Incarcerate Corzine

12/09/11 Laguna Beach, California – If wishes were horses, beggars would ride, according to a 16th century British proverb.

Continuing that logic, if wishes were $1.2 billion of missing client assets at MF Global, the company’s former CEO, Jon Corzine, would not be a criminal. But alas, wishes are neither horses nor missing client funds…so beggars don’t ride and CEO’s that “misplace” $1.2 billion of client funds are criminals.

Does Corzine deserve his day in court? Absolutely. Let’s give him several days in court…after which let’s give him several years in jail.

Perhaps there is a legitimate defense for Corzine’s overtly indefensible act. But we pity the poor defense attorney who has to come up with that one. In the heavily regulated, frequently audited and continuously marked-to-market world of broker-dealer operations, $1.2 billion does not simply “go missing”…and if it does, the CEO absolutely, positively knows about it, if he did not directly authorize it himself.

Were it not so, dear reader, Mr. Corzine would not have appeared before Congress yesterday with the lamest of all possible defenses. He would not have delivered a series of “oh my gosh,” “gee whiz,” “golly gee,” “I wish I knew what happened,” and “shucks, I feel awful” remarks.

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via Incarcerate Corzine.

Hedge Funds Facing Worse Year Since 1990

Friday, 09 Dec 2011 06:42 AM

By Forrest Jones

This year could shape up to be the worst year for hedge funds since 1990 overlooking 2008, which was roiled by the near collapse of the global financial system, according to data from Hedge Fund Research.

The average hedge fund has lost 4.37 percent so far this year in absolute returns, Hedge Fund Research reports, and while 2008 was worse, disaster struck all at once in the last quarter of the year, while 2011 roiled in volatility all year, the Financial Times reports.

Blame the eurozone crisis and issues such as political impasses during the U.S. debt ceiling debacle and ensuing downgrade of U.S. ratings by Standard & Poor’s.

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via Hedge Funds Facing Worse Year Since 1990.

An Overpriced Market Meets The Global Economic Slowdown | Bob Chapman

October 19 2011: A stock market that is still overpriced, what can leverage do for bailouts, debt is endemic worldwide, injections of money and credit cant stop the global economic slowdown, no viable solutions for Europe.

It could then be that this is the top of the stock market, which is fundamentally very overpriced. The latest rallies are the result of statements by French President Sarkozy and German chancellor Mrs. Merkel that a financial solution is at hand for Europe. This announcement named the end of the month as the date for release of this information. Thus far there has been no further comment. This was the justification for a very strong rally. In the wings there are large short and put positions, which tell us that there is a body of speculators that believe the fundaments are not in place, nor was the recent rally justified. In relation to Europe we see two possibilities; countries bailing out their own financial sectors and the use of leverage to extend bailout funds into trillions of dollars to assist the six insolvent nations. Some nations currently prohibit the use of leverage. Needless to say, rules do not impede adventurous politicians in the control of elitist interests such as the banking community. We will have to wait for this new formula, but in the meantime its results have already been discounted, or military action increases in the Middle East, perhaps in connection with Iran?

Debt problems are endemic worldwide. We all know of the problems in the US, UK and Europe, but they extend all over the world. We are in a major financial crisis, which is as bad and will be as damaging as the credit crisis of three years ago. In fact we never exited that crisis. Debt is the problem and creating more debt does not solve the problem. We have written often about debt and currency problems and as yet nothing is being done to solve these problems. It is as if these powers wanted a collapse. How long can the US dollar continue to take this thrashing? Unfortunately it is not only the dollar. Over the past 1-1/2 years nine major currencies have fallen on average more than 20% vs. gold and silver. Thus many countries and their financial institutions are going to be in serious trouble. The dollar and the euro are both overvalued and even after a 15% devaluation the Swiss franc is undervalued. It is not only going to be currencies, but everything financial that is going to be affected. That includes bonds, stocks, savings accounts, CD’s; cash value life and annuity policies. The only things that will benefit will be gold and silver related assets. For all intents and purposes in the US, the FDIC has no funds and has to have them allocated in the form of debt by the government. More debt means more inflation and higher precious metal prices. The global financial community has to be terrified because their whole world is coming unraveled around them.

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via An Overpriced Marked Meets The Global Economic Slowdon | International Forecaster Weekly Bob Chapman The International Forcaster | Economy News | Investing | US Market Information | Gold | Silver | Wall Street Bailouts | Investment Trends | Money Resources | US and Worldwide Politics.

Big Trouble Brewing – Chris Martenson

I do not toss around the idea of a market crash lightly. If you’ve been following me long enough, you know that only in very rare instances do I issue a cautionary Alert (I’ve only issued four since my website launched in 2008), and I am generally not given to hyperbole.

Let’s be clear: I’m not issuing an Alert at this time. But I am concerned that a materially adverse disruption to the financial markets is increasingly likely in the near future.

