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The Cancer of

Banking Deregulation

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The Cancer of deregulation spread slowly at first as the banking lobby gained more power.

US Banks had a two fold problem

  • Banks were losing business to faster growing emerging market banks because of globalization.  Example Chinese trusted their own banks instead of BOA
  • Digitalization of the stock and bond markets crushed investment banks/brokers who used to cash in on the huge spreads between (1/8 and 1/4) bid and ask prices for securities were now valued in 1/100 or 0.01. They lost their cash cow to computers

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Since the Great Depression, we had kept the banking industry safe by not allowing

traditional banks, insurance companies and Wall Street investment firms to merge.

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That changed in in 1999

The Financial Services Modernization Act

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  • The bank Lobby, with the blessing of the “High Priest of free markets” Fed Chair Alan Greenspan pushed three Republicans legislators – Gramm, Leach & Bliley – to rip apart the safety net that had protected us since the Great Depression.
  • They found a willing friend in the Clinton White House - A banksta- The former head of the Goldman Sachs Robert Rubin and assistant Larry Summers.

Then came the second blow by bank lobbyists in rewriting financial laws

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The Commodities Future Modernization Act.

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  • Again blessed by “High Priest of Free Markets” Alan Greenspan,, Republican Richard Luger and a host of bipartisan co sponsers brought another devastating blow to banking regulations to the White house
  • It was again accepted by the same banksta crew in the treasury and became law.

This bill removed the capital requirements for banks. These requirements had been the incentive for banks to act as police to insure  their loans.

The old system where banks and their customers wanted each other to pay their debts to profit was gone. The new giant “too big to fail” institutions” could actually make money if loans defaulted.


To paraphrase Dylan Ratigan in Greedy Bastards


It is as if  a car dealer no longer had to make a safe reliable car, but could sell you a car that would explode. Then the car dealer would collect on both the money he made on the purchase of the car and the insurance when the car exploded.

Tomorrow  some of the missing details

How they cheat, CDO, Trillion lost, The coverup and more

But if  you want more now at the bottom of the Overview section has an extensive research biography

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STOCKS

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Wall Street Bull & OWS Symbol

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  • From Last Week - Market Fundamentals driving stocks have NOT changed in any dramatic way…a 2 to 5% correction would be healthy…view this as a buying opportunity…still CAUTIOUSLY BULLISH.
  • Repeat – “INVESTORS411 has NOT changed its outlook, because this is a manipulated market. Our Central bank  has backed American banks since 2009 and the European Central Banks is now backing their Banks in the same way – by basically printing money and holding interest rates near zero.”

  • Biggest beneficiaries of all this money printing seem to be beaten up sectors. XHB (housing ETF) is Investors411 pick, but there are lots of choices from semi conductors to banking.
  • Anyone who wants a return on their $ greater than near 0% is pushed into assets that the ECB and Fed is manipulating higher.  In the case of something like Italian bonds – the yields pushed lower.
  • AAPL Last night on his show Jim Cramer was beating the drums for Apple saying the stock should have jumped to 550 after its earnings report. Now at 503
  • The mother of all stocks is still exploding higher. What started out as climax selling (big move higher in huge volume) never followed through with a second day up in huge volume. Instead volume has dropped. (Use chart link above to see what real big volume looks like for AAPL – This did NOT materialize Friday or Monday)
  • Nevertheless, almost every technical indicator is screaming oversold.
  • Bottom Line – Technicals show that AAPL did not go through a major climax run, so the fall will not be as sever and there should be some waiting buyers who missed out on the rally that will cushion a fall.

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  • Our #1 technical forecasting tool, the McCellan Oscillator (MO) rose to +4.82.  50DMA at +22.74 (for more see  STRATEGY link at top of blog) With such a high 50 dma we are near oversold territory. = NEUTRAL

  • Repeat - What used to be the European canary in a coal mine is chirping loudly and strong.
  • Italian 10 year bond is now at 5.49% - No where near the danger zone of 7.0% of just a couple weeks back.
  • Repeat from last week/yesterday  - “A 2 to 5 % correction would be healthy for the market.” But the canary is chirping

Rally Train

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Longer Term Outlook

3 months+

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Still

CAUTIOUSLY BULLISH

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AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

CHECK ALL DATA, I MAKE MORE THAN GRAMMAR  ERRORS.

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