|
We are constantly
reading and comparing current economic fundamentals and market action with
similar historic experiences in the U.S. Today we discuss key points with
eerie similarities to other troubled times. This discussion will get you
thinking. As someone once said, “History never repeats exactly but
certainly rhymes.” What we envision today as the result of these comparisons
creates such a fright your hair will stand on end.
“There can
never be any certainty that a debt crisis will not spiral out of control.
Risks therefore, must increase until the financial pressure becomes
intolerable and the financial authorities move to inject massive amounts of
liquidity, reduce interest rates and bail out the large awaiting bankrupts
that are about to collapse.” -The Bank Credit Analyst,
September, 1982 from Golden Insights compiled by James U. Blanchard III.
That Bank
Credit Analyst quote could easily be from last week’s newspaper not
1982. Let’s review a list of old era key points and see if you can
determine the dates. The following data was experienced in another economic
disruption.
The economy fell
down after a prolonged and serious war. There seemed to be a series of never
ending recessions and depressions despite a pattern of industrial growth,
innovation, and invention.
Foreign capital
was pouring into the U.S as Wall Street’s investment bankers and
trading houses were booming. Expansion was amazing.
There transpired
a physical shock to the land which proved horridly damaging and expensive
beyond initial comprehension.
Financial
pressures were growing on the national and private treasuries of most
Americans. Demands became such that those in the private sector found
themselves being “crowded out” by big government seizing credit.
Global capital
demands were so extreme against the banks and other sources of credit and
liquidity supply that analysts were very seriously concerned about the outcome.
The initial shock
nearly paralyzed Wall Street and liquidity dried-up to the extent
governments, banks and brokers were running everywhere in a serious panicky
strain seeking liquidity and credit to cover debts and repay failing
valuations. Shares tumbled, and fear escalated as leverage produced
increasing pressures.
After some
serious damage, the turbulence subsided and optimism returned. However,
robust buying did not return except from those in privileged positions with
extraordinary capital access.
Demands on gold
had been fierce and even higher demands for this precious metal were
expected. No one could see the end or measure the depth of this catastrophe.
The American
president was deeply disturbed about the financial system, out of control growth,
the numbers and types of immigrants flooding into the nation and very poor
living conditions for the masses. The president and others looked at Wall
Street not with respect but great fear. Since the war, capitalists were
judged to be “looters and self-dealing promoters.”
This president
was very aggressive and took immediate steps to rein-in the companies and
provide more advantage to labor. Lawsuits were filed against major industries
and companies with some of them being arbitrarily resolved.
This president
“sued nearly 40 corporations under the Sherman Anti-Trust Act.”
This president “In a Memorial Day speech at Indianapolis, railed that
the ‘predatory man of wealth’ was the primary threat to private
property in the United States.” Later this president was judged to be a
prime instigator creating the subsequent crash.
Liquidity strains
expanded over the world spreading deeply into Europe setting-off sales of
shares and other securities, coupled with a bitter angry rising of new
regulations.
Events of this
example were not as prolonged as our current debacle but nevertheless they
were nasty enough to threaten the very foundations of stock trading and the
entire financial system of the United States. What was prolonged were the
economic, social and corporate abuses over years.
When Did This
Happen?
This disaster was
in the making from the early 1870’s after the US Civil War until the
final fiscal explosion known as the “The Panic of 1907.” The
president was Theodore Roosevelt. The contributing physical event was the San
Francisco Earthquake and fires. In hindsight, we see the U.S. was in a
prolonged recession-depression from 1873 to 1893. From 1898 to 1906, the
rebound and excesses provided a set-up for the Panic of 1907.
Notice
Similarities In These Events With Our Current Troubles?
Those ideas
reported above were in the book the “Panic of 1907,” by Robert F.
Bruner and Sean D. Carr. We would encourage everyone with a stake in our
global economy to read this book and think about current conditions. This
book details several more similarities to the extent it seems most severely,
negative economic events all end the same.
People’s
actions and psychological feelings form the basis of human
reaction. People react nearly identically under similar circumstances.
Then, obviously, the outcome remains the same or is at the very least quite
similar.
With the advent
of speedy computers we think current conditions are further compressed into a
pressure cooker about to explode. Computer acceleration enables a trade in
Asia in the night to be felt within seconds throughout the world. We have
seen this numerous times with Sunday evening Asia copper trading followed by
vastly changed prices on the open in London and in New York the following
day.
Global finance is
an interconnected daisy chain of creditors and debtors. If one key link
let’s go the entire chain can be at risk. Remember Long Term Capital?
