International Forecaster Weekly

Insider Profiting Will Bring The Hyperinflation Juggernaut

Wall street insiders reformulate the profit model, outsider stock market players to be vaporized, new Fed facilities being created on a daily basis, new super-entities created in mergers and acquisitions, post bailout, to be vaporized by derivatives death star, dry derivatives setup for Lehman insiders to get a big payout, suppressing gold only encourages treasuries, no longer such thing as a secure retirement

Bob Chapman | October 22, 2008

Wall Street has recently reformulated their equation for profitability:  Profitability = Volatility + Insider Trading. The new formula for insider trading is:  Insider Trading = Dark Pools of Liquidity + PPT (Plunge Protection Team).  Thus, by substitution, the full equation for profitability is as follows:  Profitability = Volatility + Dark Pools of Liquidity + PPT.  The latest insider trading machines have just been loaded with new software, or should we call it scamware, which software fully utilizes the above equations as the leading precept for the creation of the computer code.  Variables for these equations include Illuminist bootlickers Warren Buffett and Jim Cramer, who have been ping-ponging the sheople in and out of the stock markets for fun and profits for their Illuminist masters, thus enhancing the already rampant volatility caused by horrendous economic news and the usual PPT manipulations such as the destruction of the yen carry trade and the hammering of oil to produce a very pronounced euro effect.  Media shills and bogus official economic statistics round out the variables together with well-timed releases of either dismal or hopeful financial news, with the former now being dominant, as well as interference, or the lack thereof, by government regulators.

If you stay in the general stock markets at this point, you are nothing but a patsy who will get vaporized one piece at a time, unless of course you are part of the insider-trading cadre.  Now that the nefarious dark pools of liquidity are up and running, insiders get to load up on positions with absolutely no impact on the public markets whatsoever.  Once they have sated themselves on their starting position, either short or long, they and the PPT, backed by tens of billions from the repo pool, along with con-men like Buffett and Cramer, go to town on the public markets, driving them up or down like a yo-yo, in grand volatile and profitable fashion, all as pre-planned by insiders.  Then, the insiders can exit all their dark pool positions, once again without any public knowledge of what they have done, without having any impact whatsoever on public markets.

The impetus to rally or to crash the public markets is provided by the PPT, media shills and con-men like Buffett and Cramer, along with the purchases and sales of non-insiders who are trying in vain to chase the insiders as the markets gyrate.

What all this means, basically, is that when insiders cover their shorts in the dark pools, that process of short-covering does not drive stock prices up in the public markets, which stock price increases would normally erode their profits from shorting.  Then, after they have covered their shorts, and the pre-planned time for the markets to reverse has arrived, they go long, make profits on the upside, and when they sell off to lock in profits through the dark pools of liquidity, that process of selling off does not drive stock prices down in the public markets, which stock price decreases would normally erode their profits from going long.  While there may be some impact on prices within the dark pool itself whenever these big plays are in progress, we can assure you that the overall impact is muted compared to the impact that these stock transactions would have had on the publicly traded stock markets.  This new procedure for ripping off the public thereby maximizes the profit potential from their many manipulations.  The insider trading scams have now been perfected.

As a bonus for the Illuminati, the SEC and CFTC are in on all the insider trading scams, so there are either no investigations at all or the investigations are whitewashed.  Recent examples of such regulators assisting insiders include the SEC's strong-arming of specs out of commodity markets by threatening to take away their very profitable ability to short financial stocks and by threatening to require public disclosure of short positions.  The raising of margin requirements on gold and silver recently by the Comex, for absolutely no good reason other than price suppression, is another glaring example of official tampering, as is the CFTC's continued denial that commercials have illegally high concentrations of short positions in precious metals futures.  All the regulators do is scarf up fine money from insiders who get caught, assessing fines and penalties that are less than what these criminals stole, thus making sure that crime pays for the elitists in their system of crony capitalism.  Of course, needless to say, no one on the inside goes to jail.

As a double bonus, all the major courts are in the Illuminists' pockets.  Thus, none of the Illuminist scam artists and henchmen go to jail, and those unfortunate souls burned in scams like Enron get little or no relief, especially if the culprit is an Illuminist organization such as JP Morgan Chase, which was one of the prime co-conspirators in the Enron scam.  The same is true for both houses of Congress and the Presidential Administration who recently voted for the Paulson Ponzi Plunder Plan and whose investigations merely identify problems, usually incorrectly, while failing to hold anyone accountable, as is currently happening with AIG and Lehman Brothers.   The 911 investigation, including the investigation of insider trading on shorts of airline stocks, is another perfect example of executive and congressional whitewashing and facilitation of heinous crimes.  We have yet to hear about who the shorts were on the airline stocks, even though this information could have been easily determined.   We can assure you that the government knows exactly who placed all these shorts, but they won't tell you because they might have a revolution on their hands.

