief, trust -- the eyes, ears, mind, heart, spirit and soul of our world".

4) ... The Foreign Currency Exchange Outlook in September 22, 2008 article How $200 Billion Of Bad Mortgages Could Have Created Such A Falling Pyramid Effect relates: "We are having a hard time understanding how $200 billion of bad mortgages could have created such a falling-pyramid effect. It’s true that banks and brokers tried to make a silk purse out of a sow’s ear, with the aid of the ratings agencies, believing modern portfolio theory was the alchemist’s stone, but still, how did something so small become so big?

The answer is that it didn’t.

The $200 billion in liar’s loan mortgages were not magically, virally multiplied to infect every CDO and other alphabet-soup asset class to the extent of $700 billion or $1.5 trillion or any other number.

In fact, because of various accounting and mark-to-model rules, the ultimate owners of a lot of this paper are going to make a tidy profit of it. It’s not bad, just not trusted. (That doesn‘t mean the US taxpayer will get the profit. The agencies tasked with buying and then selling the paper will manage to siphon off the gains to the insiders and interested parties).

The key is “not trusted.” Trust is everything. It’s everything in romance, commerce and finance. In a nutshell, the banks don’t trust one another today, perhaps projecting their own bad actions on others, and the old banker’s principle of “know your customer” is out the window.

You can’t legislate trust.

Critics are moaning about how the fat cats will only get fatter from the bailout while the little guy gets hosed, but anyone with a 401k plan is not complaining too loudly and in any case, the immediate losses or escape from losses is not the main event.

The main event is the loss of trust in society at large, not just the financial sector. The social contract was broken, and it was broken in Washington. Raw naked capitalism may be good at setting optimal prices, but that’s about it. To say total lack of regulation is a necessary corollary of capitalism is to have read no economic history and to misread human nature.

And gosh, isn’t Washington where the rescue is coming from? If a poll were taken today asking the public whether it trusts Wall Street or Washington to “do the right thing,” the answer would be an overwhelming “no.” This is not a political statement (please don’t write) but rather an economic observation.

Trust is essential to economic activity. You need trust to get new companies funded and trade conducted (think of letters of credit, not to mention open account trade). You need trust to let the gas tank in your car go down to one-quarter and not be filling it up every day just to be sure you can get it. You need trust to have a successful economy.

Observers in less developed countries note that the key reason they do not get growth is that they have no banking sector or capital markets.

Well, why not?

In large part because Tribe A doesn’t trust Tribe B.

We can see nothing that Washington or Wall Street can do this week to reverse the situation. In fact, more bad news is surely on the plate. The only thing that can save the US Dollar Outlook now is a Shock from elsewhere, like Germany. (Japan seems safe for the moment.) Aside from the mysterious yen, the US dollar is toast.

5) ... Doug Noland in September 27, 2008, Safehaven.com article Changed Financial Landscape relates "Today's finance-related economic headwinds are Cat-4 (and gaining) Hurricane Systemic Credit Seizure, compared to last year's Tropical Storm Subprime. Federal Reserve-dictated interest rates are extremely low - and the Fed and global central bankers have injected unfathomable amounts of liquidity - yet Credit Conditions have turned the tightest they've been in decades.

The Lehman bankruptcy marked a major inflection point in the confidence of contemporary "money." It was a decisive blow against trust in various money market instruments - the very foundation of our monetary system. "Money" has now tightened significantly for virtually all players that had previously enjoyed cheap short-term financings." (Financings which were used to invest long, Richard)

The Lehman bankruptcy also marked a major inflection point in confidence for the various "daisy chain" players involved in intermediating risky loans into contemporary "money." The market was convinced Lehman was "too big to fail." Its failure inflicted thousands of market participants with losses - from Primary Reserve Money Fund investors caught with short-term Lehman paper to holders of Lehman's long-term bonds. Investors all over the world were impacted.

The hedge fund community suffered mightily. The status of hundreds of billions of derivatives and counterparty obligations was suddenly up in the air or in the hands of the bankruptcy court. And, importantly, huge losses were suffered in the Credit Default Swap marketplace - the marrow of one of history's most spectacular speculative manias. (This created a Liquidity Meltdown, Richard)

Trying to add a bit of simplicity to the Complexity of a Credit Market Breakdown, I'll say the Lehman collapse marked a critical inflection point in at least five major respects: First, the Crisis of Confidence jumped the "firebreak" from risk assets to contemporary "money," shattering trust in various facets of contemporary finance that was forged over decades. Second, it required the marketplace to reexamine exposures to various direct and indirect counterparty risks, a terminal blow for derivatives markets. Third, it pushed the Credit default swap marketplace into full-fledged dislocation and instigated a long-overdue regulator onslaught. Fourth, it decisively burst the "leveraged speculating community"/hedge fund Bubble. This has ushered in another round of problematic de-leveraging and accelerated the reversal of "Ponzi Finance" dynamics. Fifth, it instilled global fear with respect to the risks of participating in the inter-bank lending market with American institutions.

Basically, the Lehman collapse marked the end of "Wall Street" risk intermediation as a significant component of system financial intermediation. Going forward, Credit growth will be chiefly generated by the banking system, supported by various forms of government backing (Fed, FDIC, Washington bailouts/recapitalizations, etc.), the government-operated GSEs, and various forms of federal government debt issuance.