Perhaps a definition will be helpful as we begin. A ‘market crash’ is an event where there are no bids to meet a wall of selling. The actual amount of the percentage decline is less important to note than the amount of chaos, or loss of control, that a given market experiences. Some like to say that a market downdraft requires a decline of 10%, or maybe even 15% or 20% (or more), in order to qualify as a ‘crash.’ For me, the key factor is not so much the amount of the decline, but the pace of the decline.

With perhaps a quadrillion US dollars of hyper-interconnected derivatives outstanding — that’s the notional value, but who really knows what the real number is? — an orderly market is essential for knowing whether or not the counterparty to one’s trade is solvent. During periods of intense price swings in the market, such things are simply not knowable, and spawn the fear and paralysis that really define a market crash.

The Next Market Crash

Like everybody, I have no idea when the next market crash will occur, but I do happen to hold the view that a market crash is on the way. In fact, my view is that the entire future from here onward will be marked by sharp plunges (both crashes and regular market declines), followed by periods of stability, if not apparent recovery.

What I track instead are imbalances and risks. Sort of like being a fire marshal who takes note of an outlet with fifteen things plugged into it, some with frayed cords, located near a pile of old cleaning rags. I can’t tell you for sure that a fire will result, only that the odds are elevated. A prudent person will take steps to remedy the situation or at least prepare for the possibility of a fire.

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via Big Trouble Brewing – Blogs at Chris Martenson.

More GAINS coming. Here’s why …

In my June 20 column and in subsequent follow-up columns, I told you in no uncertain terms that …

An imminent crash would occur in the price of gold, silver, and most commodities.

The U.S. stock markets were top-heavy and headed much lower.

The euro crisis would be the catalyst for a 2008-style selling panic in virtually all markets.

Most importantly, I gave you a number of great ways to consider playing what I saw unfolding in stocks, including …

1. The ProShares Short S&P 500 Fund (SH). Or if you wanted to be more aggressive …

2. The 300% leveraged inverse ETFs such as the ProShares UltraPro Short Dow 30 ETF (SDOW), and …

3. The ProShares UltraPro Short QQQ ETF (SQQQ) …the ProShares UltraPro Short Russell 2000 ETF (SRTY) …and the ProShares UltraPro Short S&P 500 Index Fund (SPXU).

Since then, and as I pen this column, the Dow Jones Industrial Index is down more than 7.25% …the S&P 500, down 8.75% …the Nasdaq is down 4.87% …and the Russell 2000, down 14.83%.

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via More GAINS coming. Here’s why … | Uncommon Wisdom Daily.

Hyper-Oversold Markets

Compelling and challenging analysis, but I can’t say that I agree with the idea that the S&P  is hyper oversold.  How can higher valuation be justified in an environment of stagflation and an economy starting the next leg down in the “greatest depression” to borrow a phrase from Doug Casey?  Oversold gold, silver and metals stocks…now there is something I can agree with!  JT

The recent sharp selloffs in stocks and commodities have fueled an incessant drumbeat of pessimism plaguing the financial markets. Greece is doomed, Europe is fracturing, China is slowing, the US faces a recession, the sky is falling! You’ve heard all the popular bearish arguments countless times. But as usual at major turning points, popular consensus is dead wrong. Oversold markets are very bullish!

As a battle-hardened contrarian forged by decades of trading, I relish oversold markets. They spawn some of the best entry prices ever seen, the ideal time to buy low (a necessary prerequisite to selling high later). The word “oversold” simply means a price has fallen too far too fast to be sustainable. It happens when traders’ collective fear grows excessive, flaring up brilliantly before rapidly burning itself out.

Both stocks and commodities are seriously oversold today, their prices battered down to silly levels. And as always when oversoldness runs rampant, traders think it is totally righteous. All the endless bearish arguments justifying the super-low prices seem valid and perfectly logical in real-time. But they are just rationalizations, scared traders desperately latching on to anything to justify their own irrational fears.

While the tyranny of the present obscures oversoldness when it is happening, in hindsight it is crystal-clear to all. You certainly remember the brutal stock panic of late 2008, when virtually everyone was utterly convinced the world was being engulfed by the second Great Depression. Everything was sold with reckless abandon, driving stocks and commodities to depths unimaginable a few months earlier.

But we, along with other contrarians and students of the markets, aggressively snatched up extreme bargains in the dark heart of that epic fear storm. Buying when everyone else wanted to sell led to enormous realized profits. So many times in 2009, traders asked me how we knew the markets were going to soar dramatically when everyone else was crazy-bearish. Simple, they were hyper-oversold!

Oversoldness returned in the summer of 2010, although nowhere near as extreme as seen during the stock panic. The stock markets had just plummeted in the infamous Flash Crash, Greece’s sovereign-debt problems led to overwhelming Europe pessimism, the euro was plunging, and weak Chinese stock markets threatened a hard landing in Asia. Global stock markets and commodities were utterly crushed.

