The Cardinal T-Square Crisis > California Earthquake Forecast, Also, The Global Economy, America, Germany, Spain & The Euro, Swiss Francs: Free Enterprise Or Global Default?

The Cardinal T-Square Crisis:

The Global Economy

The Euro, America, Germany, Spain & EU

Free Enterprise & Global Default:

What Is With Manipulator Speculators?

Plus,

California Earthquake 2010 Forecast

By Theodore White; mundane Astrolog.S

Θεόδωρος

Strange days. Strange days indeed.

This year, 2010, is the last year of the ruling establishment of Baby Boomers and their oligarchical parents in power.

Each generation gets about 18 years to serve as the "establishment," and between both generations, this amounted to 36 years, beginning in the year 1975, and ending in March 2011.

This is three full three orbital cycles of Jupiter's turns, and one complete Saturn turn.

And completes the generational establishment cycles of both the Baby Boomers and their parents, one with Pluto in Cancer, and the other with Pluto in tropical Leo.

Those are the mundane astronomical facts. There is no way around it.

It is a difficult time in the world for them it seems. Both generations appear to be upset with the natural progression of life, and aging, which is normal to all human beings.

We come, and we go, as does each progressive season. It is now winter for them, and they don't like it from the looks of how they've "managed" the world in their time as establishment.

Jupiter's transit in Pisces/Aries, conjoined to Uranus, and their roles in the Cardinal Crisis transits confirms that the world is now in transition, and, at a turning point, into the second decade of the 21st century.

It is my contention as a mundane astrologer that the last 36 years featuring both generations as establishment, has led to the current crisis after crisis we have been witnessing in the world with increasing regularity since that year of 1975 ~ especially in the geopolitical and financial sectors.

I've been warning about the financial market forces for years. It's a shame to see what I knew was going on, actually happen. And, it continues...

So, what's next?

Well, a lot more, that much I can promise.

I continue to "wish" things were much better than they really are, but until people get the rose-colored glasses off their eyes, and open them, I do not expect the global to become better, but worse, until that happens.

After years of rampant fraud and corruption in the financial and insurance markets, along with other sectors, by a generation that continues to consume huge amounts of resources that do not belong to them, I cannot be positive seeing the world transits of the near future, and the potential impacts in the long-term future.

My contention is that the next several years will be much like that of the early to mid-1930s, from an astrological point of view.

This means change, and the emergence of radicalism, which formed during, and after the last Saturn-Uranus-Pluto T-Square in the early 1930s.

This radicalism is not without its own truths. It is a reflection of masses of people worldwide who feel and believe that they have been abused, lied to, and stolen from in every area of their lives by corrupted people in government and the world of finance.

They believe they have, and continue to suffer because of forces that do not create, but, who take profits from the hard work of others who produce the real value of business and society.

The financial industry over the last 36 years, seems to have been infiltrated once again by manipulators and wolf speculators, who have caused havoc in global markets and in sovereign nations.

The crimes committed by these people, their firms, and their associates, are about to see the largest backlash against financial corruption since the 1930s.

This was a time when Uranus transited Aries, and entered Taurus. And this is where Uranus will transit during the decade of the 2010s.

As we draw closer to the opening years of the Cardinal Crisis, I continue to forecast serious problems which can only be resolved with calm, proper positive goals & objectives, organization, common sense, prudence, and diplomacy to avoid the clashes common under such strong planetary inclinations.

The Cardinal Crisis

California Earthquake Forecast
Start Emergency Preparedness:
Astrological Transits Tending Strong 

by Theodore White; mundane Astrolog.S

I am issuing an astrological alert for seismic activity affecting the U.S. west coast. Global transits show transiting Mars, and Saturn are on the nadir of the west coast of North America through the month of June, and July 2010.

The angles relative to southern California, and Mexico, from the cardinal transits involve Mars, Saturn, and Pluto, in that order, with Pluto descending on solar charts to the west of southern California, Saturn transiting towards the nadir, and square to Pluto. 

It is my astrological forecast for this region, especially for southern California, for residents to take the proper precautions for a large magnitude earthquake to potentially strike in the month of June, and July 2010.

Astrologically Seismic Sensitive Dates are:

• June 17,18,19,20
• June 24,25,26, 27
• June 29-30
• July 3,4,5
• July 8,9,10,11

As you can see, the dates above cover most of the time from mid-June 2010 to July 11, when a total solar eclipse of the Sun at 19-Cancer will take place. The eclipse will not be seen from North America, yet, this new moon of July 11th is a strong transit in a cardinal sign.

The Earth is nearing aphelion, its furthest approach from the Sun, as the planets continue to form their T-square alignment relative to the Earth over the summer months in the northern hemisphere. There are strong stellar forces about.

The electromagnetic energies released by the aspects of planetary cardinal sign alignments, which are astrophysical, along with Earth's aphelion to the Sun, and the Moon's transits, have geophysical effects ~ such as potentially large magnitude earthquakes with powerful aftershocks along the US west coast and elsewhere.

We've seen these seismic events earlier this year. We've also witnessed the eruption of two volcanoes in Central and South America on the same day in May as Uranus entered Aries.

A month before, plumes of thick ash from Iceland's Eyjafjallajokull Volcano shut down Europe, affecting millions of travelers around the world, as some government agencies and airlines clashed over the strict flight bans.

 Swarming Earthquakes Reported Early June 2010: The USGS has recorded a series of at least 29 seismic events for southern California as of June 9, 2010.
Source: USGS

The planetary inclinations, along with the position of transiting Saturn, indicate a magnitude 7+ or greater seismic event in California, with effects along the coastal regions of the US west.

Saturn's angle is as such relative to the other planets and the earth that a strong series of earthquakes, usually preceded by smaller magnitude "swarms" offshore earthquakes, are indicators of increasing seismic activity.

Saturn, now direct in motion, will come to square Pluto in Capricorn, as Cancer is rising along with the stars Castor and Pollux, over the US west coast. Both stars are associated in mundane astrology with powerful quakes, most recently seen in Haiti in January 2010.

The solar-earth-lunar-planetary alignments can cause weaken structures to give way. This is the cause of all seismic events on Earth.

Moreover, the transiting Lunar Nodes will be along the east/west axis of most regions of the world, including California, within orb, in late June, and conjunct by early July 2010.

Caution is urged.

I strongly advise residents of the US west coast update their emergency earthquake plans, and for those living and working in high-rise buildings to take extra care in updating your exit and evacuation plans along with updating your emergency preparedness procedures.

This is a good time to do just that. There's a New Moon in Gemini that arrives Saturday, June 12. If you start soon, use that weekend's new moon, into next week, and be a very busy bee if you live in southern California.

Go shopping, water, canned food, lots of energy & power bars. Dig out and freshen up that camping gear, clean the tent, pack some supplies. Buy new batteries. Get better communications and cellphone gear.

Take the time to update all your family's emergency and "what-to-do" procedures. Include all family members in the act. Do not take "no" for an answer.

Talk to everyone, and also to your neighbors to see who is ready and who may not be. Form up some quick networking community teams just in case. Be ready like Freddy.

Take a tip from a former explorer boy scout: Be prepared, not scared.

Watch this Eagle Scout video of what to do in an earthquake. Scouts are trained to save lives with easy to use info that is practical. Our Motto was: "Be Prepared." That's sums it all up. That's how lives are saved.

Here's a link for California Earthquake Preparedness Resources.

