Who Will Bail Out the Banks Next Time? YOU!

Are your deposits safe in banks? No.

Why? It's called “bank bail-in.” Bail-in allows failing institutions, including banks, to recapitalize by taking part of your money from your accounts, etc., with no recourse. Go to your computer and type in “bank bail-in.” Scary? It should be.

By implementing bail-in, the Dodd-Frank Act of 2010 claims to support taxpayers by ending bailouts. The act allows the Federal Deposit Insurance Corporation to recapitalize a failing institution by taking your money -- deposits -- to bail them out. Credit unions are exempted. This goes deeper, and includes global financial institutions, because the financial system is intertwined.

Did you know Bank of America and Chase have more unsecured debt obligation than the gross national product of America? Everything stated above and much more that you must know can be found under “bail-in.” If Congress does not act soon to restore the Glass-Steagall Act, then say goodbye to money.

Arthur Miller

 

 

Source:  http://www.times-standard.com/letters/ci_25474265/beware-bank-bail-hazard

Summation Index Fails to Confirm Highs

While the Dow Jones Industrial Average has made new yearly highs this week, other indicators have fallen short of confirming the breakout. One such indicator is the Summation Index. The index number is generated by adding the net gains or losses in advancing issues over declining issues. My index uses some 200+ stocks representing different industries in the US economy. The index may be a better indicator of market momentum. As advancing issues outpace declining issues, the resulting number can only increase each day. Even though the market advanced for six days in a row, ending today, one can see how the indicator failed to take out recent highs.

The topping process can be a long and drawn out affair. Observing high and low points in the chart over the last few months, we see that the chart pattern rose gradually over time, setting higher highs and lower lows. Should the market be rolling over, one might expect a mirror pattern of the trip up, with the index making moderate new lows but then rallying up, only to fall back to make new lows.

One can never predict a market collapse. After all, there is little good news in the economy. Sure companies are starting to make money but it's only a result of reduced labor costs as businesses continue to cut back on the workforce. Banks only need to borrow at the Fed window for 0% to 0.25% and buy treasuries at 3% to 4%. Sign me up for a $billion on this trade. But the trade COULD BACKFIRE, depending on the level of greed the banks choose. For example, if a bank borrows at the current low rate at near zero from the Fed and buys a 10 year note paying 3.5%, there is always the danger that the Fed could begin raising rates. This would be a double whammy for the banks and other organizations taking advantage of this trade. First of all, the Fed lends overnight, the shortest of terms, so financing would need to continue on a daily basis. The Fed has, in the past, raised interest rates swiftly in the past. In addition to their costs to carry the investment go up, the value of the 10 year treasury would fall as interest rates rise. It wouldn't take long before an institution, if they are required to mark-to-market their investments, would be underwater. The Fed's plan would fail and banks again would be going bankrupt.

Again, ANOTHER FEDERAL RESERVE CREATED BUBBLE COLLAPSES. The next time, there will be no options left. Start growing the bananas guys!

S&P Triggering Sell Signal??

Some techicians like to watch the Wilder's Parabolic stop and reverse indicator. The indicator provides a trailing stop (as reflected by the dotted line in the chart). When price moves through the dotted line, one closes out (in this case) their long position and takes a short position.

I have found that this indicator works very well in trending markets however, in sideways markets, it can mark a top or bottom and result in one selling the bottom or buying the top.

Seems that everyone on tv these days is so bullish. Few are calling for a test of the March lows. Many state that there is no possibility that this could happen. But not I. I'm sad to say that I have become totally cynical about the government and our financial markets. We have been lied to and deceived so often that you really have to close your ears to the noise and just look at the technicals.

I have been suggesting that you buy DXD or SDS positions as the market has been rising. These ETFs provide you with protection against a downdraft in the market. Also, I have discussed long-term put positions on Boeing and JB Hunt. These are just fun plays however as I was happy to get a 15% market gain in June. Realizing the fiction that we call the market, I was thrilled to get 15% in a market that may well again wind up providing negative returns.

The problem with most people though is that they cannot be satisfied with a 10% to 15% annual gain, especially when they see the market rallying sharply. But you must understand that rising prices acts as a magnet, sucking in more money as greed sets in. Without a discipline these days, you are going to get creamed and wind up broke.

Unless you are a banker and going to receive your millions in bonuses, I insist that you figure out what annual return you need to achieve your goals, dip your foot in the very volatile market, get your goal, and move to safety.

I'D BE WILLING TO BET

Yup, all of these banks paying off the TARP money, it's all a sham I think. They want to get their bonuses. Obama's Pay Czar will probably let them have it too. Then watch, these banks will be back begging for more bail out money. I'll bet you on this. There should have been some provisions, just like in a personal bankrupcy, that if you pay off the TARP, you can't come back for seven years. Nope, watch, these guys (and gals) are going to get their millions in bonuses and then BAM!, back to "bail us out or the economy and the entire free world will collapse."

If our politicians allow this again, then I totally give up.