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via Hyper-Oversold Markets – GoldSeek.com.

‘Aftershock’ Author Wiedemer: Markets Poised for Meltdown Like 2008

The economic turmoil coursing through the world has financial markets set for a 2008-style collapse, says Robert Wiedemer, financial commentator and best-selling author of “Aftershock.”

“I do think we’ll have another meltdown,” he tells Yahoo. “I think the trigger will be higher inflation. The lack of printed money short-term is going to turn the stock market down within a year.”

At that point the Federal Reserve will go on another money-printing binge, Wiedemer says. “And that’s going to run out like the sugar high we had before. That’s going to kick off a downward spiral in the stock market,” he predicts.

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via ‘Aftershock’ Author Wiedemer: Markets Poised for Meltdown Like 2008.

In Greece, Barter Networks Surge

This is the free market reaction to currency collapse.� Eventually this will take hold in the US as the long term dollar/devaluation collapse continues.

JT

VOLOS, Greece — The first time he bought eggs, milk and jam at an outdoor market using not euros but an informal barter currency, Theodoros Mavridis, an unemployed electrician, was thrilled.

The New York Times

The barter network in Volos has grown to 400 members.

“I felt liberated, I felt free for the first time,” Mr. Mavridis said in a recent interview at a cafe in this port city in central Greece. “I instinctively reached into my pocket, but there was no need to.”

Mr. Mavridis is a co-founder of a growing network here in Volos that uses a so-called Local Alternative Unit, or TEM in Greek, to exchange goods and services — language classes, baby-sitting, computer support, home-cooked meals — and to receive discounts at some local businesses.

Part alternative currency, part barter system, part open-air market, the Volos network has grown exponentially in the past year, from 50 to 400 members. It is one of several such groups cropping up around the country, as Greeks squeezed by large wage cuts, tax increases and growing fears about whether they will continue to use the euro have looked for creative ways to cope with a radically changing economic landscape.

“Ever since the crisis there’s been a boom in such networks all over Greece,” said George Stathakis, a professor of political economy and vice chancellor of the University of Crete. In spite of the large public sector in Greece, which employs one in five workers, the country’s social services often are not up to the task of helping people in need, he added. “There are so many huge gaps that have to be filled by new kinds of networks,” he said.

Even the government is taking notice. Last week, Parliament passed a law sponsored by the Labor Ministry to encourage the creation of “alternative forms of entrepreneurship and local development,” including networks based on an exchange of goods and services. The law for the first time fills in a regulatory gray area, giving such groups nonprofit status.

via In Greece, Barter Networks Surge – NYTimes.com.

The Technical Evidence for a Bear Market Decline | Charles Hugh Smith

What is the technical evidence for a Bull or Bear market? If we keep it simple, the evidence is solidly Bearish.

Without getting too fancy, let’s look for technical evidence of a Bull or Bear market in today’s charts. On a day-to-day basis, the market has experienced huge swings: a nightmare for trend-followers who have been whipsawed repeatedly in the past two months, and a dream for short-term traders:

Is this sort of manic-depressive volatility a sign of a healthy Bull market? No, it isn’t. Extended periods of wild swings from euphoria and hope to fear and despair typify markets that are about to break down.

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via The Technical Evidence for a Bear Market Decline | Charles Hugh Smith | FINANCIAL SENSE.

Albert Edwards: This Man Thinks the Market Could Fall 70%

This article is from June 8th, 2011, but Edwards seems to be spot on in his first “deflation then inflation” hypothesis.

JT

Meet Albert Edwards, an investment strategist for Societe Generale (or “SocGen” for short).

Though SocGen is a French bank, Mr. Edwards is based in Britain. It is there he has developed a reputation as “the City of London’s best-known permabear” (via The New York Times).

Also via the NYT, Mr. Edwards has called for “a stock market collapse of at least 60%, followed by years of inflation of 20% to 30% as the persistent printing of money by central banks desperate to improve the situation sends prices soaring.”

Lately, though, the 60% target has been modified. Now Mr. Edwards, a friendly fellow known for his “sandals and chuckling demeanor,” is calling for an even larger drop.

The new downside target? A toe-curling 400 on the S&P, or roughly a 70% fall from recent levels.

Wild predictions aren’t meaningful in themselves, of course. With all the analysts out there hunting for press recognition, it isn’t hard to cherry-pick the extremes. Sometimes a big target is thrown out, bullish or bearish, simply for the sake of headlines. (Perhaps the most infamous call in history was “Dow 36,000,” in a book of the same name.)

The Albert Edwards case is intriguing, though, because of the logic behind his argument. The price target is not so important as getting the drivers right. If, for example, the S&P fell a mere 40% for the same reasons it was expected to fall 70%, would anyone quibble?

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via Albert Edwards: This Man Thinks the Market Could Fall 70% – Seeking Alpha.