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We are closer to the Endgame – Zero Hedge Rules
Zero Hedge became an internet prodigy largely because articulate funny financially bright people can exchange ideas there anonymously and freely without the usual ad hominem PC PsyOp price of admission denial of service attacks.
Herewith our response to one of their best posts yet, worthy of the Federalist Papers, Samuel Adams and Poor Richard’s Almanac yet: http://www.zerohedge.com/article/good-morning-worker-drones-week-mayhem
TD you are geopolitical economic comedian mensches after our own heart. Herewith some penchant truculent observational paeans:
Part I: Last Week
1. Banks with zero carry on their Treasuries and Mortgages led this artificial rally throughout and anyone foolish enough to jump in now is testing the greater fool hypothesis to the limits. The fundamental problem seems to be the 10% or 5% net capital leverage does not give them much of a cushion against higher interest rates. Wouldn’t it be interesting to see the Fed bankrupt playing out their rigged insider big five financial trading scheme?
2. Kudos for the sleuthing. Herein lies a problem for those of US accustomed to using COT figures to our profit. With US Banks still holding some $200 T of OTC derivatives versus the $600 T worldwide, hundreds of times their net capital, and not marked to market, how are we to get bona fide transparent market information signals? $85 B in OTC Equity derivatives certainly not enough to pump the March lows 50%, but that was left to the big five banksters who are now doing the monopoly media mating dance to bring retail sacrificial lambs into the knacker. $1.169 T not enough to hedge rising interest rates either, so we think bankster net capital faces a second more terminal crisis that BB, LS, TG and BO may not survive economically or politically speaking, judging from the town halls. (Get those KBR swine flu camps ready!).
3. Capital flight, the ultimate illustration of Gresham’s Law that bad money drives out good. Sir Harry Schultz in June HSL reported Overseas Embassies were unofficially leaking news of instructions to convert massive quantities of dollars into local currencies to maintain operations for quite some time. We are students of Nathan Rothschild’s famous head fake after the Sunday Battle of Waterloo, where, forearmed with news from carrier pigeons, he stepped up to the LSE Bourse to publicly sell, while his private proxies bought everything sold in the panic triggered by people without his news assuming Britain had lost to Napoleon. And we are interested in the apocryphal Reagan Wanta Forex story of trillions of dollars made at the ruble’s expense, as we were with multiple stories including Tom Clancy of passenger jets flying into DC buildings before the actual events, accompanied by official denials. We think the more interesting scenario is, to borrow an overused CNBC LK phrase, King Dollar, triumphing as US financial markets collapse or go on holiday, and there is just not enough physical gold, silver and copper available to buy. (We already saw this when dealers ran out of Silver Eagles, which went to 100% premiums.) While COT figures long the dollar here now confirm this, we worried about larger opaque OTC derivatives on the other side of the trade, until we realized they are meaningless when TILT GAME OVER lights appear on the Fed financial pinball machine.