Locations of swarming earthquakes as of June 9-10, 2010

Update time = Wed Jun 9 10:00:51 PDT 2010

Earthquakes appearing on graphic map above, with the most recent on top:

MAG DATE LOCAL-TIME LAT LON DEPTH LOCATION 

1.9 2010/06/08 12:55:46 34.834N 117.463W 0.4 25 km (16 mi) SE of Boron, CA 
1.8 2010/06/08 02:11:04 33.703N 117.471W 13.2 14 km ( 8 mi) WNW of Lake Elsinore, CA 
1.6 2010/06/07 20:20:01 34.948N 117.293W 7.7 26 km (16 mi) WNW of Barstow, CA 
1.8 2010/06/07 17:53:07 33.849N 118.456W 13.6 6 km ( 4 mi) SW of Manhattan Beach
1.6 2010/06/07 17:43:50 33.846N 118.444W 16.8 5 km ( 3 mi) SW of Manhattan Beach 
2.7 2010/06/07 17:17:05 33.854N 118.463W 12.2 6 km ( 4 mi) SW of Manhattan Beach
1.8 2010/06/07 17:13:30 33.853N 118.439W 12.6 4 km ( 3 mi) SW of Manhattan Beach
3.7 2010/06/07 16:59:27 33.857N 118.458W 11.2 6 km ( 3 mi) SW of Manhattan Beach

2.3 2010/06/07 16:59:19 33.831N 118.468W 18.3 7 km ( 5 mi) NNW of Palos Verdes Point 
1.8 2010/06/07 15:53:57 33.856N 118.460W 13.5 6 km ( 4 mi) SW of Manhattan Beach 
1.4 2010/06/07 13:49:58 33.840N 117.498W 0.0 7 km ( 5 mi) ESE of Corona 
2.3 2010/06/07 11:17:48 33.860N 118.446W 12.3 4 km ( 3 mi) SW of Manhattan Beach
1.7 2010/06/07 05:16:29 33.835N 118.470W 19.1 8 km ( 5 mi) NNW of Palos Verdes Point
2.1 2010/06/07 04:51:39 33.849N 118.464W 14.1 7 km ( 4 mi) SW of Manhattan Beach
  1.5 2010/06/07 04:11:29 33.854N 118.439W 14.2 4 km ( 3 mi) SW of Manhattan Beach

3.5 2010/06/07 02:17:11 33.859N 118.444W 14.1 4 km ( 3 mi) SW of Manhattan Beach

1.2 2010/06/07 00:45:52 34.014N 117.201W 12.5 5 km ( 3 mi) SSW of Redlands, CA  
0.9 2010/06/06 11:21:22 34.214N 117.522W 7.9 11 km ( 7 mi) W of Devore, CA 
1.8 2010/06/06 08:12:44 33.778N 118.365W 9.0 6 km ( 3 mi) E of Palos Verdes Point, CA  
1.3 2010/06/05 01:42:19 34.000N 117.157W 9.5 6 km ( 4 mi) SSE of Redlands, CA 
1.6 2010/06/05 00:14:03 34.100N 118.247W 7.6 2 km ( 1 mi) ENE of Silver Lake, CA 
1.5 2010/06/04 23:20:35 34.200N 117.586W 7.8 10 km ( 6 mi) N of Rancho Cucamonga, CA 
2.4 2010/06/04 20:07:15 34.219N 117.526W 11.4 11 km ( 7 mi) W of Devore, CA  
1.4 2010/06/03 19:07:37 34.066N 117.320W 17.5 5 km ( 3 mi) SSW of San Bernardino, CA 
1.9 2010/06/03 13:34:30 34.321N 117.399W 29.0 11 km ( 7 mi) N of Devore, CA 
1.6 2010/06/03 13:27:30 33.959N 117.715W 3.7 7 km ( 4 mi) SSW of Chino, CA 
1.3 2010/06/03 02:02:23 33.906N 117.967W 6.5 3 km ( 2 mi) SSW of La Habra, CA 
1.0 2010/06/03 00:52:37 34.042N 117.251W 16.6 1 km ( 0 mi) SSE of Loma Linda, CA 
1.6 2010/06/02 18:51:49 34.505N 118.109W 14.0 8 km ( 5 mi) S of Palmdale, CA

~
 
The Cardinal Crisis 

credit: Visual Impacts

The Global Economy

The U.S. & European Union

Plus,
Have Some Swiss Francs With Your Euros?

~ MarketWatch Reports June 9, 2010 ~

By Kate Gibson

NEW YORK -- "U.S. stocks lost their gains Wednesday as Wall Street lapsed in another display of uncertainty after Federal Reserve Chairman Ben Bernanke voiced cautious optimism about the economy and the central bank's Beige Book also noted modest improvement.

 Federal Reserve Chairman Ben Bernanke

"Everything is universally moving in the right direction, but we already knew that," said Jeffrey Kleintop, chief market strategist at LPL Financial of the Fed's June report, which noted improvement across all 12 districts.

After climbing more than 100 points and clearing 10,000 for the first time this week, the Dow industrials (DJI:^DJI - News) ended at 9,899.25, off 40.73 points, or 0.4%.

"We have an indecisive marketplace. The only major catalyst was the euro dipped below the psychological $1.20 level," said Art Hogan, chief market strategist at Jefferies & Co.

Twenty-two of the Dow's 30 components finished with losses, led by Bank of America Corp. (NYSE:BAC - News) , off 2.1%.

The S&P 500 Index fell 6.31 points to 1,055.69, with energy off the most among its 10 industry groups.

"Stocks stalled out amid BP bankruptcy fears," said analysts at Action Economics of BP Plc (NYSE:BP - News) , shares of which were off 15% as the company contended with the Gulf of Mexico spill now in a seventh week.

"There would be a lot of potential bidders for those assets, we've seen some pharmaceutical companies because of problems forced to sell off assets," said Kleintop of the BP talk.

But, the energy Goliath's troubles are not a huge driver for the overall markets, as it's a known issue, Kleintop said.

"Any progress in containing the spill would be welcome news. But in terms of BP itself, it's a sideshow, and it's distracting for Congress, which should be working on financial reform, and tax reform," said Kleintop.

On Capitol Hill, Bernanke told a House budget panel that any fallout from Europe's debt trouble would likely have only a modest impact on U.S. economic growth, so long as financial markets continue to heal.

The fact that Bernanke is "not saying anything negative, and rates are going to remain low, it's a good environment for stocks," said Kevin Kruszenski, national director of equity trading at KeyBanc Capital Markets Inc.

"Wall Street does not see him as a threat, people see him as a reasonable, balanced person," Kruszenski added of the Fed chief.

Bernanke, whose comments about prospects for growth in an interview late Monday helped bolster Wall Street sentiment, also called on lawmakers to come up with a long-term plan to cut the U.S. budget deficit.

The Nasdaq Composite Index (COMP - News) shed 11.72 points to 2,158.85.

"Some would argue that you should be selling [stocks] because of so much uncertainty, but the companies we're talking to say conditions seem to be pretty good here," said Kruszenski, who believes basic materials and industries are among those leveraged for growth as the economy recovers.

"We're in a low interest-rate environment and companies are very lean, with lots of cash on their balance sheets, and buying one another, which they would not be doing if they weren't comfortable with the business environment," said Kruszenski.

For every seven stocks on the rise eight were declining on the New York Mercantile Exchange, where 1.7 billion shares traded. Composite volume topped 6.4 billion.

In its June report, the Fed's Beige Book found ongoing improvement across the country, with the pace of growth generally termed modest. Crude-oil futures topped $74 a barrel and gold neared $1,230 an ounce."
~

Karl Denninger, former CEO of MCSNet in Chicago, now trading the capital markets for a living at MarketTicker.com, nearly had a kitten when he heard that the Swiss National Bank intervened and bolstered the Euro on June 8, 2010:

" You want to know where the spikes in the Euro came from today?

Try here:

That's "official intervention" by the Swiss National Bank and if they don't cut this crap out they're going to cause an equity and credit market collapse.

These jackasses now have double the Euros they held just a short while ago from these "operations", and as you can see, they're pissing into a hurricane on even a daily basis, say much less on anything more consequential:

Congress does not have the right to get involved in the affairs of a foreign sovereign. But Congress has every right to demand that Bernanke close his goddamn swap lines right now until this shit stops, lest The Fed be the one who is on the hook when the entire ECB structure comes apart and WE THE TAXPAYERS are on the hook.

This sort of tampering, performed by a private party, is illegal. Of course it's routine and "expected" in the FX space for sovereigns to interfere, but much of the instability that we have seen of late has been caused by this sort of "intervention."

Specifically, today [June 8, 2010] it was responsible for a sixteen point, or 1.5%, jack-rabbit move in both directions in the stock market in the space of less than two hours.

There is absolutely no excuse for The United States to support this sort of garbage with our taxpayer backstops.

These instabilities in the foreign exchange markets make it impossible for real companies to hedge costs and profits in foreign nations and do severe and irrevocable damage to these firm's operations.

It is also reflecting into the US Commercial Paper markets and driving spreads wider there as well.

This is the very same market that locked up in 2008 and triggered the equity market collapse.

The SNB's "interest" in doing this is clear: Half of European banks are stuffed full of debt written in Swiss Francs - in nations where the currency is the Euro!