Importantly, this new financial structure will ensure minimal risky lending as well as significantly reduced risk-taking. And from a global perspective, I believe newfound fears of lending to the American financial sector marks the beginning of the end of our economy's capacity for trading new financial claims for imports of energy and goods.

Over time the Changed Financial Landscape will have a profound impact on the underlying economic structure. Our economy will have no alternative than to get by on less Credit, less risk intermediation, and fewer imports.

In the near-term, the effects will be a rapid and pronounced slowdown of our economy's "output."

And while we'll only know over time, I'd bet this new financial structure will allocate much less finance to entrepreneurial activities, productive endeavors and the asset markets - while at the same time providing ample (government-directed) purchasing power to ensure stubborn consumer price inflation."

6 ... Asha Bangalore of Northern Trust in October 2 2008, Daily Global Commentary, October 2, 2008 relates the ripple effects of frozen money markets: "Latest evidence indicates that a thaw of frozen money markets is not around the corner. The spread between the 3-month Libor and the 3-month Treasury bill rate is scaling new heights everyday. This reflects the intensity of suspicion about what is contained on the balance sheets of institutions. "The reach of this frozen money market is far and wide because it affects everyday activities of the economy. The cost of inter bank borrowing for the short-term has risen by over 200bps versus the target federal funds rate instead of a few basis points above the target rate. Firms are charged a spread above the Libor rate for their credit lines depending on the risk involved in their business. Anecdotal evidence of a sharp increase in borrowing costs and reduced credit lines for firms with sound credit history has already appeared in main stream media. If firms continue to face tight credit conditions, payrolls may not be met, payments to suppliers may suffer, and job losses will follow. The Senior Loan Officer's Survey of the Fed has ample evidence of tightening of credit conditions which runs counter to the fact that the Fed has eased monetary policy." Current Quote Of The Ted Spread by Bloomberg ... Chart of The TED Spread

7) Bespoke Group reports in October 2, 2008 article Yield Spreads At Record Highs: Up, Up, And Away! Yesterday, we highlighted that high-yield credit spreads were approaching record highs. Less than a day later, high-yield spreads are now at record highs. As of yesterday's close, based on data from Merrill Lynch, the interest rate spread between high yield bonds and comparable Treasuries rose to 1,124 basis points. This breaks the previous record of 1,120 basis points that we saw in October 2002, and given today's market action, these spreads are only likely to rise.

Printing more money won't make the credit dis-ease go away
The TARP facility provided under the authority of EESA, is definitely the printing of more money, right out of thin air.

Elaine Meinel Supkis relates the cost of credit default swaps has gone up, and this makes credit more expensive even to the best of companies; she says "The cost of credit defaults has shot up because no one is paying up after selling their services! The default credit default payee are the unfortunate taxpayers of the G7 nations, in particular, the USA. So many investors [the Chinese and OPEC] have been badly burned and require a lot of persuasion before handing out the legendary 'savings glut' money to various people in the G7 seeking loans. This is natural in all contractions. And the central banks thought, all they had to do was print more money and voila! More credit would be available".

One is guided by either a philosophical belief or spiritual doctrine.
Philosophical beliefs or spiritual doctrines form the basis of one's knowledge, and they influence one's action which has moral consequence. And the government's and business leader's beliefs form policies which guide a nation's economy and influence.

I trust gold will better preserve my wealth than Bernanke's banks.

Yes great trust that gold will preserve and protect my wealth; and no trust that Bernanke and his banks will do so.

I recommend diversification of investment in gold in four locations immediately because of financial system instability and lack of liquidity: the gold ETF, GLD, directly through streetTRACKS Gold Trust, and not in a brokerage account; two BullionVault, three GoldMoney; and four a limited number of gold coins.

I am guided by the Christian doctrine of the Election of Grace
I find God and His Word alone to be trustworthy.

I believe in the doctrine of the Election of Grace. And thus I believe that God from eternity past foreordained those to be saved; that He choose me to believe in Him, and to stimulate me to call upon the Name of the Lord, and be saved; and that he will preserve me from the corruption of sin until my Judgment Day.

I trust in God, I believe Him to be Sovereign, and what ever He provides is fine by me.

Keywords
nationalized banks, nationalization of banking, liquidity crisis, liquidity evaporation, liquidity vacuum, evaporation of liquidity, financial system meltdown, financial system breakdown, liquiditymeltdown, liquidity meltdown, liquidity evacuation, financial armageddon, crisis of confidence and trust,

Wall Street Bailout May Result In Eviction Of Rent Controlled Tenants

Saturday, 4. October 2008, 23:39:57

Love Grows Cold, Desperate New York

By Bennett Baumer of the New York Independt reports that Wall Street’s mortgage and credit crisis will have a huge price tag and tenant advocates fear one casualty could be a swath of New York’s affordable housing stock. Call it 'Wall Street stabilization over rent stabilization'.

And the stakes are rising as private equity landlords across the city feverishly move to evict rent-stabilized tenants in favor of higher paying renters to pay staggering mortgages. If these landlords default, tens of thousands of apartments could be in danger.

Tenant lawyers specifically point to 'Resolution Trust Corporation v. Diamond', a case from the early 1990s that allowed the government-run 'Resolution Trust Corporation', RTC, to resell defaulted mortgages at a higher rate by overriding tenants’ rent-stabilization protections in foreclosed buildings. Created in 1989 as a response to the savings and loan crisis that saw hundreds of thrifts go under due to reckless lending, the RTC bought up $394 billion of bad assets (mostly commercial leases) and resold them to the private sector before dissolving in 1995.

