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The Vampire Squid

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Globalized Finances

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The biggest loss in our vampire “extraction” financial system is not the trillions in wealth lost or the trillions printed by Central banks.

It is the fact that we are no longer running a capitalist financial system.

We are running a system based on unregulated gambling or placing bets on the credit worthiness of  YOUR money. Gone is most of incentive for competition to find worthy clients to loan money to.

Instead banks profit now by bundle loans and sell them to investment banks. Then they are placed on an unregulated $600 trillion dollar casino (Credit Default Swaps/derivatives market) to be bet on.

From Financial Analyst

Dylan Ratigan

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Solutions

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From the Great Depression we put rules in place on our financial structure that prevented systemic risk. Those were weakened and finally collapsed near the turn of the century.

The easy answer is to put those rules back in place.

How?


The Volker Rule

The NYT

editorial yesterday


Some Specific Changes from Dylan Ratigan’s Chart which has been featured through out this series.

The advantages of this solution is regulations worked for  over 6 decades and its far less chaotic than the Libertarian solution presented yesterday.

The vast majority of the American public don’t even know a huge over leveraged, unregulated casino of derivatives or credit default swaps betting even exists. At some point in time a credit imbalance is going to be too big for the already up to their neck in freshly printed money for the Central banks to handle.

You know what happens next.


End of series


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STOCKS

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Wall Street Bull & OWS Symbol

  • Employment numbers for February, usually come out on first Friday and this could be a short term market moving number.
  • Dow moved over 13,000 milestone and gobs of Technical analys all reconize that stocks are overbought.
  • However the mantra is again - Stocks/Bonds/Currencies are being manipulated by central banks.  This week Investors showed $6.5 trillion is now the balance sheet of the Fed and ECB.
  • Low volume rallies are here to stay until this system cracks.

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  • Our #1 technical forecasting tool, the McCellan Oscillator (MO) is at -14.47. 50 Day Moving Average at +21.46 (for more see  STRATEGY link at top of blog and scroll down) Lots of wiggle room for bears and bulls = NEUTRAL

  • The Manipulation – The European Central Bank – loans money to troubled Spanish and Italian banks for a nominal rate and they go out and buy troubled Spanish and Italian bonds. Spain and Italy are many times larger than other troubled European countries like Greece, Ireland and Portugal and therefore far more important.
  • Like the USA after the Lehman collapse, Central bank money printing , now up to $6.5 trillion, is keeping both Europe and the USA economically solvent. Our 10 year Treasury bills are near 2%
  • Italian 10 year bond yield fell again to 5.27% (6:30 AM EST) - No where near the danger zone of 7.0% of almost a month ago.

  • If the bubble does pop Italian bond yields will explode higher. – But So far…

NO SIGN OF THIS (yet).

NB – The “yet” at the end. It may be a week, a year, or even longer, but the bubble is building and you know what expanding bubbles do.


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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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