International Forecaster Weekly

Liquidity Injection Wont Cure Wall Street Disease

A disaster of epic proportions on Wall Street, More band aids for the economy, a round of hyperinflation is coming,  the credit default swap counterparty liability monster is about to be set loose, current remedy for the markets is like aspirin for a fatal disease, Get out and stay out of the markets

Bob Chapman | October 15, 2008

To err is human.  To really foul things up requires a computer.  But to create a catastrophic disaster of epic proportions, just turn a bunch of rocket scientists loose on Wall Street.  The mere thought of it makes our hair stand on end.  Question:  What do you get when you mix rocket scientists with black boxes on Wall Street?  Answer:  A massive cluster-you-know-what.

Banks around the world, but especially in the US, now have over one quadrillion reasons not to lend to one another.  Yet our government is going to try to force them to lend money anyway.  But the healthy banks do not want to play this cute little game.  They don't have to.  Their balance sheets are just fine, thank you, and they intend to keep them that way.  We wonder what kind of extortionate threats the diabolical reprobates and sociopaths in the District of Whores will come up with to force them to do so.  The latest is to have the banks pay fees for insurance via the FDIC that will insure them against losses for any loan they make to other banks for a period of three years.  So, once again, you, the sheople-taxpayers, will pick up the tab when the system freezes up again and all the loans insured in this manner go sour as the next of the myriad derivatives powder kegs blows us into a new round of losses and bank failures and as the terms "credit default swaps" and "CDS" become common household terms like the words "subprime mortgages."  Yes, indeed, the acronym, "CDS," and a whole new meaning for the acronym "IRS," (interest rate swaps), will soon be added to the vernacular.  This move is just another contrived and artificial Band-Aid to keep the system afloat a while longer.  It may even work in the short run.   But because the root issues, as usual, are not being addressed, this retread of the banking and financial systems is going to peel off and the tire is going to blow out again.  It is not a question of "if," but of "when."  We wonder how many hundreds of billions more this latest "cutesy" move by the Illuminati will cost the sheople, as we can assure you that the fees charged for coverage will be negligible when compared to the ultimate losses that are suffered on account of this latest Ponzi scheme to keep banks afloat.

Speaking of Ponzi schemes, the next debacle-in-the-making is that our evil, rapacious government, via the Paulson Ponzi Plunder Plan, will inject our 9 largest Illuminist bankster fraudsters with hundreds of billions of extorted taxpayer largesse in a futile attempt to re-capitalize the same Wall Street fraudsters that created the current fiasco, knowing full well that every one of these toxic waste sites is completely insolvent, that their financial statements are masterpieces of fraud and fiction, and that their insolvency will worsen substantially once the credit default swaps (CDS's) and interest rate swaps (IRS's - how appropriate) implode.  What this means is that the equity positions, which you, as taxpayers, will receive, will become totally worthless over time.  Even their bondholders will be lucky to pull out pennies on the dollar from these bubbling swamps of fraud and deceit when their inevitable bankruptcy and liquidation occurs, and they are nationalized by the US government.  Other banks may get to dip into our extorted taxpayer largesse as long as they kiss Prefect Paulson's feet and do as they are told as the Vizier of Wall Street waxes mightily.

A similar defrauding of the people of Canada, of the UK, and of the European nations in general is on the way as the European and American enclaves of the Illuminati compete to see who can give their citizens the biggest screwing.   Incidentally, as our futures continue to be squandered by Hanky Panky, guess who was chosen to chair the oversight committee to keep an eye on what Hanky Panky does with the $700 billion?  Here's a hint:  The initials for his name are B. B. B. B.  That's right, you guessed it, Buck-Busting Ben Bernanke.  Talk about a rubber stamp!  And, of course, after Hanky Panky gives the first $250 billion to his cronies on Wall Street, our beloved emperor, Caligula, gets to decide whether the next $100 billion of the $350 billion initially authorized by our scum-bags in Congress should be spent.  Do you think, perhaps, that Caligula is going to authorize the additional mega-divestiture of taxpayer largesse?  Ya' think!  In fact, he has already authorized it.  This is nothing short of surreal.

Naturally, all these efforts to re-capitalize the fraudsters will be funded by money created out of thin air by the central banks, which means worldwide hyperinflation is on its way, and that is a lock.  With the sucker-dupe citizens of Europe kicking in $2.3 trillion worth of liquidity and equity injections, together with purchases of toxic assets and other banker bailouts and nationalizations, and with the sucker-dupe sheople of the US kicking in another $.7 trillion, you now have $3 trillion dollars that are about to be created out of thin air, and get dumped into the global financial system as the sheople of the world get fleeced for the nth time, big-time.  
So get ready for the next round of massive global hyperinflation because we can assure you that most of this money will be created through the monetization of treasury bonds which will have to be created out of the monetary ether.  Let the printing presses roll in hyper-drive!!!