Now, as Congress moves to clean up after Wall Street’s binge, business interests are already calling for the creation of an entity modeled on the RTC to soak up investors’ bad assets.

“If [Congress] follows the resolution trust model, I believe the [trust] will be able to evict tenants,” says Bob Katz, an attorney at the tenant law firm Collins, Dobkin and Miller. “RTC v. Diamond allows federal preemption; so where the federal government expressly enacts law, it takes precedence over state law.”

More than 2,200 New York City homeowners — in largely African-American and Latino neighborhoods — have already defaulted on their mortgages this year, according to real estate research website Propertyshark.com.

Yet, an even greater default crisis is lurking in New York City. Highly leveraged corporate landlords that have bought up tens of thousands of rent-stabilized apartments could be the next victims of the housing crisis, leaving tenants in the lurch.

“RTC v. Diamond makes really clear that the federal court doesn’t feel rent stabilization extends protections,” says Jeffrey Brooks, a staff attorney at Gay Men’s Health Crisis, an AIDS advocacy group that represents HIV-positive tenants. “Our clients were forgotten once before, we don’t want them forgotten again.”

The Association for Neighborhood and Housing Development estimates that private equity finance groups have bought approximately 90,000 rent-regulated apartments across the city in the past four years, according to the The Villager.

Many private equity firms’ ability to pay their gargantuan mortgages is predicated on substantially increasing rents by evicting rent-stabilized tenants and replacing them with market renters.

In one case, the landlord of the 1,232-unit 'Riverton Houses', a seven building complex between Fifth Avenue and the Harlem River and 135th and 138th Streets in Harlem, could default on his $225 million mortgage as early as the end of October, according to the New York Times.

The landlord, Larry Gluck, purchased the building with backing from the private equity firm, the Rockpoint Group. Almost 90 percent of Riverton tenants are rent-regulated and protected from eviction as long as they pay their rent on time and the apartment is their primary residence. These tenants could face an uneasy future if Gluck defaults and RTC v. Diamond comes into play.

The scale of this decade’s bailout could be more than $1 trillion, and if private equity held buildings begin to default, it could send shock waves through the city’s affordable housing market.

“If the government follows the trust model, it would be attractive to the Bush administration to do away with rent regulations,” tenant attorney Katz says.

Keywords
rivertonhouses, rentcontrols, rent control, rentcontrol,

Nursing Home To Close As New Hampshire Cuts Medicaid

Tuesday, 9. September 2008, 15:00:17

Love Grows Cold

Nursing home gives residents eviction notice

Martin F. Downs of The Valley News reports that the Alice Peck Day Memorial Hospital has advised residents in its Extended Care Facility that they will be closing the facility in 18 months, due to Medicaid cuts.

Part of a nationwide trend, New Hampshire cut the facility’s Medicaid reimbursement rate this year by 7 percent, for an average payment of about $140 per patient per day.

“It’s very difficult for nursing homes at this point in time,” said Paul Gardent, former executive vice president at Dartmouth-Hitchcock Medical Center and a senior faculty associate at Dartmouth Medical School.

The Liquidation Thesis require that more Medicaid and Medicare cuts will be forth coming.

The Liquidation Thesis holds that government services and payments, service sector jobs, public and private debt of all types, and unfunded retiree benefits are going to be liquidated, that is done away with.

The Investment Demand For Gold Grows As The Dollar Rises On News Of The Freddie And Fannie Bailout

Tuesday, 9. September 2008, 02:27:23

HUI, Zeta, Love Grows Cold, EUR/JPY ...

Since August 15, 2008, there has been a measurable investment demand for gold, $GOLD, even as the US Dollar, $USD, has risen; this even more so since the US government has taken over Freddie Mac, FRE, and Fannie Mae, FNM .... $GOLD closed at $802 ... $USD closed at 79.47

The MSN Finance chart of DGP, compared to FXE, FXY, UUP, TLT, since August 15, 2008, communicates that both gold and the Dollar are up, as the yen carry trade, the EUR/JPY, better called the euro carry trade, has unwound; and the chart communicates that US Treasuries will likely sell off in response to the bail out of the two mortgage guarantors .... DGP, compared to FXE, FXY, UUP, TLT.

The 3 month ongoing Yahoo Finance chart of DGP, compared to FXE, FXY, UUP, TLT, relates the very same thing: an up trending gold and dollar, since August 15, 2008, and an unwinding yen carry trade, with US Government Bonds likely topping out in value ... DGP, compared to FXE, FXY, UUP, TLT.

The ongoing 5 day Yahoo Finance Chart of $TNX, compared to $TYX, shows the bond market place has declared a defacto interest rate hike in response to the Statement of James Lockhart director of the Office of Federal Housing Enterprise Oversight, OFHEO, who will head the Federal Housing Finance Agency, FHFA, being created to oversee mortgage backers Fannie Mae, FNM, and Freddie Mac, FRE ... ^TNX compared to ^TYX

Stockcharts.com shows $TNX turning up today from a spiked bottom... $TNX ... Mortgage rates and all interest rates will be heading higher now.

Today is a watershed day in investment history: we have likely reached Peak Treasuries.

The rewards of mortgage securitization have been privatized; and the losses of home ownership socialized to the public, investors and the world at large: the US Taxpayer is now on the hook for the debt of the two mortgage underwriters.