This event was a freaky non-expected mess that originated from over-leveraged
massive hedge fund trading as Russians bonds collapsed. Who would have
expected that one?
The next key
point relating to the LTC debacle is the extent further unpredictable fallout
can subsequently cascade from other parts of our system. Despite the fact
we know US bankers and their henchmen in congress joined together to allow
trillions in derivatives to go bad, they still have not addressed the
majority of these problems. We are still exposed.
All types of very
nasty financial derivative instruments remain in lurking piles in back rooms
of banks throughout the world. If all that junk had been put on the table and
marked to market at once, an immediate global collapse would have been
inevitable.
Current theory is
to continue to reinforce confidence within the herd. Media and public
relations machines of central bankers, corporate types, stockbrokers, and
others with a vested interest in prolonging the game are fully engaged. If
the herd panics and runs, we could see another 1907 all over again of
infinitely greater dimensions.
The Sheeple are
deliberately lied to and kept in the dark regarding economic reality. If most
of them understood the seriousness of our predicament, they would empty bank
accounts in massive runs and head for the hills. We think this could happen anyway;
but it is not a certainty. Just when the end of the world appears nigh more
tricky rabbits jump out of those Bernanke-Geitner hats. The words
“slippery snakes” seem a good definition.
As long as the
herd can be controlled, inflation rises and debts are inflated away in a more
gradual than abrupt scenario. As long as some semblance of order and
continuity can be maintained, the manipulators hope they gradually melt down
the dollar with inflation and destroy debt values within huge piles of loans.
This is why the dollar today is only pennies of its former real value. These
crooks have been successful in following this “inflate it away”
plan for decades.
Debts can be
eliminated or destroyed with inflation as well as in the old fashioned ways
of repayment or, repudiation. We suggest the real test comes in the later
spring and fall of 2010. The manipulators objective is to hang-on at all
costs finally ending it with a new, bailout world war in roughly 2012.
Our physical
catastrophe was Katrina, the Iraq war and continuation of expensive treasury
draining for Middle Eastern conflicts.
Eventually, when
the world finds a recovery, we think it happens after a war similar to WW I
in 1914-1918 a few years after the Panic of 1907. Remember the Roaring
Twenties” post World War I?
Governments can
wail forever about how they can inject more credit and liquidity into
financial systems to “Spread It Around.” Their larger
problem is one of pushing on a string. Big credit is no credit if business
and consumers are wrecked and refuse to participate. For now big banks and
investment banks are okay. Everyone else is out in the wind and a typhoon is
just ahead. Maybe not tomorrow, but its coming to your house.
In the massive
consumer sector, the herd is very touchy both in economic observation and
spending their hard earned cash. If they smell a rat they run. And today the
herd continues to run steadily over a cliff. They are not spending. Those
that can are saving. When some real scary fear arrives next year we’ll
see who can pass the final test.
TARP was a
gigantic failure for consumers and a homerun winner for crooked bankers and
politicians. Banks are recapitalized by taxpayers again and are still
foolishly engaged in more bad behavior. Why? Simply because they can; and are
permitted to do so. They want the big bonuses. Notice Goldman Sachs is paying
out even higher bonuses this year than in those hot years preceding the
Lehman mess? The scam remains in full play.
To make matters
worse we have the one-worlders, many of whom have gained their millions and
are interested in only two things: (1) Prolonging the game for control and
(2) an absolute naked global power grab. The elitists and one-worlders are
using tools of the UN (money, control and troops), and the IMF and World Bank.
Further their gang members and the infamous cabal within the Council on
Foreign Relations along with miscellaneous central bank lackeys led by the
Federal Reserve all live in the same power grab cesspool.
It was reported
the Federal Reserve is now rated lower in the polls than just about any type
of profession or institution. Abolishment cries are on the rise to erase this
gang. It shall be very interesting to see where it goes next. Reading
this kind of stuff can cause depression lasting more than a few days.
Don’t get depressed; be a realist and attack these problems with common
sense.
Your defense is
to extricate yourself, your friends and family from the entire system to the
extent possible. It cannot be done entirely but more so than most imagine.
We just finished
the book “The Greatest Trade Ever” telling about how one
very smart guy set new records for profits shorting housing and housing
credit. This same super successful trader is now an advocate of gold and says
this is the next bigger opportunity. Our readers and those visiting Kitco
knew this already. This news merely re-justifies our positions and signals we
are on the correct, longer term trend.
We cannot save
the world but we can save ourselves, our families and our
friends. Get busy or busier with gold and silver. Buy physical
first and then get trading.