These idiots (both the borrowers and the banks that offered these "products") have now seen the principal balance of these loans represented in Euros rise by 11% in the last year.

This sort of idiocy, incidentally, is one of the reasons two years ago that I said there was no chance we could possibly "inflate our way out" or play the "Keynesian game" any more and get away with it.

These instabilities can and will come to the fore and force defaults and there is literally nothing that can be done about it.

The more the ECB intervenes in the bond market the weaker the Euro gets and the more damage is done to debtors holding Swissy-denoted notes!

We made a critical error in 2007 and compounded it in 2008 and 2009 by building in structural deficits as a supposed "sop" to the banksters who got us into this mess - both here and abroad.

We have continued to refuse to force them to eat their own cooking and close those firms that were responsible for doing this and both were and are insolvent, both here and abroad.

Now we have CENTRAL BANKS flailing around trying to stop that which is inevitable, expending tens of billions that have effective time periods measured in minutes, and yet we STILL refuse to wake up and smell the coffee.

There is no durable economic stability or recovery possible until these imbalances are forced out of the system in their entirety.  This means forcing those who are insolvent to admit it and swallow their medicine. 

The extreme volatility will continue so long as their jackassery by entities like Bernanke and the SNB continue, and as more and more investors and traders give up on any sort of longer-term holding due to the volatility and head to the sidelines liquidity in both equities and credit will contract until there is an all-on no-bid circumstance one day - a full, all-on crash - and this one will NOT retrace.

If you thought the "Flash Crash" was bad I hope you're prepared for what's coming, unless we find a leader somewhere in the world who will pull these jackasses into the dock and demand that they stop it - right now.

I've been warning people now for three years about snipping the fuse before it goes inside the box. 

It appears it may have now done so, in which case it's too late."

~
Europe At Crossroads:

Governments Determined On Deficits?

Sunday Afternoon Shopping: Camden Market, London, England
Credit: Visual Impacts

~ The Los Angeles Times reports May 25, 2010 ~
By Henry Chu 

LISBON -- "A day after Britain announced it would slash $9 billion in spending, Italy discusses a plan to cut $29 billion. But the continent's stock markets and currencies continue to take hits.

 Governments in Europe are scrambling to introduce austerity measures that would slash their budget deficits, as investor fears about high public-debt levels continued to hammer the continent's stock markets and currencies. 

Britain's new coalition government used Tuesday's official state opening of Parliament, a ceremony filled with pomp and pageantry, to reiterate its commitment to getting the country's books in order. 

"The first priority is to reduce the deficit and restore economic growth," Queen Elizabeth II said in the House of Lords, in accordance with tradition that the monarch outlines the agenda of the ruling government. 

And the Italian government met Tuesday to discuss a plan that would cut $29 billion in spending. 

Details reported in Italian media said Rome would reduce the amounts it transfers to local governments as well as slashing the state payroll by freezing wages and hiring for three years, while gradually raising the retirement age for public-sector employees. 

The British and Italian moves follow the painful spending cuts and tax hikes announced by Greece, Spain and Portugal as those countries try to narrow their budget gaps and stem the loss of market confidence in their economies.

Europe's main stock markets saw sharp sell-offs Tuesday, with the exchanges in London, Paris and Frankfurt all shedding about 3% of their value.

Meanwhile, the battered euro, already down against the U.S. dollar to one of its lowest levels in four years, struggled to maintain an even keel. It closed at $1.23, down one cent.

The British pound was also down slightly against the dollar, despite the new government's tough austerity talk Tuesday.


The new coalition made good Monday on a Conservative Party campaign pledge to announce an immediate program of about $9 billion in spending cuts.


Among the measures are the closure of some smaller agencies, a government hiring freeze and the cancellation of some state-funded projects.


In a feisty attack on the economic management of his Labor Party predecessors, Conservative Prime Minister David Cameron said his government had inherited "a deficit that is bigger than Greece's."

 British Prime Minister David Cameron

But Monday's cuts add up to barely 4% the size of the deficit, and whether the markets deem that a good enough start remains to be seen.

"The cuts we have just heard about are the easy bit of the story," commentator Hamish McRae wrote in Tuesday's edition of the Independent newspaper. "The tough choices are ahead."

Nor do investors appear impressed by the even harsher budget plans announced elsewhere in Europe. The uncertainty stems largely from questions about whether those governments will follow through in the face of public opposition and unrest.

In unusually strong terms, the International Monetary Fund warned Spain on Monday that it must not balk at reforming its labor market — unemployment there has topped 20% — or consolidating its banks, which have been hard hit by the collapse of a sizable real estate bubble.

U.S. Treasury Secretary Timothy F. Geithner arrives in London May 26 for meetings with European officials about the economic situation there ahead of next month's Group of 8 gathering in Canada of the heads of the major world economies.

Speaking to reporters during his visit to China on Tuesday, Geithner reiterated his belief that Europe can solve its economic problems.

"It's important to understand that Europe has the capacity to manage these challenges. And we're confident they will," he said.

Geithner also will meet Wednesday with British officials, including the new finance minister, George Osborne, and Bank of England head Mervyn King.

Then Geithner will travel to Frankfurt, Germany, for a working dinner with Jean-Claude Trichet, president of the European Central Bank."

Germany Versus the EU

Checkmate on the Euro?

~ Stephen Castle, Washington Post, reports May 25, 2010 ~

Germany called 'naive' on the Euro?

BRUSSELS — "The European Commission president, José Manuel Barroso, on Tuesday accused the German government of lacking leadership during the euro crisis and describing its plans to rewrite the European Union’s rulebook as “naive.”

In an uncharacteristically blunt intervention, Mr. Barroso took issue with German proposals to change the European Union’s Lisbon Treaty so that punishments can be increased for countries, like Greece, that break the rules governing euro countries.

He also suggested that the alarm in the markets, which has destabilized the euro, might have been calmed by quicker assurances of German support.

The comments, made in an interview in the Frankfurter Allgemeine Zeitung, irritated German officials, where some of Mr. Barroso’s claims were dismissed as “absurd” on Tuesday.

The diplomatic feud underscores the difficulty the European Union faces in reaching consensus on how to reform the single-currency rules to avert a repetition of the Greek debt crisis.

The criticism also highlights the extent to which the market distress in the euro zone has often put Germany, the bloc’s dominant economic power, at odds with many of its European partners.

In many quarters, the German caution over a bailout for Greece, which was first rejected in February, is faulted for helping to turn a crisis over Greek debt into one that destabilized the entire euro zone.

Though criticism of Berlin has been widespread among officials in private, no senior European Union politician has made such a direct attack on Chancellor Angela Merkel.

The fact that the comments come from Mr. Barroso, who often goes out of his way not to offend the big member states, underlines the strain on relations between the European Commission and Berlin.

On Friday, the European Union’s 27 finance ministers met to consider changes to shore up the euro and deepen economic coordination under the chairmanship of Herman Van Rompuy, the president of the European Council.

He is expected to produce recommendations in October.

Berlin is pushing for tough sanctions against countries that breach rules, including powers to deprive them of European Union subsidies and their voting rights.

Mrs. Merkel has expressed her support for the idea of rewriting the Lisbon Treaty, a step that would help give any new measures legal certainty in Germany.

 German Chancellor Angela Merkel

But Mr. Barroso said it would “be naive to think one can reform the treaty only in areas Germany considers important,” adding that countries like Britain might try to put their more skeptical ideas into the negotiating pot.

“There are already procedures by which states with excessive deficits do not vote,” Mr. Barroso said. “Under constitutional law it would be nearly impossible to do more, in my view.”

The German economy minister, Rainer Brüderle, said in a statement that he was “surprised at the criticism” from Mr. Barroso, adding that the “current process of economic policy coordination cannot prevent problems arising in the member states and the euro zone.”

In his interview, Mr. Barroso said that while a quicker rescue of Greece was probably impossible, “perhaps from the beginning one should have been able to say more clearly that Germany has a strong interest in keeping the euro stable, not just because of European solidarity but because of its own interests.”

“In recent years in German politics,” Mr. Barroso said, “there haven’t been enough strong voices explaining to the public how important it is for Germany to have the euro.”
~

From the looks of it, at least to me, perhaps the Germans are doing what other countries have not been doing when it comes to dealing with sovereign debt, and the manipulator speculators ~ you know, a practice drill?