A run on the US Treasuries will likely now commence as investors gain greater insight and clarity into the true and ongoing cost of the nationalization of the US mortgage industry.

US Treasuries, TLT, rose to a almost a new weekly high. The zero coupon mutual bond fund, BTTRX, likewise ... TLT weekly and BTTRX weekly

Here is TLT Daily ... TLT Daily closed at 95.88 on September 8, 2008.

Yet the futures market place treasuries, $USB, has turned down. And the ratio of US Treasuries, to futures Treasuries, TLT:$USB, suggests that the cash market place in government bonds is over-extended, that is overbought ... TLT:$USB

The Resourceful Bear says: "TLT ain't no life boat of safety ... it's a looming Titanic!!" Yes the futures market investors have abandoned ship.

DXKLX Direxion 10 Year Note Bull 2.5 Fund will be going down ... DXKLX

DXKSX Direxion 10 Year Note Bear 2.5 Fund will be going up. DXKSX

The homebuilding, banking and value stocks rose today.
the Homebuilding, XHB,
the Regional Banks, IAT,
the Multicap Value, FAB,
the Large Cap Value, FTA
the Small Cap Value, RZV
the Russell 2000 value, IWN.

The 3 month ongoing Yahoo Finance chart of IAT, compared to FAB, FTA, RZV, IWN shows how the value stocks are driven by the banking sector. .... IAT, FAB, FTA, RZV, IWN

The one year chart of value stocks shows how the small cap value stocks were terrifically injured by the Citigroup CDO Bust of October 8, 2007. Given the failure of securitization and financialization, one can truly say we have reached the end of value investing ... IAT, FAB, FTA, RZV, IWN

The growth stocks, that is the NASDAQ stocks, QQQQ, $NDX, continued to fall lower; it closed at 43.31; which is below support at 44 ... QQQQ

The NASDAQ was led lower today by:
the broad line semiconductors, CY, which is set for a massive fall lower.
the semiconductor memory chips, SNDK which manifested a lollipop hanging man candlestick
the communication stocks, RIMM, AAPL, QCOM All of which are now perched at the edge of massive head and should patterns in their weekly charts.
the biotechnology stocks, XBI, This ETF is also on the edge of a massive head and shoulders pattern.

It's the end of a growth age; specifically the end of a bullish age of prosperity in the Nasdaq 100, QTEC. When one one compares QTEC, to SMH in the two year ongoing Yahoo Finance chart, one has to ask, "which of these two are going to fall faster"? And by implication which is a better investment, SSG or QID, as seen in the three month ongoing Yahoo Finance chart? Personally. I think QID will outperform SSG from now on out.

The S&P, $SPX, SPY, manifested a massive lollipop hanging man candlestick at its 50 day moving average; thus giving the clarion call to the end of a dollar driven stock rally ... SPY

The Dow, DIA, $INDU, manifested a kind of dragonfly candlestick ... DIA

The Russell 2000, IWM, $RUT, manifested a harami at 72.48, which is at the apex of a 'broadening top pattern' that goes back to May 1, 2008; all I can say is "lookout below" ... IWM

The Dollar Rally in stocks ran up Autozone, AZO, America's Car Mart and Dollar Thrifty Auto Group; these are now terrific short selling opportunities .... AZO, CRMT, DTG.

Petsmart, PETM, has been a discretionary and retail leader in the Dollar Stock rally that began July 14, 2008 when the yen carry traders sold oil to take profits and bought financial, homebuilding, retail, biotechnology, consumer, retail, and health care stocks ... PETM

Consumer pharmaceutical company Johnson and Johnson, JNJ, has been a dollar stock rally leader as has Walmart, WMT ... JNJ and WMT

UUP has gone parabolic up; and today manifested a gravestone doji; this indicates a market top is coming in the US Dollar, that is, $USD .... UUP closed at 24.56 in a gravestone doji and $USD closed at 79.47

The battle between the US Dollar and gold can be followed in the ongoing 5 day Yahoo Finance of UUP compared to GLD.

And the battle can be followed on the INO.com Dollar, Dow and Gold Page as well.

For reference and insight in the ongoing Gold and US Dollar, Kitco.com provides good reference.

Although, there is a bullish cross in the US Dollar chart; and a bearish cross in the gold chart, I believe the dollar will capitulate; and gold arise the victor to rule currency trade world wide.

Yes it's reasonable to believe that the Dollar is topping out: the day off Peak Dollar is fast approaching. As stocks fall from here, risk aversion will manifest to being long the US Dollar. I fully expect the USD/JPY to sell off from 108.035 as is seen in this on going FXStreet chart of the USD/JPY, aiding in the fall of the Dollar.

And I am hoping that the EUR/JPY will rise from 152.62 as is seen in this ongoing FXStreet chart of the EUR/JPY.

Stockcharts.com shows the EUR/JPY to be 1.54 ... FXE:FXY is 1.54 on August 8, 2008.

Here is ongoing five day Yahoo Finance chart of the EUR/JPY

My Investment Maxim Is Two Fold
Sell at market tops; buy at market bottoms.

In a bull market be a bull; in a bear market be a bear. In a bull market, one buys on dips; in a bear market, one sells into strength.