We are expecting
a mild markets’ move on technical signals at this date. Could it become
more extreme? Yes, it could but it increasingly appears we get a mild
correction followed by a new shares rally in precious metals and mainstream
shares. We would be PM shares buyers on our technical confirmation. We
recommended four new trades this week putting our toe reluctantly in the
water. We’re skittish as the charts are so toppy.
Financials crashed
in fall, 2008 with Lehman. Recovery began with TARP in May, 2009. During
November, 2009, we’re ending a dead cat bounce with mild toppy selling
later this month. Precious metals and their shares are still peaking on this
November 18, 2009; for the shorter term. Next week most trends could reverse
and then later move to rallies. Between now and then some selling and
corrections should appear. We are at a turning point in most markets with
lots of choppy, sideways trading.
Keep in mind, if
you own paid for stuff it will most likely remain in your hands; not in
somebody else’s. That includes gold and silver. Do not get tangled-up
in daily noise. Keep studying the larger view and buy precious metals after
each profit-taking correction. Headwinds are building into an economic
hurricane. Take care of business right now.
My dire
prediction might surprise us and arrive at any time. Selling is mild now. But
next summer could be the larger crash. In the coming middle, look for more
buying on most everything. Our personal trading year is up over 100%. Markets
are giving and giving.
Personally, I can
see unbelievable opportunities to trade that we would never see again for
many years. Turn these problems into opportunities. Those on the right side
of the trade might get rich. Those on the other side are just victims. Stay
Alert. –Traderrog.
Roger Wiegand
www.webeatthestreet.com
Also
by Roger Wiegand
Roger
Wiegand is Editor of Trader
Tracks Newsletter and of
the Rog Blog at www.webeatthestreet.com.
Roger provides recommendations for short and longer term trading using
stocks, futures and commodities with specifics.
Contact Claudio Bassi, at Trader
Track’s New York City publishing offices for a trial subscription. Call 718-457-1426 Monday
through Friday,
9:30am to 5pm or, e-mail cbassi@miningstocks.com
Recommendations
made in “Trader Tracks” are exclusively those of Roger Wiegand
and the publication is also exclusively the editorial content provided by
Roger Wiegand. TAYLOR HARD MONEY ADVISORS, INC. (THMA) LOCATED AT 33-42 61ST STREET, WOODSIDE, N.Y. 11377, ASSISTS IN THE MARKETING OF “TRADER TRACKS.”
However, the views expressed in Trader Tracks do not necessarily reflect
those of THMA (Website: www.miningstocks.com). Because individual investment
objectives vary, this summary of investments should not be construed as
advice to meet the needs of any particular reader or subscriber. Opinions
expressed in Trader Tracks are statements of judgment expressed at the date
and time they were written, and as such, are subject to change without
notice. Roger Wiegand is not a CFA nor an investment advisor, but a private
individual who studies the markets extensively and offers summary opinions.
Before any type of investment is made, you should always seek advice from
your attorney, CPA, registered broker, or financial advisor. There is
considerable risk in market speculation and investing. There are no
guarantees regarding performance and past performance provides no guarantee
of future performance. Your trading accounts are always subject to the
potential for severe or total losses. This service will involve SPECIAL
EMAIL ALERT TRADING RECOMMENDATIONS PROVIDED AT ANY TIME Roger Wiegand
believes it is opportune to trade either in or out of the market in question.
AS SUCH, THIS SERVICE WILL BE CONSIDERED A PREMIUM SERVICE. The
management of THMA, Inc. does not anticipate trading in the securities
recommended in Trader Tracks. No statement or expression of any opinion
expressed herein constitutes an offer to buy or sell the securities mentioned
herein. Trading futures contracts may not be suitable for all investors. You
may lose a substantial amount of money in a very short period of time. The
amount you may lose is potentially unlimited and can exceed the amount you
originally deposit with your broker. This is because trading futures is
highly leveraged, with a relatively small amount of money used to establish a
position in assets having a much greater value. If you are uncomfortable with
this level of risk, you should not trade futures contracts. If you need a
broker, contact mine, Ryan Olson, Managing Partner, Jackson-Olson commodities
at 800-352-5228 or by e-mail rolson@jacksonolson.com Contact Jackson-Olson
Commodities, LLC, 5510 Abrams Road, Suite# 101, Dallas, Texas 75214. Local Telephone is 214-691-8600. Fax is 214-691-8614. Jackson-Olson clears trades through
R. J. O’Brien founded 1914. They provide clearing and execution
services in virtually all markets around the globe. To subscribe to Trader
Tracks stocks & bonds, futures & commodities, contact Claudio Bassi
with e-mail CBASSI@MININGSTOCKS.COM
| 