See > Just in case?

American Economic & Social Anxiety?

US Treasury Secretary Timothy Geitner on Capitol Hill, Washington D.C.

President Barack Obama addresses the graduating class of 2010 at the U.S. Military Academy at West Point during the 2010 commencement ceremony at Mitchie Stadium at West Point, New York, May 22, 2010.

Credit: Reuters/Larry Downing

~ Scott Malone of Reuters reported May 24 that ~

BOSTON, May 24, 2010--"The U.S. economy faces major problems while Europe's is "teetering," the head of General Electric Co. told a class of graduating college students on Monday.

"We are at an unprecedented moment in the history of our country. There is economic and social anxiety," said Jeff Immelt, chairman and chief executive of the largest U.S. conglomerate. "Europe appears to be teetering."

Still, the risk that the Greek debt crisis could drag down other European economies does not appear to be enough to derail the world's overall economic recovery, he told reporters after addressing Boston College's commencement.

"It's going to be slow growth in the economic region, but look, I'm 28 years with GE and I can't remember when Europe was fast growth," Immelt said.

"I think the U.S. economy is very good right now and improving. We have to see what happens in Europe, but I don't think it's enough to slow the recovery, I really don't."

China's economy -- a key growth market for GE, the world's largest maker of jet engines and electricity-producing turbines -- "remains reasonably robust," Immelt said.

'IT'S A MESS OUT THERE'

 

 
The U.S economy will have to confront problems ranging from the rising cost of healthcare to the loss of many of the manufacturing jobs that once sustained the nation's middle class, Immelt said at Boston College, where GE does extensive recruiting.

The company currently employs some 270 alumni of the school.

"Look, it's a mess out there. There are some real problems that need to be fixed. I could really bum you out if I wanted to," Immelt told the graduates.

"Your country will be better coming out of the financial crisis if we learn a few lessons: that real, honest, ethical leadership matters, that the U.S. cannot prosper today as just a service economy."

Improving the U.S. healthcare system is a pet cause of Fairfield, Connecticut-based GE, which is a major maker of medical imaging devices.

GE aims to invest some $6 billion over the next four years in ventures it hopes will help lower the cost of healthcare.

"The problems with the American healthcare system are real and will require great determination," Immelt said.

The GE chief, who was awarded an honorary doctorate in business administration, also said the world needs to come to terms with the growing gap between rich and poor, both in the United States and abroad.

 

 May 2010: Athens, Greece 

"The global economy will not tolerate a few people getting rich while other people get poor," said Immelt, who earned his Masters of Business Administration at nearby Harvard Business School.

He also told reporters he was confident that GE, which runs a hefty finance operation, was prepared to cope with any changes to U.S. regulations resulting from the sweeping financial reforms passed last week by the U.S. Senate.

"Is it perfect? No, but could we live with what's passed the Senate? Sure," Immelt said. "We'll have to adjust to new standards and we're ready for that."

Last year, some observers suggested the reforms could force GE to spin off its GE Capital unit, an idea the company fought." 

Spain 

'Takes Spotlight From Greece in Europe's Debt Crisis?'

 

Tourists stay away?

A restaurant advertises a economic 'crisis menu' in Torremolinos, Spain, in this 2009 photo.

~ By Chris Wallace, Finance Writer, Daily Finance ~

May 26, 2010 -- "First came Greece, which threatened Europe's economy with its staggering 130% debt-to-GDP ratio. Now comes Spain, which also seems to be contributing to the debt crisis in Europe.

Unlike Greece, Spain has a low debt-to-GDP ratio. The country's problem is its banks' large real estate debt, fears about Spain's economy, and the fact that its sovereign debt is largely financed abroad.

If foreign investors walk away from Spanish bonds, it could cause a sovereign debt crisis for Madrid that could spread to the rest of Europe.

'Spain May Experience Japan-like Deflation'?

World stock markets shuddered last week after the Bank of Spain, the country's central bank, seized a small savings bank called Cajasur, and replaced its directors after it failed to merge with a larger savings bank, Unicaja.

This was followed on Monday by the announcement that four small savings banks were being merged into the country's fifth-largest bank, with assets of 125 billion euros ($152 billion), causing fears of market instability to spread across the continent.



"Spain could easily be like Japan," says Jonathan Tepper, a partner at Variant Perception, an independent macro economics research firm based in London, referring to Tokyo's 15 years of price deflation and stagnating economy.

"In terms of a long, protracted period in which property prices go down on a sustained basis and banks have to recapitalize themselves, I think the problems are far ahead."

Unlike Greece, Spain's debt-to-GDP ratio is among the lowest in Europe, about 55% of GDP. Japan's debt is approaching 200% of GDP, but thanks to a high savings rate, it finances 95% of the debt internally.

Spain's problem, along with the rest of Europe's periphery, is that it must finance its debts abroad. Some 45% of Spanish debt is held by foreigners -- the amount climbed to 55% in the last year.

"If people don't show up for your bond auctions, it can be a big problem," says Tepper.

"There was a problem with one of the Spanish bond auctions last Wednesday where they didn't raise the full amount they wanted and had to do it at a higher price.

People are focusing on the wrong thing -- it's not so much the absolute level of debt, it's more how the debt is funded."

'Skittish Foreign Creditors?'

What's the problem with foreign creditors? They tend to be more nervous than domestic lenders and often flee at the first sign of trouble. That forces up interest rates, which could cause interest payments to balloon.

Santiago Lopez Diaz, a bank analyst for Credit Suisse, says the Bank of Spain's intervention in Cajasur "may raise concerns for the financial system, for the sovereign risk profile and for the economy in general," though he added that he didn't think the system was at risk.

Diaz, in a note to investors, says he thinks banks' cost of funding is likely to go up due to higher sovereign risk, an increase in deposit costs and restructuring of the financial system.

He said he expects earnings to decline by an average of 4% over the next three years at Spanish domestic banks.

'Spain's Real Estate Debt a Real Drag?'

"The risk for the debt outlook lies, in our opinion, in the looming bank restructuring," Diaz said.

While the Spanish financial system had virtually no exposure to toxic assets like U.S. subprime bonds in 2007 and 2008, it's exposed to the highly leveraged domestic real estate sector.

Outstanding loans to developers now stand at around 325 billion euros ($397 billion), or about 31% of GDP.

One big problem, according to Tepper, is that Spanish savings banks have a huge amount of undeveloped land on their books. This property is held at relatively high values as urban land available for development.

But with 1 million unsold homes in the country, it's unlikely that anyone is going to build new residences anytime soon, meaning the undeveloped land is worth a lot less now than it's being valued at on the bank's books.

"A lot of this land should be marked down," Tepper says. "The long-term solution is being more aggressive about writing down loans and recognizing losses."

Tepper adds that the Bank of Spain's approach is to hope that eventually these losses will be recognized, but it doesn't want to do anything now to upset the stability of the financial system.

"If that's the case, you just have a grossly long period of stagnation where credit isn't available because it's tied up in illiquid assets," he says.


'Getting Worse Before It Gets Better?'

The International Monetary Fund concluded a visit to Spain this week with a downbeat assessment of the country's economy.

 
"Spain's economy needs far-reaching and comprehensive reforms," the IMF report said.

"The challenges are severe:

'A dysfunctional labor market, the deflating property bubble, a large fiscal deficit, heavy private sector and external indebtedness, anemic productivity growth, weak competitiveness, and a banking sector with pockets of weakness.'

The usual antidote to an economic slump is to devalue the currency and pump government funds into the economy to create jobs.

But Spain is part of the eurozone and thus can't adjust the currency to its needs.

And the IMF and the European Union are forcing Spain to make cuts to its government budget, reducing civil-service pay and public-sector pensions, at the precise moment it needs to increase spending to boost the economy.

This could have a drastic impact for years on economic growth in Spain and the rest of the European Union.

"The bad news for investors is that due to the reforms, markets will turn more negative before they will improve," says Philip Gisdakis, a strategist at Unicredit, a large European bank, adding:

"Harsh austerity measures and a reform of the banking system in the midst of a deflating property bubble is definitely not supporting growth."

~

~ The Wall Street Journal's Art Patnaude reported May 25 that ~

"The cost of insuring debt issued by European Sovereign borrowers moved wider Tuesday, with recent news from Spain providing fodder for increasing concerns over the banking sector, according to data provider Markit.

