Thomas Henning: Musings of a Stock Market Curmudgeon
It's All About Gold, Part IV
As described in three previous articles, a gang of international bankers have debased the world's currencies through a very profitable public and private debt laden Ponzi scheme, as much gold was tripped from the world's treasuries. The gold strip is what the game is all about.
Given that there will be a debt implosion, it may be helpful for the savvy player to take a further step in the scenario and anticipate the overall climate in which the implosion will take place. To do this, we will take a look at the banking gang and their probable reaction to the debt bubble burst, and how the savvy player should react to the implosive condition.
Essentially, the banking or bilder gang is made up of politicians of all persuasions including ex-presidents, senators, etc.; media moguls along with their puppet talking heads; born to the manor money manager types; military heads; and lastly, the bankers, Big Al, Fed and World Bank types, etc. The bankers hustle the transfer game as the politicians and media types sell the hustle to the sheeple who passively support the hustle by voting for the free lunch, getting taxed to death to pay for their own free lunch, and then getting paid off with inflated Dollars having lower buying power. The sheeple also buy U.S. Bonds, pay taxes to pay off their own bonds along with the interest, and eventually get paid off in inflated Dollars. Meanwhile, the bilder gang takes the gelt and lends it out on a fractional basis at who-know-what multiple, collects the vigorish and pays off the bonds in depreciated Dollars. What a sweet hustle. P.T. Barnum was right when he said, "There's a sucker born every minute."
The broad grand banking plan is to centralize the world's economic power into one neat controllable package which facilitates profitable interest paying debt and money flow. The problem with the plan is that the debt bubble is beginning to burst. The bond market is most likely dead meat, having seen its highs with interest rates rising, which is putting the squeeze to the in-hock world.
The hustle was started in 1913, with the passing of the Fed Act, and this gang is now roughly three generations old, having been raised on the sacred theology of Fed babble. I suspect that they are incapable of comprehending the end of their game. Interestingly, during the 1987 implosion, the T.V. financial press showed a bunch of the boys coming out of a quickie Paris meeting with total panic on their faces.
Given higher rates and debt default and implosion, there will be real estate dumping, a bond market devaluation, bank loan portfolio implosions, with probable bank insolvencies aggravated by the derivative cancer, along with a corporate profit collapse with tax receipts drying up causing the free lunch not to be paid, as holders of foreign dollars and government bonds "diversify" out of the Dollar. Kiss off the pension funds. This is only for starters. It will be a deflationary bubble burst, and end to the sacred belief system that has been operative since 1913, and the end of an economic epoch that started in 1913.
The banking gang, being only human will think in terms of their ruptured belief system. Their world and economic belief system will cease to exist as ninety years of economic currency self abuse and of debt creation will evaporate. Anything that they do, say, imagine, will be irrelevant. It will be like the World War I cavalry charge into a bank of Maxim machine guns. The destruction of a 90-year Ponzi scheme will be concentrated into an implosion of a very short time. The world will enter into an economic void as 90 years of economic concepts is blown sky high. This is the nature of a bubble burst. It happened when the South Sea and tulip bulb bubbles burst, and more recently, the Dot Com blah blah bubble busted.
The savvy player must purge his mind of any belief system based on the "new world order" and concentrate on the market actions only to profit from that action. Ironically, the savvy player could make a bundle and have the check bounce because the banks could fail. A true nightmare, but the savvy player lives in a world of reality denying Fed babblers and must adapt and survive in the concentrated food chain
To handle the real world, let's look at the markets.
The bonds are dead meat. The final wave of the bull cycle that started in 1982, waved up as marked in the Weekly bond chart with the 5th wave peaking out last February. This was followed by a downleg that busted the Weekly Hard Momentum to the bear side. A close below 109 would break a series of lows and would confirm the breakdown. This is the start of higher rates that will put the squeeze to the in-hock crowd.
The stock market is at the tail end of a bull cycle that stared in 1982. Look at the Weekly Value Line Index and note that the 5-wave upleg off of the 2002 low has evolved nicely. Given that this 23-year cycle is just about waved out a downmove of about a decade is in the cards.
Near term, my favored wave count suggests that a final peak was put in on March 7th. However, I have a less favored alternate count that suggests the possibility of another upleg of a few weeks. To drag in the jury, the Dow has to close below 10, 350 with the Transports below 3450. What's bothering me about the near-term bear case is that the Transports are a fair distance away from confirming to the downside relative to the Dow. It's my old Dow's Theory roots that keep me from turning near-term super-bearish; however, if the Transports bust that 3450 level, I'd say that the bear cycle has been confirmed.
The gold complex bottomed in late 2000 and legged up in a 5-wave move and has moved into a corrective phase since late 2002. (Refer to the Monthly XAU chart.)
Near term, my favored count suggests that the broad corrective wave is still in gear. To confirm the beginning of the next primary upleg, the XAU must close above 115 with the gold punching above 460. Until that occurs, gold will be like your first girlfriend: "It'll break your heart every time."
I strongly suspect that the gold complex will accelerate when the Dollar Index breaks into new low ground below 80 as the Dollar is regurgitated and the implosion accelerates.
To sum up the situation, the ninety-year Ponzi scheme is beginning to implode as interest rates begin to rise, forcing the debt load to become unserviceable, which will trigger a default implosion. Much gold has been sold off from the various treasuries of the world, which has been contrary to the national interest of the countries involved. This gold was readily accumulated in the open market. This tells me that there is a move afoot to strip gold, and the ultimate game is about gold.
Meanwhile, the implosion will rupture the established belief systems in force for ninety years as the promoters of the belief system wander in their bubble busted la la land. The Ponzi scheme, which taxes the sheeple and pays off the free lunch with inflated dollars will have their tax base deflated and will have to pay off the inflated free lunch commitments in deflated dollars having much higher buying power. The hustle will go bass ackwards. Only a total fool would believe that this situation would be sustainable. Bye bye free lunch.
The savvy player must adapt to this condition as the world's economies, which have moved from the "old world order" into the "new world order," now move into the "no world order."
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