What nations, we ask, can purchase and absorb 3 trillion worth of treasuries from various nations without hyper-inflating their populace into oblivion.  This fresh round of global hyperinflation will cause a substantial number of businesses to fail as consumers, already beaten down by massive unemployment and the loss of their home ATM's, especially here in the US, can no longer pay for necessities, much less for items that are discretionary in nature.  These defaults will be added to bank failures worldwide, and together these business deaths will turn the credit default swap counterparty liability monster loose to reek destruction and havoc on the completely helpless and frozen global financial community.  Risk will explode to new levels on account of this myriad of business failures, and investors will require greater rates of return on corporate bonds, on treasuries and on debts in general in order to offset the increased potential for losses due to heightened risk and to offset the incredibly destructive power of rampant hyperinflation.  The end result will be double-digit interest rates, and that will light the fuse that leads to the IRS powder keg.  When that sucker blows, there will be no place where anyone can run and take cover.  Just bend over and kiss your butt goodbye.

So, because the Illuminist financial institutions can get more bang for their freshly printed Federal Reserve notes by re-capitalizing their equity positions with direct injections of cash as opposed to de-leveraging debt to increase their equity positions by purchasing toxic waste assets at falsely elevated prices, with the added bonus that the sheople-dupes will lose every penny on their new stock investments in the fraudsters instead of at least having the opportunity for chump change later on down the line if they purchase and hold some of the fraudsters' toxic waste assets, the latest action has been taken by Prefect Paulson.

The current remedy is the equivalent of telling someone with a fatal illness that they should just take some aspirin and that they will get better if they simply ignore the disease.  In the current case, we may get a brief placebo effect, or hopeful thinking effect, but eventually the disease will return with a vengeance if nothing is done to address its root cause, which in this case is the failure to recognize the reality of how worthless the toxic waste is, the hiding of hundreds of billions of subprime losses in labyrinthine financial statements, the exposure to direct CDS and IRS counterparty liability, and the potential for losses and increased capital costs that could result from the reduction of credit ratings on many issues of bonds and derivatives in the event that a CDS counterparty insuring any financial institution's paper goes under.  The huge potential for derivative chain reactions resulting in massive business failures because a counterparty's liability has been discharged in bankruptcy is the real fly in the ointment and all the major players on Wall Street and in our government knows that.  The explosive power of the Lehman Brothers bankruptcy liquidations has given everyone in the financial markets a taste of the coming destruction.

The Illuminati think that the current efforts to stop the credit markets from freezing up will buy them time to sort out who owes what liability to whom, and that by somehow waving their magic wand, they will be able to make most of the problems go away.  We have news for them -- it won't work!  You morons placed your bets in the big Wall Street casino, and now you are going to have to pay the piper.  Meanwhile, you can count on them to squeeze every drop of graft and corruption from their precious system as they possibly can by continuing to extract outrageous salaries and bonuses derived from ill-gotten profits generated by insider trading in every market under the sun and by continued perpetration of fraud in the derivative, security, mortgage and general credit markets.  They want to suck you dry until you are nothing but a wizened husk that will be blown into a cloud of dust by the next stiff breeze.   Phony and Fraudie, the Paulson Ponzi Plunder Plan, which is now only in its first of many phases that will see trillions spent on bailouts, and the Fed's printing presses, are about to get a major workout.

So what do you think about the Dow running up from 8,451.19 to 9,794.37, before more de-leveraging took it back down to 9,310.99?  This shows you in spades that the big plunge we experienced last week was totally contrived.  The PPT was obviously able to support the markets had they chosen to do so, because nothing has really changed from last week, other than the fact that we will get credit injections instead of toxic waste purchases from the first div's out of the Paulson Ponzi Plunder Plan.  They chose to withdraw their support, allowing a rapid plunge instead of an orderly descent, and then ran it right back up again, albeit to a lower level.  They let the carry trade unwind to hit precious metals, while the Mother Theresa of high finance, Jim Cramer, scared all the retirees out of their wits.  Then they used the thin trading on Columbus Day and some short covering to run it right back up in rapid fashion, taking everyone by surprise who was not an insider.  

These manipulations were the payoff to specs, via both shorting and direct investment, for staying out of the commodity markets, especially the precious metals markets, so their beloved commercial shorts could cover their paper gold and silver shorts in the futures markets.  The rapid decline was the first phase of the reward via shorting.  This decline had two phases.  First, non-financials were shorted right after the Paulson Ponzi Plunder Plan was passed, and that continued through last Wednesday.  On Wednesday, the ban on shorting of financials was lifted, so needless to say the financials were thoroughly hammered on Thursday and Friday.  And this latest big run-up, which occurred out of the blue while all the frightened non-insider investors quivered and shook on the sidelines, was another reward to the insiders who knew this was going to happen after everyone had a chance to cover their shorts.