The Investment Application
We are still in a bear stock market, therefore I recommend the use a trust account to
1) buy 200% inverse of the financial sector SKF; The spike down in SKF to 103.24 is a buy signal.
2) sell short the guarantors: MBI, ABK; MBIA shows a dark cloud cover candlestick; and Ambac a massive lollipop.
3) sell short the suretors: RDN, MTG, SUR, AGO, SCA, Radian Group manifested bearish engulfing today.
4) sell short homebuilders: XHB, MTH, BZH, HOV, SPF, TOL The homebuilders ETF, XHB, closed in a massive long legged doji, communicating the active battle between bulls and bears.
5) sell short DEE as it is terrifically overbought; sell DEE at 29.41 ... DEE

I recommend a small short position in USD/JPY in a Forex account, if one can obtain a put above 108.

And I recommend the purchase of gold at BullionVault.com and GoldMoney.com as protection against systemic risk events -- the risk of a financial marketplace breakdown.

And in as much as we are in a market bottom for DXKSX at 13.40, for corporations, I recommend a purchase of DXKSX.

The other reason for buying gold is that the former well springs of liquidity, the USD/JPY and the EUR/JPY, have now gone toxic on risk aversion to inflation, debt and decreased profit and growth opportunity.

These currency pairs will now be the 'saws of destruction' working to cut asunder fiat wealth; and in the process of sawing, gold will fall out as the world's currency and measure and means of garnering and preserving wealth.

In as much as gold relative to US Stocks, GLD:VTI, continues to stay above 1.15, there is an measurable ongoing investment demand for gold ... GLD:VTI.

The investment demand for gold is seen in the 3 month ongoing Yahoo Finance chart of GLD compared to GDX, XME, SLX, EEM, SLV .... GLD, GDX, XME, SLX, EEM, SLV. The story here two fold: First, the unwinding yen carry trade, FXE:FXY, has caused disinvestment from the natural resource stocks. And second, disinvestment from commodity currencies, the Euro, FXE, the Australian Dollar, FXA, and the Canadian Dollar, FXC, has caused disinvestment from the emerging markets as risk aversion has grown to being invested long, due to rising producer price inflation, diminished growth prospects, and the level two and level three assets at banks and investment bankers.

And the investment demand for gold is communicated in the three month on going Yahoo finance comparison of the gold ETF, GLD, to the commodities ETF, RJI, and the oil ETF, USO ... GLD, RJI and USO.

Moise Levi has a helpful chart analysis on gold; and relates "Conclusion ; not a buyer yet ; let us first see another higher lows first, mid to long term trend is down".

West Texas Intermediate Crude, $WTIC, closed at 106.25; which is approximately near the level in Rick Pendergraft article How the Government’s Short-Selling Ban Killed Oil Prices.

The HUI Indexed precious metal mining shares, that is the gold stocks started to disconnect from the price of gold in November 2007 and even more severely so in March 2008 ... ^HUI and GLD ... March fall in the HUI Shares

Kondratieff Winter Has Set In
When I look at the Eddy Elfenbein chart article September 9, 2008 30 Years of Fannie Mae and reflect that a year ago the prices were closer to 70, it is clear that and age of prosperity that came via securitization and financialization is over.

Kondratieff Winter has set in. Socially responsible investing is sure to fail; it like value investing and growth investing is part of a bygone era. The ETF iShares KLD 400 Social Index, DSI, is an excellent metric of green investing; but investing here is sure to drive one to financial ruin. The lollipop hanging man candlesticks in DSI weekly warn the investor to flee to gold and to short selling ... DSI Weekly

And I present the coffin investment, that is TDX Independence 2040 ETF, TDV, which seeks investment perfromance of the Zacks 2040 Lifecycle Index. The longer one stays invested here, the sooner one will NOT be able to even afford a coffin ... TDV

The Potential Of Systemic Risk Is A Compelling Reason For Investment In Gold
Systemic Risk potentialities abound ... yes little fires continually burn and can become monster blazes that burn entire nations, and even the world financial system to the ground ... that is why one should be invested in gold.

Here is just one of many systemic risk potentials that exist today:

Oliver Biggadike and Shannon D. Harrington of Bloomberg in article Fannie, Freddie Credit-Default Swaps May Be Settled report that investors may be forced to settle contracts protecting more than $1.4 trillion of Fannie Mae and Freddie Mac bonds against default after the U.S. seized control of the companies in a bid to bolster the housing market.

Thirteen ``major'' dealers of credit-default swaps agreed ``unanimously'' that the rescue constitutes a credit event triggering payment or delivery of the companies' bonds, the International Swaps and Derivatives Association said in a memo obtained by Bloomberg News today. Market makers for the privately traded contracts will discuss how to settle them in a conference call at 11 a.m. in New York, the document said.

``This is a big deal,'' said Sarah Percy-Dove, head of credit research at Colonial First State Global Asset Management in Sydney. ``The market is not experienced at settling a credit event for a name of this size, so it is a bit of an unknown.

Systemic Risk events do happen. Rob Kirby writing in Financial Sense.com article The Stars are Aligning - But For What? writes that Fannie and Freddie were finally nationalized on Sunday, September 7, 2008 – a date that may very well live in infamy. Shareholders of the mortgage behemoth mortgage giants have been effectively wiped out ... yes wiped out by the US Government ... that's why I recommend gold.

Summary Comments For Today
Capitalism and sound investing died this weekend as Freddie Mac and Fannie Mae were nationalized, state corporate rule now governs commerce, finance, trade and investment.