As you see, the Illuminati have a very long reach, but they are in a bit of a 'sticky wicket' right now, because they went way too far with their greed in the creation of the quadrillion dollar Derivative Death-Star.  Yes, they planned the current carnage, but its savageness goes way beyond what they intended, and they are running around like bulls in a china shop trying to stop the Derivative Death-Star from vaporizing their power base in the financial markets, especially in the bond and treasury markets, and the Fed is resorting to more and more draconian methods in a vain attempt to stop the bleeding.

It seems like new Fed facilities are now being created on a daily basis.  Soon everyone will be asking what the facility du jour is on any given day.  The latest Fed facility is up to $540 billion in financing to be doled out though a program run by JP Morgan Chase & Co. to purchase from mutual funds certificates of deposit, bank notes and commercial paper. The program, to be called the Money Market Investor Funding Facility, is designed to revive the market for commercial paper, which consists of the critical short-term loans used to fund the liquidity needs of most major businesses.

More misdirection and fraud from the transplant from Goldman Sachs, who we "affectionately" refer to as Hanky Panky Paulson.  Now we hear that some of the Big Nine banks, flush with billions in shock-absorbing equity injections from the hapless sheople taxpayers that were doled out to them under duress by Hanky Panky in order to protect them from the coming meltdown of counterparties on the one hundred fifty billion in defaulted Lehman bonds, which were covered by double or triple that amount in credit default swaps, will use their taxpayer largesse from the Paulson Ponzi Plunder Plan for mergers and acquisitions.

The Wall Street fraudsters will now scarf up a bunch of the little guys, many of whom wisely avoided taking big risks on labyrinthine toxic waste derivatives and Phony and Fraudie stock, all for the express purpose of improving their balance sheets via M & A transactions.  So, the Illuminist plans have now been laid bare as we have morphed from the purchase of toxic waste assets, to the partial nationalization of the fraudsters via taxpayer equity injections for preferred stock, and now to the funding of mergers and acquisitions, so that you, the sucker-dupe sheople, can pay for big banking's continued consolidation and monopolization of our financial system into several mammoth super-entities that will automatically be deemed to be too big to fail.   These new super-entities will continue until they get vaporized by the Derivative Death-Star, which is now brightly glowing and expanding, after which they will all get nationalized, along with the spent Fed, to form a single fascistic and nightmarish monstrosity that will rule our financial markets with an iron fist.  This new entity will be in control of all financial market regulation, assuring that, in the end, the foxes and weasels will guard the henhouse.  If you are a banker, and you are looking to fleece the sheople as only bankers know how to do, you will have to give the new monstrosity a piece of the action.  A new protection racket will be established, so if you want to do business in their bailiwick, you will have to pay their very high price, or get unceremoniously wiped out.

Of course, once again, needless to say, this M & A crap was planned all along. Obviously, you were not told about this when the Paulson Ponzi Plunder Plan was set before our corrupt Congress for approval.  That would have been like asking you to pay for your own funeral, and then to dig your own grave as a bonus.

Incidentally, speaking of the Lehman credit default swaps, the counterparties on these swaps will have to pay out over 90 cents on the dollar to Lehman bondholders, who own $150 billion of Lehman's senior debt.  We note that many of the parties insured under these credit default swaps, some $200 to $250 billion worth, did not own Lehman bonds at all.  They purchased what are known as "dry derivatives," meaning that they were simply betting that Lehman would collapse, and they would get a big payout, even though they did not own the underlying asset being insured.  There may be a problem, however, when it comes time to collect on these swaps.  Many swaps require that the insured transfer the underlying bonds to the counterparty as a condition to paying out on the swap.  There could be major litigation on this, and the potential losses that would have to be listed on footnotes to financial statements could potentially continue until the litigation was settled.  If delivery of the underlying bonds is required, and the insured can't produce them, then the insured and the counterparty would both walk away from the transaction.  If delivery of the underlying bonds were not required, the counterparty must eat the loss unless, as if often the case, he holds the insured end of an equal and offsetting Lehman bond swap, unless such offsetting swap requires delivery of the underlying bonds to get a payout, or the counterparty on that swap is bankrupt, in which case the counterparty in the first mentioned swap is out of luck.  Remember, offsetting swaps do not cancel if one of the parties goes bankrupt and has its obligation discharged in bankruptcy.  This principle is what guarantees the eventual obliteration of the credit default swap and interest rate swap derivative markets.