This insider trading largesse was the carrot for the large specs, but they also had a big stick threatening if they did not cooperate, and that was the SEC and its ban on shorting over 800 financial stocks, which was a very profitable venue for the large specs.  The useless-as-tits-on-a-bull SEC even went so far as to threaten to require public disclosure of short positions in financial stocks, which would have exposed and ruined many of the large specs.  The SEC relented on this issue probably after the specs caved in and let them have their way in the commodities futures markets. Hence you have recently borne witness to the huge disconnect between the paper and physical markets in gold and silver.  

We also see here another benefit, which these scum-bags can derive from the dark pools of liquidity known as Project Turquoise and Baikal.  These dark pools allow the insider specs to short stocks, and to go long in stocks, without the general markets knowing what has occurred.  They are able to buy into their short or long positions, and we mean to really load up big-time, without driving the markets up or down, allowing all the insiders to take their positions before the manipulation takes place, thus maximizing profitability.  Then the PPT steps in, and asserts or withdraws their support via ten of billions in liquidity provided by the repo pool in a fashion, which has been previously divulged to insider Illuminist players.  This dark pool system, together with the power given to the PPT via President Reagan's executive order (which power is illegally abused), are the working parts of a nearly perfect insider trading scheme.

This insider trading scheme, the scam of the century, will now be used to milk the money from the sheople dupes who continue to play the stock markets.

You may recall our discussion about the Big Sting Two, where the Illuminati would run the stock markets up and then unload their positions in dollar-denominated paper assets outside of public view through the dark pools of liquidity, with proceeds to be invested in tangible assets such as commodities, real estate and infrastructure, with many of these investments being made at pennies on the dollar due to ongoing carnage and liquidations in many financial sectors.  This is exactly what happened in 1929 in implementation of the Big Sting One, except that instead of having a dark pool of liquidity to assist in the bailout, they simply told the Illuminist players when the Fed would pull the plug and send the markets plunging, with enough advance notice to enable them to unwind their huge stock and bond positions without causing the markets to sell off.  That is how Illuminist players like John Rockefeller and Bernard Baruch got out of the markets unscathed.

However, because of the extent of the financial destruction reeked by the Illuminist morons and their rocket scientist creators of Frankenstein derivatives, the ability of the Illuminists to run up the stock markets looks unlikely.  So, Plan A having failed, they will now implement Plan B.  What is Plan B?  Plan B is to use this insider trading scam to make non-insiders chase after the Illuminist insiders as they manipulate the markets, with non-insiders always coming up a day late and a dollar short because they do not know when the manipulations will occur, or whether markets will be driven up or down.  Instead of ripping you off all at once, they will dismantle you one piece at a time.  Instead of running the markets up incessantly for one final payoff, they will gyrate the markets, and systematically strip you of your wealth in a series of insider trading manipulations.  All you are going to see now are lower highs and lower lows as the staircase to oblivion spirals down into bear market hell.  

All future market gyrations will be counterintuitive, so that use of fundamentals will be rendered useless, along with black boxes, which are based on what markets do normally by use of probability statistics.

For instance, the sudden plunge, which occurred unexpectedly after the Paulson Ponzi Plunder Plan was approved and after insiders had a chance to load up on shorts, is a perfect example of markets moving contrary to expectations.  Then came the big run-up, which occurred while all the non-insiders were standing on the sidelines, licking their wounds and taking their nitroglycerine pills.  This big run-up, touted by the fane-stream media as the big turnaround from the recent bottom when nothing has changed, was used to suck the dupes from the investing public back into the markets for another fleecing.  Unbeknownst to the public, the Illuminist insiders were loading up on shorts again through the dark pools of liquidity, ready to steal the hard-earned money of the non-insiders once again in another plunge into the abyss, and in another orgy of profitable fraud, as the PPT sticks it to the public ad nauseam. This is why all of you must get out of the stock and bond markets, AND STAY OUT! Use all run-ups as an opportunity to exit.  Do not play their games.  Do not empower them.

Simply put your sales proceeds from dollar-denominated paper assets into gold and silver related assets and wait for the price explosion as hyperinflation and outrageous risk take the system down, and send gold and silver to the moon.  If you try to chase after the Illuminist insiders in the general stock and bond markets, you will be systematically vaporized, one excruciating step at a time.  Case in point:  After running the Dow up over 1,900 points from a multi-year low of about 7,900 on Friday to a recent high of almost 9,800 on Tuesday, the Dow has already plunged 800 points as of the time of this writing between late Tuesday and Wednesday morning.  Gee, aren't you jumping for joy that you bought back into the stock markets as the run-up was peaking to soak up all those "bargains?"  Are you starting to get the picture here?  You cannot beat insiders when the regulators are in their back pockets.