As Jesse relates: Word For The Day: State Capitalism

Health Care Providers Say California Lawmakers Are Criminally Negligent

Saturday, 6. September 2008, 23:25:00

Love Grows Cold, Chaos

Medicare And Medicaid Cuts Of 10% Or More To Be Forced On California Health Care Providers
Aurelio Rojas of the Sacramento Bee reports that health care providers struggling to keep their doors open today accused lawmakers locked in a record state budget impasse of "criminal negligence." "No financial or political battle is worth the life of even one Californian," Anne McLeod, a vice president for the California Hospital Association, said during a rally outside the Capitol. Representatives of the hospitals, nursing homes, adult care centers and community clinics at the rally said the state owes them more than $4 billion in Medi-Cal services since the new fiscal year began without a budget more than two months ago.

Realted Article
The HollisterFrelance in editorial Budget Can Stop Further Injury To Our Health Care relates that the state's 10 percent cut to Medi-Cal reimbursements will constrict the flow of care to the neediest, further clogging hospital emergency rooms and pathetically reimbursing the few doctors who agree to treat poor patients.

Still, the cuts themselves are a symptom, not a disease. The real culprits are many, but the state's estimated $15.2 billion deficit and the country's broken health care system are good places to start. You can't spend what you don't have.

Our partisan state lawmakers are compounding the problem by, once again, not doing their job and passing a budget. That's the real outrage.

Medi-Cal's reserves are expected to run out in less than two weeks, leaving no money to reimburse the community clinics that provide critical care in our region.

"These are nonprofit providers. They don't have a lot of money sitting in the bank," said Doreen Bradshaw, executive director of Shasta Consortium of Community Health Centers.

One doesn't have to look far to see the seriousness of this situation.

The chief executive of the Eastern Plumas Health Care District, which runs a Portola hospital and clinics, told the Sacramento Bee his emergency room may close unless there's a budget by the end of this month.

With credit tighter after the mortgage crisis, clinics may also find it harder to borrow money to keep the cash flowing and the lights on.

Meanwhile, there's still plenty of light (at least the electric sort) and air conditioning in Sacramento, where Republicans and Democrats show every sign of digging in for a protracted and ideological fight. Secure in their gerrymandered districts, they seem content to choose posturing over progress. What a shame

Commentary by Richard
We have entered the miseries, conflict and chaos of Kondratieff Winter. I hold forth the Liquidation Thesis for your consideration: Government services and payments, service sector jobs, public and private debt of all types, and unfunded retiree benefits are going to be liquidated, that is done away with.

The New York Legislature Cuts Medicaid So Severely It Will Have The Effect Of A Neutron Bomb Culturally Destroying Health Care

Sunday, 24. August 2008, 04:08:15

The Pyramid Society, State Corporate Rule, Sovereignty, Love Grows Cold ...

Introduction
I have reproduced the report of World Socialist Website author Alan Whyte below.

Unfortunately, the New York Legislature decided this week to make most of its budget cuts on the Medicare program and less else where.

The cuts are so severe, that Medicaid is soon going to be a thing of the past in New York state -- physicians and clinics simply will not accept lower Meidicaid reimbursement; the clinics will most likely close.

My analysis is that the low income, the working class, the elderly and the disabled have just lost their health care.

And despite, the massive budget cuts, deficits loom, that are so large, government as it is currently conceived of and organized cannot function in the state of New York.

Unfortunately New York City and State, have both relied economically upon financialization and securitization provided by the investment banking and banking sectors. And now that those services are part of the bygone era of fiat wealth and investment prosperity, massive "black-hole type of deficits exist".

It's as Jesse and David Cho of the Washington Post report in article A Few Speculators Dominate the Vast Market for Oil Trading where Jesse states that: "A few large financial firms, Goldman Sachs and Vitol for example, were able to influence the rules on the exchanges to allow the manipulation of commodities prices, including oil and other energy products.

Enron was an early example of this new found power. The havoc this one company was able to inflict on the State of California is a microcosm of what is happening to the world today.

This report from The Washington Post shows what opened the door for this latest round of market manipulation. Goldman Sachs figures prominently in this story.

The Commodity Futures Modernization Act, along with the repeal of the Glass-Steagall Act, set in motion the events that are battering the financial system today in article How Phil Gramm and the Wall Street Investment Banks Helped to Destroy the US Financial System.

The worst is yet to come. The actions of the Fed and the Treasury are only serving to make the final outcome worse. We are heading inexorably towards an Abyss.

Until reforms are put back into place, and markets and governance are once again efficient and relatively free of corruption, and price discovery and asset allocation is restored to normal functioning, the economy will lurch from crisis to crisis until we are exhausted and collapse.

The best an individual can do is to try and make themselves, their wealth, their family, and their ongoing welfare as independent as possible from the US financial system."

My net analysis here is that the low income, the working class, the elderly and the disabled have just had their health care hit by a financial neutron bomb; yes the infrastructure of health care for the lower halve of society in New York state has just been destroyed by budgetary cuts.

The action of the legislature will immediately pauperized the lower halve of society; and has hastened the day of a financial system breakdown with the result that society will be pyramidal, with the elite at the top, and through stakeholders, from government and business, ruling in the global governance principles, of the Security and Prosperity Partnership of North America, that is The SPP.

I anticipated cuts in government services in my article Liquidation Thesis, where I wrote "government services and payments, service sector jobs, public and private debt of all types, and unfunded retiree benefits are going to be liquidated, that is done away with".