The International Monetary Fund published a overall negative assessment of Spain’s economy Monday, which came after the country’s central bank said Saturday it had taken over ailing savings bank CajaSur.

At around 0730 GMT, the cost of insuring Spanish debt was 17 basis points wider at 230 basis points, while the level on Portuguese debt was 31 basis points wider at 360 basis points.

“(The IMF’s) description of the (Spanish) economy, while known, set out quite starkly the problems facing the euro area’s fourth largest country,” wrote Evolution Securities analyst Gary Jenkins in a note.

The cost of insuring Greek debt was 15 basis points wider at 720 basis points, and the level on Ireland’s five-year credit default swaps was 22 basis points wider at 255 basis points.

CDS are tradable, over-the-counter derivatives that function like a default insurance contract for corporate debt.

If a borrower defaults, the protection buyer is paid compensation by the protection seller. Swap buyers may be protecting investments they own or simply making bearish bets against companies or countries."
~

Wall Street Titans:
'A Bit Frightened by European Debt Woes?'

~ Emily Chasan for Reuters reported May 26, 2010 ~

New York-- "Some of Wall Street's biggest names said they are frightened and worried by the debt crisis in Europe, but still do not expect a double-dip recession in the United States.

"We're frightened at this moment to see how this can all play out with these countries already in a fragile position," said Larry Fink, chief executive of asset manager BlackRock Inc., at a Reuters Insider Newsmaker panel in New York.

 Wall Street Titans on Europe: (from left to right) Joseph Perella, chairman and CEO of Perella Weinberg Partners; Roger Altman, chairman & CEO of Evercore Partners; and Laurence Fink, chairman & CEO of BlackRock, meet at Reuters Insider "New Wall Street Newsmaker" in New York City May 26, 2010. 
Credit: Brendan McDermid/Reuters

He cited austerity measures that countries like Greece, Spain, Italy and Portugal must implement to deal with heavy debt loads.

"Now they're going to have to bring down their deficits in the tens of billions of dollars to stabilize their country, but will that destabilize their social fabric?"

Recent riots in Greece have sparked concerns about how austerity measures will play out in other countries, like Spain, where unemployment is already very high, Fink said.

"It's very hard to see a good ending," he said, noting his firm, which manages about $3 trillion in assets, is avoiding Southern Europe debt at the moment.

"The real question is how long can Netherlands, France and Germany support these Southern Rim countries," Fink said.

The latest developments are a strong signal that the global credit crisis is not over, as some had thought only a few months ago, Roger Altman, founder and chairman of boutique investment bank Evercore Partners (EVR.N), said at the panel.

"The really serious crises of the last 150 years tend to be long and drawn out and have several stages, including a sovereign debt stage," he said.

"The global financial crisis is not over, and it's not close to being over, and there are probably other large shoes that can drop beyond Europe," he continued.

Another concern is the effect that the crisis has had on European banks and their ability to lend, said Joseph Perella, chairman and chief executive of investment banking firm Perella Weinberg Partners.

"Right now, people are concerned about the impact of this European crisis on the liquidity that will be available from their commercial banks," Perella said.

"If you're a major corporation in Europe and you think you might want to do a big acquisition ... you wonder whether or not what's going on in Greece or other countries could ultimately impact (European banks') ability to provide liquidity for you. "

While fiscal belt-tightening in Europe could slow growth, it won't necessarily torpedo a U.S. economic recovery, unless the debt troubles grow into a larger currency crisis for the euro, the panel said.

"At the moment, I don't think the problems in Europe will bleed into the United States," BlackRock's Fink said.

Altman said he expects "flat growth" in the euro zone, could simply pinch demand and shave a few extra points of growth off the U.S. economy in the next year.

Most economists think the U.S. economy will grow at a roughly 3 percent pace this year and next, so it would take a powerful blow to knock it back into recession."

"Just Get On With It...
...Can We Call It A Global Default?" 
Don't forget to wash your hands when you're done hun

~ Commenter Tracy R. Twyman Has Seven Reasons Why ~

"Last month [April 2010] the IMF released a series of policy papers recommending austerity measures for all Western countries, including the USA.

The recommendations were reviewed by Howard Schneider at The Washington Post and summarized with the headline “For nations living the good life, the party’s over, IMF says.”

The papers predictably called for things like the depression of wages, increasing taxes, and pushing back the retirement age.

They also called upon the Western nations to devalue their currencies, including the US dollar. The IMF papers frankly implied that we all have been enjoying a standard of living that we didn’t deserve, thus the “party” headline.

These sentiments were echoed by New York Times columnist Thomas Friedman, who denounced us all for eating through our post-World War II economic abundance “like hungry locusts”, and believing that the “tooth fairy” would somehow keep it all coming.

Friedman is not the only figure in the mainstream media and politics that has been pimping the idea of austerity measures to Americans, and implying that, through our laziness and greed, we have all brought this financial crisis on ourselves.

Despite the fact that Americans are now working longer hours than any time in the last 40 years, with greatly increased productivity and ever-decreasing inflation-adjusted wages, and a steadily-declining standard of living, going without health care and forestalling retirement at unprecedented rates, people like Glenn Beck frequently state that we’re going to have to “tighten our belts” to save our childrens future prosperity.

This has become the Republican co-opted version of the Tea Party’s new message of fiscal responsibility.

In their world-view, it’s “conservative” to go along with austerity measures imposed by a privately-owned international corporate government entity, to accept higher taxes and the theft of your pensions and entitlements so that your government can make higher interest payments on an unpayable debt to banks.

But in fact, adopting these measures will condemn our children to a life of complete serfdom.

The new taxes are never going to go away, the retirement age will never be lowered back down, and the pension money is never coming back.

It will just be lost forever into the black hole that is the global banking system. The banks don’t need any more of our money.

They make our money. What they need is more control over their slaves.

The belt that is being tightened around us right now is one of bondage to corporate overlords through a debt that can never be paid.

What really needs to happen is that every country, every corporation, and every man and woman on Earth need to default on their debts to the banks.

We need a global default.

You know it, and I know it.

But in case there’s anyone out there who doesn’t know it, allow me to give you the 7 main reasons why we must have a global default:

1. All debts were based on loans extended by private banks with money created out of nothing by fractional reserve lending, which is fraud.

2. The banks will not be losing anything, since they never had any money to begin with.

They will only be losing the hope of ever collecting on the fraudulent debts they’ve created, which is all they ever lost in the first place.

Think about it:

The entire “credit crisis” that started in 2008 was a bunch of bankers having a hissy fit because they were unable to get people to pay off the fraudulent debts they created, even though any reasonable person, looking at the underlying debts, would have concluded from the very beginning that they were never going to be paid.

It would be like if I ran up a bunch of debts on credit, with the expectation that I was going to be able to pay it back by winning the lottery.

And when I didn’t win, I went crying to the government, demanding they pay me the lottery winnings I was expecting so that I can pay my bills. In this scenario, I didn’t do anything. I just had an unrealistic expectation that I would win.

3. As Ellen Brown explains in my recent interview with her, countries do not need banks in order to create money.

Therefore it is possible to create a solution wherein governments do not need to borrow from them in the future, and therefore we would then not need to worry about what they consider our government’s credit rating to be.

Indeed, what does a “credit rating” mean coming from a banking cartel that has had to borrow trillions from taxpayers over the last 2 years just to stay in business?

4. The countries and banks that are bailing out other countries and banks are themselves bankrupt and in need of a bailout.

In other words, the people of every nation on Earth, and indeed almost all corporations on Earth, would actually benefit immediately from a global default, even factoring in the lost revenue they would suffer because of their debtors defaulting on them.

The end result would still be a net gain for almost everyone.

5. It is not possible to “tighten your belt” around a $700 trillion hole in the global credit markets caused by toxic derivatives that were created and sold through fraud.

There is not enough wealth on Earth to pay for it all, nor will we ever be able to pay for it with the slave labor of our descendants, because compound interest will always make the debt larger.

6. We can cancel out most personal and corporate debts as well, since most of them were created in the same fraudulent manner as the sovereign debt.

Since everyone’s now in debt and nobody has good credit, it’s only reasonable to level out the playing field by hitting the reset button, hopefully for the last and only time, to allow us all to begin building good credit again, and ideally, relying much less on credit at all in the future.

7. We can start almost from scratch right now to create national systems of finance and international trade mechanisms that are fair, functional, and sustainable, built on 21st century understandings of economics, built to function within 21st-century nation states.

