Tuesday, July 12, 2011

Like a Bad Hollywood Remake

Like most any Hollywood remake, the second or third in a series is always worse than the first. And so it goes on. The fun in Europe just never stops. Just when the banking and political elites had thought they had bought some breathing space with the passage of the on again off again interim bailout package for Greece along comes the Spaniards and Italians to gum up the works. Sadly the situations in Portugal and Ireland haven’t improved either but in the bigger picture appear small compared to what’s coming with Spain and Italy.

First, and almost as a side note, we get some of the Spanish provinces announcing that they are finding that their deficit conditions are almost twice as bad as previously reported. (Read their Credit Default Swaps are going down the toilet.)

Next comes corruption plagued Italy’s banks sinking faster than the Lusitania. They started collapsing so fast that trading had to be halted, only to resume once the markets were reopened. The replay of the Greek delusion that all could be settled with austerity packages and a few bond buy backs at below at below par blew up even quicker than it did in Greece. It seems those pesky rating agencies just won’t stay bought and informed the ECB and the IMF, not to mention the public that doing so would simply be default by another name. They can put all the ribbons on this steaming pile they want, it’s still going to stink.

Add in the new IMF President opening her mouth and saying that “nothing should be taken for granted on Greece” and the next thing you know the Euro drops back below $1.40 for the first time in a year. What more could possible go wrong? Oh that’s right Germany’s Angela Merkle said that any expansion of the existing €500 Billion bailout fund at Germany’s expense was off the table.

Hey I’m just an engineer but I still think €376.7B + €624.8B = €1001.5B is just a tad bit larger than €500B.

Gee I wonder why the price of gold is again approaching its all time high in Dollars and has already passed it in Euros. The real kicker in the PM markets though is the price of silver. While gold and the Swiss Franc again soar, silver remains in the summer doldrums to say the least. Guess these poor fools have bought the line that silver is just a mere commodity and not real money. Meanwhile inventories plunge and naked manipulation and price suppressions goes on at an accelerated pace. Just as the bankers and politicians solution to debt is more debt their solution to being naked short in silver is to go even farther naked short. It’s reached to point of hilarity.

Look at this chart for July 11th and try to tell yourself that this is not manipulation. While you’re at it click your heels together three times and you might find yourself back in Kansas too.

Just another opportunity to buy as far as I’m concerned. When the bill comes due the price will explode to $200 an oz. and then we will be seeing just who is sitting fat. Hint: It won’t be JP Morgan or HSBC.

Never mind, the one thing you will be able to count on is that the Central Banks will continue doing two things; churning out more propaganda to keep the view blurred and confused and continue using those piles of newly printed currency notes to buy hard assets to protect themselves from the growing debacle that they created, while everybody else’s situation only gets worse. Hey maybe I should go long on pitchforks and torches as a side investment.


  1. Bernanke is now hinting at QE3 (which was a foregone conclusion after obama was elected). I guess this is the third installment of the "bad movie" we are currently in. Add to that the fact that the senate minority leader wants to give obama a free-hand with the debt ceiling, and it might be more profitable to collect and recycle aluminum cans than to work for USDs.


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