Thursday, May 20, 2010

Global Monetary System Nearing its End - May 19 2010

Hello everyone,

This will be the final email I send out regarding what’s going on with our economy and the world’s financial system. I have a blog – and will continue to add to it – but this stuff is becoming repetitive – and I’m not sure that sending you updates at this point really benefits anyone. These things are not exactly uplifting and it’s getting worse every day.

So – here’s what you need to know. There are four – very important things you need to understand as events unfold in the coming days/months.

1. The world’s economy is collapsing – and has been collapsing for the past 3 years. It has always been unsustainable – we just happen to be alive at the end of our exponential debt/money growth curve. Exponential growth always ends with a steep incline up – then a catastrophic fall – always. Unlike our political and financial leaders – math doesn’t lie. You may not believe this now – but it will become clear to everyone very soon. Things are accelerating rapidly. At some point – you’ll begin hearing the talking heads on TV using the term ‘free fall’ quite often. If you don’t understand why everyone isn’t saying this now – ask yourself how many times (high school, college, economists, etc.) you’ve heard someone explain how our banking/monetary system works. Enough said. If you want a refresher – here are a couple of links to related blog posts:

2. This global economic collapse is not an accident or random event – nor is it going to be a surprise to many of the world’s political and financial leaders. There is an agenda at work here – and it is evil. No other way to say it. The people behind this are the richest, most powerful people in the world – and they have been scheming for hundreds of years – to bring the world to the brink of the abyss. Why? They have used their financial strength to cause financial panics in the past to move their plans forward – we’re watching the same game plan play out before us on a global scale. The goal has always been a one world socialist government (very similar to the USSR or China) with the global elite running the show. If you think Obama appears to lean toward Socialism – you’d be correct – but probably not in the way you think. George W. had his role as well. Alice – this rabbit hole goes far deeper than most people know.

3. Regardless of what you’re told - all of the government stimulus plans, positive media spin and central bank ‘actions’ over the past 2 years have been done for one purpose – to give the impression that the world’s governments and world’s central banks have done everything possible to save the system. They are attempting to shift the focus (blame) for all of this to sovereign fiscal mismanagement, individual and corporate debt loads, bad mortgages, etc. What they don’t tell you is that exponential debt growth is required for the system to function. The problem today is that the global system is now saturated with debt – a direct result of the debt based monetary system itself. This is why trying to solve a debt problem with more debt (see U.S. and European bailouts) is doomed to failure. Systemic failure may happen today, tomorrow, next month – but it is coming – and there is nothing that anyone can do that will prevent this (except changing the system). Again – math doesn’t lie. At some point – even mainstream media will begin acknowledging that something is seriously wrong – you’ll know we’re at the end when this happens.

4. Don’t panic. If God could see these people and their evil plans since the foundation of the earth – and told us about them 2,000 years ago (Revelation 13, 17, & 19 are some of His references to these people) – I feel confident that He has a plan for His people to stand against them. He always has a plan for His people – and He always will. Regardless of what happens here – our focus needs to remain with Him. If this makes you uncomfortable – time to pick-up a Bible and start learning the truth. We have allowed our enemy to blind us – time to turn things around and focus on what’s important.

There are some very intelligent money managers/institutional investors/Economists/Arm-chair quarterbacks, etc. – who are now saying what I’ve been trying to tell people since 2005 – the system appears to be unsustainable – and it’s going to lead to some very unpleasant things. Read the exerpts below.

As for today – we’re seeing some massive Central Bank intervention and German efforts (ban on naked short selling) to save the Euro and keep all of the balls in the air. Other than a possible short term uplift - it won’t help. We followed the same game plan in 2008 – and the result was not good (See: Lehman Brothers bankruptcy). Asian and European stocks are tanking again today (down 2% on average) and the Dow is currently down 120 after plunging 200 points earlier. Over 80% of the stocks on the NYSE are currently declining (same story as yesterday). Expect this type of volatility to increase until we experience another ‘event’ like May 6th – then – all bets are off. Wealthy people will then find out that they have built their lives on a foundation of sand. Sound familiar? If not – again – it’s time to pick-up a Bible and start learning how to build your life on a solid foundation.

Take Care,

John – May 19, 2010
Bears Come Roaring Forth

By Barry Ritholtz - May 19th, 2010, 9:30AM

I am on an email list that is from a group smart hedgies and strategists. The discussions range far and wide, and while I sometimes disagree with the conclusions, but I always find the conversation provocative.

Lately, they’ve been emailing a collection of warnings of various fund managers and strategists:

• Long time Dow Theorist Richard Russell set out this dire warning:

“Do your friends a favor. Tell them to “batten down the hatches” because there’s a HARD RAIN coming. Tell them to get out of debt and sell anything they can sell (and don’t need) in order to get liquid. Tell them that Richard Russell says that by the end of this year they won’t recognize the country. They’ll retort, “How the dickens does Russell know — who told him?” Tell them the stock market told him.”

• Reuters reported that well regarded hedge fund manager Seth Klarman “sees few bargains in the current environment and predicted on Tuesday that the stock market could suffer another lost decade without any gains.” Klarman is concerned that we could see “another 10 years of zero returns.” He has 30 percent of assets at his $22 billion Baupost Group in cash, he said. (His firm started in 1982 with $27 million and has averaged 20 percent annual gains ever since).

• Raoul Pal of Global Macro Investor got even more specific warning in his newsletter: Crash Is Coming In Two Days-To-Two Weeks. He sees as an “archetypal crash pattern — a sharp decline followed by a failed rally followed by a collapse.”

• But as Art Cashin of UBS pointed out in his morning missive, stark bear warnings are not restricted to equities. He cites Nouriel Roubini warned on the U.S. Treasury Market:

“Bond market vigilantes have already woken up in Greece, in Spain, in Portugal, in Ireland, in Iceland, and soon enough they could wake up in the U.K., in Japan, in the United States, if we keep on running very large fiscal deficits,” Roubini said at an event at the London School of Economics yesterday. “The chances are, they are going to wake up in the United States in the next three years and say, ‘this is unsustainable.”

Global Macro's Raoul Pal: Here's Why A Crash Is Coming In Two Days-To-Two Weeks

Joe Weisenthal
May. 18, 2010, 2:15 PM

We don't mean for it to be doom and gloom day, but Richard Russell isn't the only big name pundit to be calling for a fall.

Raoul Pal, who writes Global Macro Investor newsletter, and whose bio cites stints at GLD and Goldman Sachs, is out with a very specific crash call. In his latest note he calls for a big move down in just two days to two weeks.

That's refreshingly specific!

So what's the reason?

It's all about what he sees as an archetypal crash pattern -- a sharp decline followed by a failed rally followed by a collapse.

It looks like this:

Image: Global Macro Investors

That's an unspecific chart, but here's a more specific one, based on the current post-flash crash market.

Image: Global Macro Investors

And now, here's the kicker. It's the current market vs. 1929, which is what prompts him to see a crash as imminent.

Image: Global Macro Investors

And finally, here's the flash crash vs. 1987

Image: Global Macro Investors

Get the picture?

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