But I did not expect it to come this soon, and I did not expect the cuts to come out of Medicaid "right away"; I expected cuts to come out of general government services and education and transportation, which I see are taking place; but not out of Medicaid at first, like is currently happening.

New York State Legislature Passes Draconian Budget Cuts
In a special session of the New York State Legislature on August 20, lawmakers agreed with Democratic Governor David A. Paterson to make hundreds of millions of dollars in budget cuts in order to reduce the state’s budget deficit for this and future years. The cuts will immediately reduce the $122 billion budget for this fiscal year by $427 million. They are expected to cut next year’s budget by $1 billion and slash another $2.4 billion by fiscal year 2011-2012.

The legislature passed a 6 percent reduction in services, including $141 million in cuts to health care. This includes a reduction to Medicaid funding, which services the health needs of poor people, by $127 million.

The state cuts in payments to hospitals and nursing homes will be especially painful, due to the reduction in matching funds from the federal government.

There will also be a $97 million cut in aid to local governments for various health services, such as nutritional programs. The annual inflation-based increases for Medicare, the health care program for the elderly, have been capped, and this is expected to reduce spending by about $170 million every year.

There will also be a 7 percent reduction to the New York City university system, totaling $51 million, and cuts to various projects in the legislators’ districts, totaling $50 million

Immediately after the special session, the governor employed his own authority to make another round of cuts totaling $630 million. This included reducing the budget of the State University of New York system by $96 million and cutting the Dedicated Highway and Bridge Trust Fund by $41 million. He was able to do this by reducing state agency spending by 7 percent. This is in addition to his decision earlier this year to cut agency funding by 3.35 percent for a total spending reduction of $500 million, which was then followed by his decision to implement a state hiring freeze on June 30.

Social service providers have warned that these reductions will lead to a significant deterioration in vital services. “The cuts that were enacted will inflict real pain on health care providers, health care workers, and the New Yorkers they serve,” said the president of the Greater New York Hospital Association, Kenneth E. Raske.

This fiscal crunch—which is being reproduced in state after state—has been created by a growing credit crisis and recession that have dramatically reduced tax revenues. New York State’s financial condition has been thrown into particular crisis by the billions of dollars that Wall Street firms have lost, plus the layoffs of their employees. Altogether, Wall Street has accounted for about one fifth of the state’s income. The state comptroller, Thomas P. DiNapoli, has reported that tax receipts from businesses were $453 million below projections for the first quarter of the state’s fiscal year.

Before the cuts were passed, the governor’s office had projected that the budget deficit for the next fiscal year would be $6.4 billion, instead of an original estimate of $5 billion. Deficits for the next three years are now estimated to reach $26.2 billion, instead of the original estimate of $21.5 billion. Therefore, these cuts promise to be only the beginning of a series of future social service reductions aimed at offsetting the state’s ballooning deficits. Indeed, Paterson has already suggested that it might be necessary to recall the state’s lawmakers later this year to pass more budget cuts. He expressed concern that tax revenues could shrink further, due to a deepening downturn in corporate capital gains and the shrinking of the bonuses paid to Wall Street employees.

The decline of Wall Street and real estate taxes is also have an enormous impact on New York City’s budget deficit, which according to the city comptroller William C. Thompson is expected to grow from $68 million in fiscal year 2009, to more than $2 billion in 2010, and $5 billion in 2011. In March of this year, the city’s mayor, Michael Bloomberg, sent a letter to all city agencies ordering them to cut 3 percent of their budgets for this fiscal year, which began in July. This was on top of a 2.7 percent cut imposed during last fiscal year and a 4.4 percent budgetary reduction that was projected for the current year. This last cut included a special $324 million reduction to the Department of Education.

In addition, the Metropolitan Transportation Authority (MTA) is also suffering from a budget gap of nearly $900 million. This is partially a result of the falloff of monies earmarked for public transportation such as real estate taxes, due to a slowdown in that market, as well as rising costs, especially for fuel.

As a result, the authority is planning to increase fares next year, after just imposing a fare hike earlier this year. Moreover, the MTA’s budget projections are unrealistically optimistic, considering that the agency is counting on $300 million in additional support from the state and city, which given their own deficits, is nothing more than a fantasy. Indeed, at a recent meeting of the US Conference of Mayors, Bloomberg told reporters that the city is definitely not able to give the transit authority any additional money.

While the public transit system has seen a significant increase in ridership, a substantial share of it no doubt owing to commuters seeking to avoid high gas prices, the fare hikes mean one more attack on working-class living standards.

During the state’s special session, demonstrators gathered outside the Capitol building protesting cuts in health care. Protesters in wheel chairs assembled outside the governor’s office.

Various state employee union heads have also protested. Professional Staff Congress President Barbara Bowen complained that the educational cuts would “slash the only opportunity for college education for thousands of New Yorkers.” The public unions had spent millions of dollars in advertisements aimed at influencing Governor Paterson and the legislators to refrain from cutting programs involving their members.

These same unions predictably gave their support last year to the state’s Democratic Party candidates, and helped Paterson win election as lieutenant-governor, and Elliot Spitzer as governor. Paterson became the governor when Spitzer suddenly resigned in mid-March over a sex scandal, after having served only a little more than two months of his term.