Obama Wants Fox to Guard Henhouse!

IN THE FED WE TRUST

Just when I thought I've seen it all, I see the story about how Obama wants the Fed to be the Economy's SUPERCOP!!! Super Cop Ben. Don't get me wrong, I thought it was great when the Banking lobbyists got rid of the Glass-Steagall Act allowing the banks to weave their way into every aspect of my life. I cheered when the banks lobbied to be able to leverage up from 10-1 to 30 or 40-1 on their loans to capital. We partied hard when they began packaging mortgages and were able to shuffle them out of their system so that they can continue to make bigger and bigger profits, much of it going into the pockets of a chosen few.

Stress Test Relief

I'm overjoyed now as I read a Wall Street Journal article Banks Win Concessions, showing again that Banks are still in total control - always were - always will be.

Seeing Tim Geitner, a former Federal Reserve Bank President now a federal regulator reminds me of the days when I worked at the Commodity Futures Trading Commission (CFTC). I most fondly remember how the CFTC Chairwoman, Wendy Graham, had the opportunity to regulate energy futures contracts, the kind that Enron was involved with. How surprising it was that after she declined to regulate these instruments, she wound up on Enron's Board of Directors. Funny how no one ever reviewed this connection, at least not that I've ever seen. And now, we have an ex-Federal Reserve banker in cahoots with his Fed buddy Ben Bernanke saving the world by giving the banks billions and billions of taxpayer dollars. And now, on top of giving the banks all of our money, our elected leader wants to give control over banks and investment houses to the Federal Reserve!

Fed a Privately Held Business

For those who don't know, the Fed is not a government organization. And while there is a lot we do know about the Fed, there is a lot more that we don't know about the Fed. Like who really owns the Fed? Who profits from all of the dollar bills the Fed puts in circulation at a cost? It's not us taxpayers. It's the richest of the rich who hide in the shadows. It is the richest of the rich who have for decades called the shots in our country. It is the richest of the rich who now are pulling all of the strings to give them ultimate power over all businesses in the US.

One Man's Battle


There is a 'cry in the wilderness' though, the voice of Congressman Ron Paul. You might remember Ron Paul as a candidate in the recent presidential elections. While he was not a major candidate, those who followed him were passionate about his cause. Out of all of the candidates from both major parties, it appeared that only Ron Paul understood and defended the US Constitution. Others in power have been making a mockery of it as our civil liberties continue to be eroded.

Federal Reserve Transparency Act of 2009

Representative Paul outlays the plan to enable the Comptroller General of the GAO (Government Accountability Office) to audit the Federal Reserve system before the end of 2010. Per the Federal Reserve, "Monetary policy is exempt from audit by the Government Accountability Office."

Back Where We Started From

Seems to me that we the government is again trying to pass the buck. It's obvious that self regulation has not been working. Even Former Federal Reserve Chairmain Alan Greenspan said that he never ever thought that banks would not act in the best interest of the shareholders. I think that Jim Rogers got it right by moving to Singapore and focusing on the Asian markets. China is getting wise to the game here. When will we?

Just Like Japan

Is Tim Geitner, US Treasury Secretary looking for a second chance? Not to say that Geitner had a hand in Japan's lost decade, the dead period in Japan's economy when they went through a banking crisis similar to that which we have today. Geitner, in fact, served as the Treasury attache' to Japan in the early from 1989 to 1991. Can he refine the strategy that failed in Japan?

Bank stocks rallied overnight after the release of the stress test but still, many believe that the parameters of the stress test were too lenient. Some even believe that the highest unemployment assumptions might be questioned even as early as this morning, in 30 minutes. Almost everyone expects the unemployment numbers to be moderating. But there are still a few holdouts who believe that we are on a hellbound train. Well recognized figures such as Nouriel Roubini and investor Jim Rogers fear that we are headed for a depression and government intervention is the absolute worst thing to do.

Only time will tell how tings play out. Certainly the government's strategy to print more and more money to save the economy has been the strategy that has gotten us into this mess in the first place. It happened after the Asian Financial Crisis and after the high tech bubble burst. Each time, the government created a new bubble and the bursting got worse and worse. Now Geitner and Bernanke are truly betting the house. They again created still another bubble in the Treasury securities. Certainly should this bubble collapse, the credit-worthiness of the US Government will be as good as many of the bankrupt homeowners who just like the government, took on much much more debt than they could service.

In the end, rising rates destroyed the hopes and dreams of many who bought their homes using Adjustable Mortgage Rates. When Fed Chairman Bernanke came on the scene, he quickly raised rates as high as 6%. This truly caused the stress that we have now. Many blame it on the banks, and for sure, their predatory practices and
fancy mortgage derivatives exacerbated the situation. But for many, the dramatic increases in rates and much higher mortgage payments caused the bubble to burst. Now we are again on the opposite extreme with interest rates close to 0%. This can only lead to great inflation and another super bubble, just as in the past.

Looks Like Japan