Ideally, this “system” would be much less “systematic” than the present one, much less centralized, and thus with much less risk of systematic failure.

There are a lot of different ideas about how to reform the system. We have explored some of them on this website and on our podcast already. We will continue to explore more ideas in the coming weeks.

These ideas come from people with different economic philosophies and political persuasions, but the things they all agree on are that the current system is built on fraud, is responsible for creating many of our societal problems, and is doomed to catastrophic failure.

So the idea here is, if the system is going to collapse, why let human civilization go down with it?

Why not let the system of make-believe money and crushing debt collapse into its own footprint, while we create a parallel system that will prosper and carry on long after the former system is a dusty memory?

There’s no need to allow real wealth, real assets, and real human labor to be tied any longer to the fate of fictional debt instruments."
 ~

The European Union & The Euro
Brief Astrological Analysis

What a month of May 2010 it has been for Europeans, The Euro, and world markets. And, it continues right into early June.

Just as Greece was mired in national revolt against a deal that would send most Greeks into abject poverty (which is what the word "austerity" really means) the market manipulators caused a near 1,000-point drop of the Dow Jones on May 6th with a Euro crisis that threatened the entire European Union, and world markets.

 French President Nicolas Sarkozy

Led by French President Sarkozy, and German Chancellor Angela Merkel, it was discovered that French banks may collapse, with stories that Sarkozy threatened to pull out of the Euro if the euro was not supported by a common and united effort.

This happened with astounding news that the EU would bailout Euro nations with $1trillion bailout of the entire eurozone.

The world transits of spring in the northern hemisphere are giving way to the formation of the cardinal transits of the planets from Mars to Pluto, in an unusual, and powerful configuration T-Square, when joined by the transits of the Moon, becomes a Grand Cross.

This is what the August 7, 2010 Grand Cardinal Cross Looks Like Over London, England:

Grand Cardinal Cross: August 7, 2010

The cardinal inclinations, especially the waning Saturn/Pluto Square with Jupiter/Uranus conjoined as part of the Cardinal T-square signifies the need to creatively step over the blockages created by others. In this case global manipulators and speculators.

The Euro's problems are no different than what the dollar has experienced, yet the dollar, as the world's currency, benefits from the fall of the Euro. This accounted for the Swiss move recently to bolster the ailing currency.

The Cardinal T-square itself reflects a turning point of sorts, call it an evolution, away from outworn methods, corruption, greed and incompetence of the late 20th century and into a visionary era, where the ideas and learned lessons of history are applied as truths unto themselves, with its failures repeated less often.

The cardinal crisis years are a series of years of challenges for those who stubbornly refuse to admit that they were wrong, and to step aside as a new generation becomes the new establishment. There's a lot of work to be done.
~

An interesting analysis of the markets, the Euro and EU was given by Bradley Klapper and Jill Lawless on May 22, 2010. Right after this was published, the Swiss Banks stepped in and bolstered the Euro in early June 2010 ~

GENEVA — "Can anything stop the euro's decline? With the single currency facing the biggest crisis of its existence, European governments this month thrashed out a $1 trillion bailout for struggling member states.

Market reaction was cool; the euro sank this week to a four-year low against the dollar before recovering somewhat, and European stock markets have taken a battering.

On Friday [May 21, 2010] after another round of tense meetings, European Union finance ministers promised new punishments for countries like Greece that threaten the continent's solvency with fiscal imbalance.

But many fear this will be too little to end the crisis. If hundreds of billions of euros in loan guarantees failed to stabilize markets, it appears unlikely that the prospect of a lengthy EU move toward fiscal reform will do the trick.

"The markets are trading in real time, while the politicians are moving in bureaucratic time," said Mark Cliffe, chief economist at ING Group.

"We're promised something maybe in October – that's a hell of a long time in the financial markets' eyes.

The EU's woes, triggered by Greece's admission last October that it was sitting on a destabilizing 12.7 percent budget deficit, have shattered confidence in the euro, which has lost about 20 percent of its value in recent months.

While the markets responded with immediate alarm, eurozone leaders struggled to agree on a rescue package. Many in northern European countries like Germany resented having to pay for what they saw as the profligacy of other member states.

Late Friday, European finance ministers backed the tough-sounding idea of sanctions against countries that run up too much debt.

But it was unclear how severe they would be, or how quickly they could be introduced.

EU leaders are due to decide on long-term reforms at an October 2010 summit. There's little time for another bout of hand-wringing, after months of EU dithering over the bailout package contributed to market unease.

The European crisis is both a continuation and an extension of the financial and economic turmoil that has ravaged much of the world over the last three years.

But whereas China is now raising growth predictions, and the U.S. Congress is moving ahead with reforms of Wall Street, European governments are mired in debate over how to regulate themselves.

The concern is universal because a euro zone plunge back into recession could slow the recovery elsewhere.

European stock markets stabilized somewhat Friday after the German parliament approved the bailout plan – to which it is the largest contributor.

France is due to vote on the euro zone bailout by May 31 but neither Spain or Italy have set a deadline to authorize it.

And investors remain unconvinced that indebted euro zone governments will be able to pay their debts.

 Those fears have sent the prices of government bonds plummeting, and many of them are held by big banks in Germany and France whose losses could set off a new credit crisis.

Still, the EU has beat the odds before. The bloc has survived numerous soul-searching setbacks in its integration process over the last decade, which it hoped to end with last year's Lisbon Treaty.

Cliffe said he saw some hope in the EU's efforts to "get everyone on the same track," especially the agreement on a euro750 billion ($937 billion) package of cash and state loan guarantees to protect eurozone countries with troubled finances from bankruptcy.

Cliffe said that package "was a smart move, the first time they've got ahead of the curve."

"The markets have been concerned about unilateral action and a lack of solidarity," he said.

In the longer term, some observers fear the EU faces an identity crisis.

The push for greater integration has recently stalled. "No" votes in Dutch, French and Irish referendums over the past decade have shown that there is a growing divide between European officialdom and citizenry on defining the kind of bloc they want to live in.

The current threat is that while Brussels asks governments to grant it more teeth, its role in ensuring economic stability remains unclear. It may end up meaning rules and regulations for northern Europe, but only a source of subsidies for the south – a sure recipe for discontent.

"The eurozone cannot survive as it is at the moment," historian Timothy Garton Ash told BBC radio.

"Either it goes forward to become something more like a fiscal union, or some of the weaker, as it were Club Med member states, will in effect default inside it."

Leon Brittan, a former European Commission vice president, agreed that the "shock and awe" rescue package needed to be accompanied by stricter national spending controls.

But he was skeptical that Europe was ready to enforce its rules.

"Whether there is a real willingness to accept that discipline – for example to have sanctions if your budget deficit goes up too much – remains to be seen," he said.

"Let's not forget that when agreement was reached that there should be limitations on budget deficits, the first to break it were not some of weaker brethren as it were, but France and Germany," he said, referring to the EU's 1997 Stability and Growth Pact.

That accord was relaxed in 2005 after France, Germany and others violated the provisions."

~

So, what we seem to have here is a failure to communicate. While the financial world deals with "real time" of trading, and the politicians go slower in their "bureaucratic time" ~ what we have here are two kinds of time that cannot ever diverge.

No wonder it's a mess out there.

~

Europe Comes to Terms With Market Manipulation?

 "The SEC & American Media Bury Heads In the Sand"

~ Deepcapture.com reports ~

By Mark Mitchell

May 21, 2010 -- "Well, the current state of the global financial markets is certainly interesting.

I mean, you have to be a bit sick in the head, but if you think about it the right way, it really is “interesting” — sort of like, oo-wee, look, the girl in the cute leotard is falling off the tightrope, there’s no net, and she’s going to go “splat” when she hits that pavement.

How interesting!

And check it out, the circus animals have gone berserk — the tigers are tearing the trainer into bloody shreds, the elephants are stampeding, the tent might very well collapse, maybe we’re doomed, and look at those clowns – they’re still smiling.

How deliciously interesting!

Actually, I take it back — it is not in the least bit interesting.

It is terrifying.

Despite early attempts by the smiling clowns of the nation’s media and regulatory apparatus to portray the dramatic market collapse of May 6 as mere happenstance, it is now clear that this unprecedented event was no “fat finger” accident.