In a year in which all the 212 state Senate and Assembly legislators are up for reelection this November, a number of unions had threatened to withhold their endorsements from any lawmaker who voted for budgetary reductions in education or health care. There was no indication that the threat had any impact. Both Democratic and Republican politicians voted overwhelming for the cuts. The Senate voted twice by a margin of 51-6 for the package, while the Assembly first voted 128-10 and then 131-7 to approve the draconian budget reductions.

On August 19, 2008, The New York State Fiscal Situation Was Described As Dire ... A 6.4 Billuon Dollar Deficit Is Being Estimated According To Bloomberg
Henry Goldman and Michael Quint of Bloomberg relate that "New York's Legislature will meet today at Governor David Paterson's request to consider a menu of spending cuts totaling $1 billion aimed at narrowing a $6.4 billion budget gap anticipated next fiscal year. While the Democratic-controlled Assembly favors higher income taxes for millionaires, Republicans who control the Senate say they are against any increase and oppose cutting health care, education or the workforce. Paterson has asked lawmakers to trim expenditures in the $121.3 billion budget before weighing higher taxes. 'What we're going to find out in the very near future is that we may have to do all of these things,' Paterson said ... The state's fiscal situation is 'more dire' than at any time since the Great Depression of the 1930s, he said."

On August 19, 2008, A Stand Off Exists Between Democrat And Republican California Legislators Over The State Budget
Justin Scheck of the Wall Street Journal reports that: "California's months-long budget standoff hit a low Sunday night when an emergency State Assembly meeting failed to produce a compromise between Democrats and Republicans over how to compensate for a shortfall exceeding $15 billion. At issue is the Democrats' proposal to make up for the deficit largely by increasing taxes on California's wealthiest residents -- a plan that Republicans oppose. In a vote Sunday, not a single Assembly Republican voted for the plan to raise $6.7 billion in revenue largely through income-tax increases. Republicans account for 32 of the assembly's 80 seats, but California requires that two-thirds of the legislature approve the budget. 'We're fundamentally saying 'no tax increases,' said Mike Villines, the Assembly Republican leader. If the tax standoff continues, California state workers could have their pay reduced to minimum wage, and the state could be forced to take out high-interest loans to fund ongoing operations

Related New York Woes
Patrick McGeehan of the New York Times relates: "With unemployment on the rise, New York State's jobless benefits fund is likely to run out of money again in early 2009, if not sooner, according to state officials and labor market analysts ... 'We know that the trust fund is not where we'd like it to be,' said Nancy E. Dunphy, the state Labor Department's deputy commissioner for employment security... Ms. Dunphy said the state fund, which is the source of all the standard unemployment benefits paid out to New York residents, now totals about $760 million. That is about $90 million less than at this time last year."

Keywords
newyork

Love Central

Thursday, 31. July 2008, 19:42:34

Love Grows Cold

God, The Father, has a "honey bucket" of love, it's located "in Christ Jesus" and "in the Beloved"; and I was made accepted there.

The reference says, "He made us"; I did not have a choice, I was made accepted.

God, the Father chose me; I did not choose Christ.

And his choice was from before the foundation of the world.

I am so very fortunate to be located in the outpouring of his tender care and most gracious oversight.

She Had A Helpmate

Sunday, 20. July 2008, 23:20:16

Love Grows Cold

While out and about today, I took the local bus from the downtown station; and as I always do, I observe the people.

There was a young woman there, fair complected with blonde hair blowing in the breeze, and she had a bag of diapers in one arm and a young child in the other. I noticed that she had a helpmate -- a young man, fit with short hair, with stroller in hand. I pray his love will not grow cold.

It looked like they were getting along well.

How fortunate she was and is ... I cannot imagine how difficult it would be and is going to be, to have a young child, and be without a helpmate in what is coming.

I take the bus frequently, I seldom see a middle class and above person: it usually is the lower class, retired, student, and mentally ill who go by public transportation. Cost here is $20 per month; it is only 10% of the cost; the rest is paid by sales tax and Federal grant. The service is quite excellent, even on the weekends and into the night.

Richard, your blog host, eats one meal a day at a soup kitchen, cuts his own hair, shops garage sales for clothes, and uses a bicycle and bus to get around.

I bet you thought I was like wealthy ... Well, I do have a small investment portfolio, and a small bank account ... but as for any sizeable amount of gold and silver I have none.

So like why do I write on the investment demand for gold? Well, one reason is that I seek the reward that flows to your account; that is I write simiply for your well being; and I do not want, nor do I receive any monetary reward.

Arsons Increase As Mortgage Defaults Rise

Sunday, 6. July 2008, 18:26:28

Love Grows Cold, Chaos

Kathleen M. Howley of Bloomberg reports that "At 10:40 p.m. on April 27, a blaze at the beige Victorian house at 19 Nye St. lit up a neighborhood littered with boarded-up homes on the north side of New Bedford, Massachusetts ... The house had been abandoned after the owner defaulted on a $240,000 home loan from GreenPoint Mortgage Funding ... a ... lender that shut down in August, 2007. The fire was one of four suspicious blazes in foreclosed properties that month in the southern Massachusetts city. All are under investigation. The biggest surge of mortgage defaults in seven decades coincides with an increase in blazes in foreclosed properties ... ‘The more empty houses we have, the more fires we are going to see,’ said James Wright, chief of the Nevada State Fire Marshal Division ... ‘It’s particularly dangerous for firefighters, because they don’t know what condition these buildings are in or what they might find in them.’"

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