Friday, September 4, 2009

Who's Buying This Cooked Market? Crooks, Computers, and the Coming Crash

I certainly respect Obama's ability to speak softly and try to work with those across the aisle (although I wish his big stick were more in evidence on the health care finance reform bill), but I become more and more concerned every day.

I know you've thought of this recently, but Graham Summers has done more than merely think about it (he's documented it). I'll admit that most of this compendium was already known to me (as the facts were published in a timely manner (or maybe not)).

Only one thought occurs now though "Whom to trust?"

Hank Paulson, Tim Geithner, banksters, traders or my growing sense of really needing to move? (And what's happened to the Rude Pundit's blog today?)

As stocks continued to rally into September, one has to ask one’s self, “just who’s buying this rally?” The answer? Computers and no one else. I’ve written extensively about the computer trading programs thatare dominating this market. All told, High Frequency Trading Programs (HFTP) control 70% of trading volume on the NYSE. However, at this point, five stocks (yes only five) account for 40% of the trading volume on the market. Those five stocks: Citigroup, CIT Group, Fannie Mae, Freddie Mac, and AIG. Think about that, five stocks out of several thousand, are accounting for 40% of ALL trading. And which five are they? Five that are virtually guaranteed to be propped up by the government in one way or another (CIT indirectly through Goldman and other government-aligned groups). This summates today’s market like nothing else: folks are ONLY trading the investments that they know are on life support from the government. That metaphor extends to the entire economy. Nearly 20% of incomes come from the government. More than 34 million Americans are on food stamps. This will continue. The government will extend unemployment and every other short-term “fix” it can. But it won’t do ANYTHING to create real job growth. The life support metaphor extends to the financial system as well. The Fed has extended TRILLIONS to support virtually everything out there. Here’s a brief list of some of the more major items: The Federal Reserve cutting interest rates from 5.25-0.25% (Sept ’07-today) Bear Stearns/the Fed taking on $30 billion in junk mortgages (March ’08)

The Fed opens up various lending windows to investment banks (March ’08)

The SEC proposes banning short-selling on financial stocks (July ’08)

Hank Paulson uses the blank check with Fannie/Freddie spending $400 billion in the process (Sept ’08).

The Fed takes over insurance company AIG (Sept ’08) for $85 billion.

The Fed doles out $25 billion for the auto makers (Sept ’08)

The Feds kick off the $700 billion Troubled Assets Relief Program (TARP) with the Government taking stakes in private banks (Oct ’08)

The Fed offers to buy commercial paper (non-bank debt) from non-financial firms (Oct ’08)

The Fed offers $540 billion to backstop money market funds (Oct ’08)

The Feds agree to back up to $280 billion of Citigroup’s liabilities (Oct ’08).

$40 billion more to AIG (Nov ’08)

Feds agree to back up $140 billion of Bank of America’s liabilities (Jan ’09)

Obama’s $787 Billion Stimulus (Jan ’09)

Fed announces its plans to buy $300 billion of Treasuries (Mar ’09)

Most if not ALL major banks, the stock market, the debt market, and more are on Fed life support right now in one form or another. Take this life support away, and you have a full-scale collapse. I’m talking about 300 on the S&P 500 and 3,000 on the Dow.

And what a life support it is:

Please read the rest if you have the time. Suzan _____________________


nunya said...

Bernanke didn't do all of this. The Fed is supposed to regulate and monitor the banking industry. What it does is nurse a bunch of spoiled assholes that need to be off the teat, and change their diapers when they shit them. Again. Even though they are way past potty training age.

After reading "The Secrets of the Temple" by William Greider, I follow what he writes.

Suzan said...

As do I (see my link to one of Greider's fine essays here:

I link another (also) of his at the end of my blog on my blogroll. (and as you know he has some very, very tough words for Bernanke in The Deification of Gentle Ben, which you linked:

While the mainstream press portrays newly reappointed Fed Chairman Ben Bernanke as a mild-mannered hero, the reality is he is responsible for much of the economic pain Americans are feeling.)

I adore him for his courage and ability to speak out plainly without fear about the plans our masters have for us.

Thanks for your comments!


Financial-market wise guys, who had been seized with fear, are suddenly drunk with hope. They are rallying explosively because they think they have successfully stampeded Washington into accepting the Wall Street Journal solution to the crisis: dump it all on the taxpayers. That is the meaning of the massive bailout Treasury Secretary Henry Paulson has shopped around Congress. It would relieve the major banks and investment firms of their mountainous rotten assets and make the public swallow their losses - many hundreds of billions, maybe much more. What's not to like if you are a financial titan threatened with extinction?