It was not a “black swan” that appeared out of nowhere. And more than likely, it was not some anomalous but innocent trade that triggered a run-of-the-mill panic.

What it was, exactly, nobody seems able to say – and that is what makes it all the more scary.

But we can venture some educated guesses, and my best guess is that this was an orchestrated attack on the stock market – an attack that shaved 1,000 points off the Dow Jones industrial average in a few minutes, and caused some stocks worth nearly $50 to drop to a penny in matter of seconds.

I have been trying hard, but I simply cannot imagine any natural confluence of events that would cause this.

I can, however, think of a number of criminal market manipulators who have caused similar, though less dramatic, events in the past.

And I know that these manipulators would get a kick out of triggering a full-blown market cataclysm. They wouldn’t just get a thrill — they would also make a boatload of money.

At any rate, this much is clear: our financial system is seriously broken and the nation is vulnerable. If the May 6 “anomaly” was not an attack, there is every reason to believe that something worse can happen.

It can happen because the Securities and Exchange Commission has done nothing to prevent it from happening. Despite overwhelming evidence that market manipulators contributed to the financial turmoil of 2008, not a single criminal has been apprehended.

And not only does the SEC let the miscreants run loose, but it also stubbornly refuses to close gaping loopholes that enable market manipulation to occur.

To its immense peril, much of America seems disinclined to discuss market manipulation.

I don’t know if it is indolence, in curiosity, or simple complacency, but the discourse in this country stands in stark contrast to the one taking place in Europe, where politicians and the mass media have declared unequivocally that the markets are under attack, with consequences that could be quite dire, to say the least.

According to BaFin, the German financial regulator, “massive” illegal short selling attacks have led to excessive price movements that “could endanger the stability of the entire financial system.”

After beholding the drama in the American markets on May 6, and seeing its own market tumble precipitously, the German government finally took on the manipulators, banning naked short selling of stock in its largest financial institutions and restricting the trading of naked credit default swaps, which are often deployed in manipulative attacks.

Not all of the discourse in Europe has been helpful, however.

German Chancellor Angela Merkel declared that “speculators are our enemies,” confusing law-abiding traders who passively speculate on price movements with criminal manipulators who actively seek to inflict harm on the markets.

Chancellor Merkel only made things worse when she said that this is a “battle of the politicians against the markets” – a proclamation that reinforced the notion that Europe’s politicians harbor a disdain for the free market system. Our enemies are criminals, not market freedoms.

The European response has also been characterized by a certain degree of ineptitude. Germany had already banned naked short selling in 2008, and foolishly lifted the ban last January.

Having given the market bullies the green light to attack, Germany’s politicians now appear like the playground dweebs, panicky and weak, hurling nothing more than small stones.

It is presumed that the naked short selling and other manipulation will simply move to exchanges in London, where officialdom seems less inclined to fight. But Germany’s ban on naked short selling — though too little, too late — is perfectly sensible.

Which makes the American media coverage all the more inexplicable.

The Wall Street Journal, which has for many years seemed incapable of even uttering the words “market manipulation”, reported that the German ban on naked short selling “sparked uneasiness” and actually caused markets to fall further.

Sparked uneasiness?

Only criminals could possibly be “uneasy” about a policy designed to prevent a crime.

Perhaps some “uneasy” criminals are members of the hedge fund lobby, whose talking points tend to find their way into stories published by The Wall Street Journal.

As for the notion that a ban on naked short selling would cause markets to lose value – well, we’ve heard something similar before.

It was back in 2008, when the SEC issued an emergency order banning naked short selling of stock in 19 big financial companies, only to have the hedge fund lobby (and The Wall Street Journal) holler that preventing crime would “reduce liquidity” and put downward pressure on markets.

This, of course, is precisely the opposite of what happened.

While the emergency order was in place, the stock market surged. Then, on August 12, 2008, the SEC, for reasons that cannot be fathomed, lifted its emergency ban, allowing the manipulation to resume.

The stock market duly tanked, and continued to spiral downwards until September, when market manipulators wiped out a large swathe of the American financial system.

It is not just me saying this.

Respected economists, famous hedge fund managers, former government officials, and current U.S. Senators such as Ted Kaufman of Delaware have all studied the events of 2008, and the consensus is that illegal naked short selling and other forms of short-side manipulation contributed to the demise of Bear Stearns, Lehman Brothers, Washington Mutual, and countless smaller companies.

In the months leading up to September 2008, criminal naked short sellers flooded the market with more than $8 billion worth of phantom stock every day.

As further evidence that The Wall Street Journal just doesn’t get it, consider that the newspaper reported this week that “under naked short selling, investors can sell securities before they have borrowed them.

The practice is already banned in the U.S…” This, unfortunately, is patently false. Although the SEC took some half-hearted steps to prevent naked short selling in the aftermath of the 2008 carnage, it did not ban naked short selling outright — traders are still permitted to sell shares before they have borrowed them.

The SEC’s current rules state only that traders have to deliver stock within three days, or in some cases, six days after they have sold it.

This means that market manipulators can flood the market with phantom stock for three to six days, inflicting serious damage on prices.

When it comes time to deliver the stock they have sold, the manipulators buy stock (at the newly damaged price) on the open market and hand it over.

Then they do it all over again – flooding the market with phantom stock for another three to six days.

In nearly every case, such naked short selling is designed to manipulate prices, which is blatantly illegal. But the SEC turns a blind eye to the manipulation so long as the manipulators deliver stock before the three or six-day deadline.

In fact, the SEC often turns a blind eye even when the manipulators don’t deliver the stock. Every day, more than 100 million shares go undelivered before the anointed deadline, and that is in just one part of the system monitored by the Depository Trust and Clearing Corporation.

Far more phantom stock is processed ex-clearing, and in other shadowy regions of the financial system.

The SEC would do well to investigate these shadowy regions in its attempt to identify the roots of the “freak accident” that took place on May 6. But, alas, the officials of that agency have been too busy picking buggers out of their noses.

Okay, not just buggers – they also wrote a 100-plus page report on their investigation into the “market events” of May 6, and this report is filled with all sorts of statistics and enough head-in-the-clouds hypothesizing to bring a smile to the face of any university economist (or SEC report-writer) looking for a job at a market manipulating hedge fund.

What the report does not contain is the names of any culprits, or any evidence that the SEC is trying to identify specific culprits.

The report does not even contain a plausible explanation for what happened.

If the SEC were charged with writing a report on the causes of the New Orleans flood, it would provide a hundred pages telling us how many cubic meters of water there were, how many molecules of oxygen and hydrogen the water contained, and plenty of assurances that water is usually good for the health, but it would forget to mention hurricane Katrina and the broken levy.

Bottom line: the SEC’s report was designed to make it seem like the bureaucrats have been busy investigating, when in fact they have been counting beans and picking buggers out of their noses.

Meanwhile, the madness of the market circus continues, and we look up at that teetering tent with great trepidation."
~

Here's another view of a person responding to Mitchell's write up above

"I’ve got a dent in my forehead where I kept having to slap myself each time some talking head on the news mentioned “efficient market theory” and the need for “liquidity” in the system.

I’m going to go out on a limb here and speculate that there is absolutely no empirical data to support “efficient market theory”, and that it is no more than a theoretical construct based upon an ephemeral series of highly questionable assumptions, the most ridiculous of which is an assumption that only honest people will participate in the marketplace.

You know, the sort of person who, when they sell you something, they actually hand it over to you.

I’m damn near 60 years old, and my life experience has shown me that the goal of every business is to somehow exempt itself from the basic rules of free enterprise.

Free enterprise postulates that in a market for fungible goods, sales will go the the lowest cost producer. Anybody wanting a share of that market has to compete on price.

Eventually prices are driven down by competition to the point where the producers are no longer willing to work so hard for such a paltry profit, and every producer thereafter squeezes out a modest living doing something of benefit to society.

While it might be nice to obtain a price advantage and a large profit margin by inventing some beneficial new method of production, or a beneficial new product to replace a less efficient older one, that is not always easy to do.

There are a lot of other time-honored strategies to increase the bottom line that require less intelligence and effort.

But the business of business primarily involves figuring out some way to exempt yourself from the economic rigors of free enterprise.

Most time-honored strategies for doing so are somewhat silly, but essentially harmless, such as product differentiation or price discrimination.