This Lehman scenario, and others like it in the future, also mean, potentially, that any of the unfortunate insured's and/or counterparties to credit default swaps may go belly up if they aren't paid, or they can't pay, respectively.  So if any of the vaporized parties is also a counterparty on other credit default swaps covering bonds other than Lehman bonds, the underlying bonds of those swaps would get downgraded, leading to further losses and further potential counterparty failure, and so on down the line.  This is a hellish nightmare with no end in sight.  And this is just one large investment bank.  What will happen if JP Morgan Chase and Bank of America both go under?  And they will, eventually.  It is only a matter of time before they, and others like them who imbibed in the wanton greed of the past decade, are nationalized with the Fed to form the lynchpin entity in our upcoming corporatist, fascist police state.    

Well, how 'bout that high-flyin' dollar?  You might even believe that it was still the world's reserve currency, which it still is, in a de facto sort of way, given that all the other world fiat currencies are in even worse shape, aside from the Swiss franc.  You are probably wondering what has propelled it to the 85 mark on the USDX?  Many factors are involved, all the direct result of manipulation by the PPT and the cartel.  But the irony is that the upward swing in the dollar is actually not the new beginning for a bull market rally in the dollar, but rather, this new push upward portends that the dollar is now singing its swan song.  Most, if not all, of the events that are driving up the dollar are going to eventually take down our financial system, along with the entire world economy, and the dollar will go down with them, along with all other non-gold-backed currencies, with the exception possibly of the Swiss franc.  Gold and silver will be headed for the Fifth Dimension when that happens.

So how are they propping up the dollar aside from the usual direct intervention in the currency markets?  First, the PPT and their Illuminist masters have withdrawn their support periodically and have allowed the markets to enter into a period of fear and instability to enhance volatility and thus insider trading profits for Illuminist insiders.   They have allowed markets to crash out of control, sending everyone scurrying for treasuries in the US, Canada and Europe, while Asia runs to the equally spurious security of Japanese bonds.  This piling into Japanese bonds, which requires foreigners to purchase yen, has thus strengthened the yen and triggered a new detonation of the Yen Death-Star, which will soon totally destroy the Japanese economy, or rather, what is left of it, as the price of their exports reach astronomical levels.  A month ago, the yen stood at around 106 yen per dollar and 156 yen per euro.  This morning, Wednesday, those numbers were about 99 and 127, respectively. That's 7 yen per dollar, and very nearly a banzai 30 yen per euro in one month!  And you wonder why people are liquidating and de-leveraging, which would include precious metals positions?

So everyone is running for the perceived security of US treasuries.  The carry traders, institutional investors, professional and amateur individual investors, hedge funds, sovereign wealth funds, mutual funds, money market funds, holders of US agencies, you name it.  Any foreigners who want to purchase treasuries must buy dollars, and that is the major support we are seeing in the current dollar rally.  This is not a very good scenario for our economy and it will only get worse as real estate, credit-crunch, derivative and consumer spending debacles grow ever more fearsome. Meanwhile, the advance of the dollar keeps steady downward pressure on gold, which is JOB ONE at the Fed.  For many months now, this is what we have described as stock markets coming down with "yellow fever," meaning that the stock markets look sickly because they are being sacrificed to push money into treasuries, thereby supporting the dollar and suppressing gold.  

Also, by suppressing gold through various means, they are discouraging gold and encouraging treasuries as the safe-haven of choice.  This keeps money pumping into treasuries, thus supporting the dollar, and the value of treasury bonds and other debt tied to treasury rates.  Remember, the bond markets are the seat of Illuminist power, and they are about to crumble at any moment, thus paving the way for the worst bear market in bonds in our nation's history.  That is because, unfortunately for the elitists, this increased demand for treasuries drives their rate of return down to extremely low levels to the point where no one will want them anymore because they know that real inflation is in double digits and is about to get much worse as the bailout dollars flood the world economy with worthless paper.  By driving money into treasuries and by supporting the dollar, the elitists are trying in vain to delay the destruction of the bond markets.