Perhaps the foremost method of exempting your business activity from free market forces is to pay a lot of money to the government to receive a special dispensation via friendly laws or regulations to shield your endeavors from ghastly, profit-squeezing competition.

One even better way to exempt yourself from the dismal law of supply and demand is to refuse to participate in the market and instead just steal what you want. 

“Efficient market theory” has no application to a transaction and to a marketplace in which a party to a “sale” is not required to perform his contractual promise.

Well, maybe the theory of efficient markets does have some application, since that theory would most certainly predict that once observers realize that a competitor is being allowed to steal all the want, everybody else will marvel at the efficiency of that strategy and adopt it as their own.

It is far more efficient for yourself to acquire something by stealing it than by having to go into a market and pay the going price for it.

You might even end up as the head of the “profit center” of your mega-corp and be remembered as a “legendary investor” before your retirement at age 35.

It is amazing that the talking heads on MSNBC don’t seem to realize this basic proposition. It seems to me to be a pretty simple idea.

If you sell a security, as part of that transaction, you actually have to give the buyer that security when you take his money, and if you intentionally fail to deliver, you have committed larceny and should expect to see the constable on your doorstep soon.

No industry can operate in an efficient market unless the government catches and punishes the thieves in that market, and the punishment must be huge enough to actually deter other folks inclined by greed to maybe engage in the same sort of thievery.

In the absence of regulation and enforcement, there is no way for an efficient market to exist. What you will have, at best, is organized crime.

At the worst, you will have total anarchy and the destruction of any pretense that a financial market actually exists.

I guess that in the financial “industry”, larceny is perfectly permissible, and is to be encouraged, as long as the market makers can skim off a commission on each theft, much like Tony Soprano got a percentage of each of his henchmen's rackets.

So instead of talking about the massive larceny, the “experts” talk about the financial disaster that would ensue if all of the henchmen were forced by government heat to move their rackets from Wall St. to London.

Instead of applauding the Germans, we get commentary the gist of which is how stupid can they be to give up all those commissions to other financial market centers?

But I suppose I’m guilty of preaching to the choir assembled here.

Instead of a government intent on catching and prosecuting the thieves in the financial industry, we have a government more interested in protecting the thieves so that their way of life shall remain undisturbed.

Like Mr. Keating in the S&L scandal, Wall St. must have been paying for something with all those political contributions to both parties. Yes, Virginia, there is deep capture.

The concept of “liquidity” is best understood in this light. If you are being allowed to steal, you can steal more money if you can do it faster and in higher volume.

All hail liquidity!! 

Nobody said the 1000-point plunge was caused by too many sell orders hitting the market instantaneously.

 May 6, 2010: The New York Stock Exchange's mysterious "fat finger" 1,000-point drop

They all said the problem was that regulators restricted the amount of buy orders, and that government interference in the efficient market caused the “price discovery” mechanism inherent in efficient markets to fail.

If you don’t deliver what you sell, there is no price discovery mechanism at work, and no readily ascertainable value to any security when the actual total supply variable is a complete unknown.

Proponents of “efficient market theory” should be in the front lines of those, who, like us, cry for the banning of naked short selling. But in the great Orwellian tradition, words are being twisted and redefined by Wall St. apologists to obscure rather than enlighten.

The perps shout for more “liquidity” when the liquid has long ago been superheated into a plasma the properties of which are a great unknown.

Does society actually need stock traders using computers preprogammed to make 10,000 trades per second?

Or maybe the better question these days is whether the quaint traders and their supercomputers need to be able to put in 10,000 per second sell orders without first having to comply with a time-consuming and troublesome locate and borrow requirement?

And, what would happen to Wall Street if 60% of their business was drastically changed by effective government regulation?

At least everybody seems to agree from the German experience that if NSS is banned by one sovereign, the crooks will just take their business elsewhere. 

Methinks hidden in there somewhere is a reluctant admission that they are, indeed, crooks."

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'No Escape From Europe's Rubble?' 

credit: Visual Impacts

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By Aaron Task, Yahoo finance

May 21, 2010-- "If the market hates uncertainty, as the saying goes, just about the only good news this week was that "uncertainty" over regulatory reform was removed. 

But the reforms aren't necessarily positive, and major uncertainty remains about the euro and the outlook for the global economy -- among other small matters. 

First, the grim tally: Thursday's washout left all major U.S. averages at least 10% below their 2010 highs.

That the decline occurred less than a month after most averages hit those highs is at least as disturbing as the fact that the Dow and S&P entered official "correction" territory. (On Friday, the Dow dipped below 10,000 early on before rebounding to close higher.) 

So there's a good reason why a lot of investors are feeling whipsawed --and maybe a little nauseous -- right now, The VIX, a.k.a. "the fear index," has jumped about 175% in the past month, while Treasuries, the dollar and gold have benefited from the "risk aversion" trade.

Inevitable Object Meets Irresistible Force?

The Euro-zone crisis has reminded the global financial community that despite all of the government liquidity and credit … the process of needed private and public sector deleveraging is going to be painful and -- to no small extent -- has been delayed/stunted by the government stimulus itself," says Daniel Alpert, managing partner at Westwood Capital.

"It is, nevertheless, inevitable."

While many Americans rightly worry about the day of reckoning for our massive debts, the "inevitable" has already arrived in Europe.

 Spanish Prime Minister José Luis Rodríguez Zapatero

As a result, expect the euro to remain the linchpin around which the global financial markets swing in the coming days and weeks. Reports of central bank interventions Thursday and Germany's vote to fund its portion of the $1 trillion rescue package Friday helped give the currency a boost heading into the weekend.

But the outlook for the euro remains in doubt.

Why the Euro Matters So Much

The euro's fall vs. the dollar raises concerns about the profit outlook for U.S. multinationals, which have benefited greatly from a weak dollar in recent years.

Suddenly, the optimistic earning forecasts for S&P 500 stocks are being called into question.

That's a big reason why mega-caps like GE (NYSE: GE - News), IBM (NYSE: IBM - News), Boeing (NYSE: BA - News) and Caterpillar (NYSE: CAT - News) have been so battered in recent weeks.

Beyond the stock market, a weak(er) euro has major ramifications for the global economy because it will make European exports more competitive against rivals from the U.S., Japan and China, most notably.

[For more on this dynamic, see: Outlook for Global Economy Is "Bleak," Former IMF Chief Economist Says.]

Concern about the economic impact of the currency crisis is a big reason commodity prices have tumbled recently, most notably oil. Historically, currency crises lead to trade barriers and protectionism, which typically bring slower economic growth, if not deflation and depression.

The euro will be a major issue when U.S. Treasury Secretary Timothy Geithner and Chinese Vice Premier Wang Qishan meet next week for a strategic and economic dialogue.

Ahead of the gathering, Chinese officials said the euro's weakness means they are less likely to let their currency, the renminbi, rise in value, something U.S. policymakers have long agitated for.

In sum, Europe's mess is further complicating an already highly sensitive sore spot between the world's largest and world's fastest-growing economies.

Meanwhile, in a world "intertwined by $500 trillion of derivatives," as Minyanville's Todd Harrison likes to say, Europe's crisis has also revived fears of "systemic risk" and financial contagion.

'Fighting the Last War?'

The regulatory reform bill passed by the U.S. Senate May 20 was designed expressly to address such an event, fear of which had diminished heading into the weekend. But whether the Dodd bill could prevent another "contagion" remains very much in doubt.

As The Wall Street Journal reports, key elements of the Senate bill include:

• Establish a new council of "systemic risk" regulators to monitor "too big to fail" firms and prevent bubbles from forming.

• Create a new consumer protection division within the Federal Reserve.

• Empower the Federal Reserve to supervise the largest, most complex financial companies.

• Resolution authority for the government to seize and liquidate failing financial firms without a taxpayer-funded bailouts.

• Give regulators new powers to oversee derivatives.

• Force banks to stop "proprietary trading," or making market bets with their own capital, and put limits on firms' ability to grow beyond a certain size of liabilities.

The WSJ labeled the Senate bill (which must be reconciled with a House version) "harder than expected" and said Wall Street is "bracing for seismic changes."

Considering prop trading and derivatives have become huge sources of income for Wall Street firms, maybe "certainty" over reg reform isn't such good news, after all.

No tears are being shed for the "fat cats," but if the reforms result in a contraction of credit, as opponents contend, the U.S. economy and our 401(k)s will feel the impact."
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