Second, note how the European nations are swapping their currencies for the dollar, and then using the dollar to support their financial system and institutions.   These nations are buying dollars with their domestic currencies, and that is what has driven the dollar to 85 on the USDX.  Their currencies are being parked with the Fed, thus preventing their currencies from being debased at the expense of the dollar.  Most of that $2.3 trillion in European bailout money will be spent in the form of dollars.  Add in the $150 billion stimulus, the $700 billion Paulson Ponzi Plunder Plan, the $150 billion in Paulson Ponzi Plunder Plan pork, $300 billion for a new stimulus package, $175 billion for Bear Stearns and AIG, $2.5 trillion to bail out Fannie and Freddie toxic waste losses, $1.8 trillion to bail out losses on other toxic waste not guaranteed by Fannie and Freddie ($2.5 trillion minus $.7 trillion), and you have just over $8 trillion dollars in losses that will be paid for by digital dollars created out of thin air and backed by nothing.  And we have not even touched on credit default swaps and interest rate swaps, the losses from which could far exceed that $8 trillion figure. And let's not forget the half a trillion budget deficit, hundreds of billions in trade deficits which will get worse as the dollar strengthens and makes US good more expensive overseas, and the hundreds of billions that will be pumped in to support the phony "War on Terror" in Iraq and Afghanistan.  Who we ask, will buy all the treasury paper that will be needed to fund this madness?  Not many, so most of it will be monetized, which is immediately inflationary.  Every move the Fed makes, especially the recent .5% reduction in its Funds rate, along with the upcoming eventual reduction of the Fed funds rate to 0%, is begging for hyperinflation/hyper-stagflation as we continue on our Bataan Death March in pursuit of Japan's ongoing nightmare journey into economic oblivion.  You asked for it, you got it, Toyota.     

Third, the PPT has driven oil down, both by direct intervention in the oil markets, but also via SEC strong-arming of specs by threatening to take away their profits from shorting and by forcing them to publicly disclose their short positions.  This was a commodity wide ban on the specs under this threat, not just on precious metals trading.  Note that a month ago today, the USDX stood at about 76 and oil topped out at $130.  Now, we have a USDX of 85 and oil at $70.  This means that the number of petrodollars being converted to euros, the preferred currency of OPEC nations, has been essentially cut in half, taking a huge amount of pressure off the dollar. This is known as the "euro effect."   The euro was at $1.60 at one point, now it is at $1.28, and small wonder.  This downturn in oil has lent tremendous support to the dollar, but it has devastated the Russians and the OPEC nations who also happen to be big gold buyers, which is hardly a coincidence.  And, of course, weaker oil makes gold less attractive as a hedge against the high cost of energy.

Fourth, the overall commodity downturn, which has occurred through de-leveraging, liquidation and margin call pressure caused by de-leveraging, plunging stock markets, the unwinding of the carry trade and the chasing of large specs out of the paper commodity futures markets via SEC strong-arming and obnoxious PPT manipulation, is meant to hide the effects of inflation being caused by the bailouts, but such effects will soon be impossible to hide.  The elitists are playing on the common misperception that falling price means inflation is being reduced, or is "moderating" as Buck-Busting Ben would put it.  This is the excuse they need to keep pushing the Fed funds rate down until it hits 0% so they can continue their efforts to save the fraudsters and keep their precious sheople-bilking system afloat.  But all that is really happening here is that money is being transferred from one place, the commodity markets, to other places, like treasuries (as a safe-haven for savings) and banks (via margin payments and debt de-leveraging).

If parked in treasuries, or hoarded in banks, the dollars from the commodity and stock market sell-offs are temporarily neutralized (some use the term "sterilized") just as happens when foreign central banks print and inflate their currencies to buy up their surplus dollar forex to purchase, and then park, those dollars in US treasuries, thus keeping their currencies artificially weak and reducing the cost of their exports.  In this case, instead of exporting our inflation to other nations by selling our treasuries, which are now too numerous to pawn off on other countries, we are keeping that inflation here, but it is being kept under wraps as potential, as opposed to ongoing, inflation.  But as our money supply increases with the multiple trillions in bailouts, and the trillions in money and credit which the Fed keeps pumping into the system via its now numerous facilities as M3 continues to rampage, all of which will manifest itself as hyperinflation in 6 months to 1 year from now, the pressure to bail out of treasuries will reach critical mass and the whole world is going to run for the exits at once.  Then all those parked and hoarded dollars are going to come back to haunt us with a vengeance, and we will be completely, utterly and immediately Weimarized as everyone tries to grab as many tangible, real US assets as they can get their hands on.  We will literally be awash in dollars, as if a dollar tsunami had just been unleashed by a Force 10 earthquake.  We also expect to hear more threats from OPEC nations to break dollar pegs as the price of oil continues its downward spiral, and this could be the straw that breaks the camels back.  If you don't own gold, silver and their related assets when this mega-tsunami hits, you will get wiped out completely by the hyperinflationary juggernaut.