Wednesday, June 8, 2011

Hey Bernanke! Economic Failure Rests With The Man In The Mirror

It is interesting to note that May 2, 2011 was not only the top in Silver and Gold, but in the S&P 500 also.  After five weeks of losses, the S&P 500 is now down over 6%.  June 1 has marked an acceleration in the take down of the S&P 500.  Silver and Gold have remained resolute in the face of this acceleration in the fall of the S&P 500, but we expect them to remain pressured as stocks fall further in this scripted take down of the equity markets.  We continue to believe that the current take down in stocks [and commodities] is a manipulative set up by the Fed and their cronies in order to setup the demand for QE3.

Silver appears capped now below $38 and Gold at $1550, despite brief forays above this cap recently.  Technically, both Silver and Gold are poised for breakouts to higher ground.  But, as we mentioned in our charts posted recently, CRIMEX market rigging will be employed to "halt the obvious" as the Fed buys time in the hope of proving their soon to be completed QE2 was a success.  Unfortunately, it is no secret to the Fed, many economists, or those of us reading this that QE2 has been a dismal failure.  And if at first [or second] you don't succeed...try, try again. 

And try the Fed might, but not right away.  First, the stage for the next round of Quantitative Easing must be set...just as it was prior to the first two rounds.

Stocks Close Down For 6th Consecutive Day: Longest Red Streak Since February 2009, Just Before QE1
From Zero Hedge
The last time we had 6 consecutive down days was February 13-23, 2009. Which is before March 2009. Which is when the S&P hit 666. Which is when the Fed started Q1. As for the last time we had 5 down days in a row was in August of 2010, just when the Hindenburg Omen was spotted and threatened to undo the entire Centrally Planned house of cards... Which is when the Fed started QE2. Pattern emerging?

The area to watch closely on the S&P 500 is around 1245-55.  This area coincides with the March 2011 lows and the present region of the index's 200 day moving average.  I would expect a technical bounce here back to the index's 50 day moving average before the market crashes towards 1100 where QE3 will be rolled onto the launch pad by mid August.  However, I would not be surprised to see the S&P 500 slip through it's 200 day moving average like a hot knife through butter sometime next week either just to launch the cries for QE3.
The much dissected speech Bumbling Ben Bernanke gave yesterday afternoon did little to assure the markets of any forthcoming support.  You can read Ben's bag of lies and excuses here, and I highly suggest that you do that now.

Our Captain of the Titanic refuses to admit to the TRUTH regarding his meddling in the financial markets:  It has been a dismal failure.  It is really quite amazing that the man fails to see that after two years of free money, a tripling of the Fed's balance sheets and 10% deficit/GDP ratios the Fed has fallen short of establishing an establishing anything remotely representing an economic recovery.  Instead he blames an earthquake in Japan, an 80% increase in the cost of gasoline, and strong economies in emerging markets for his inability to deliver jobs and economic growth here in America.  He refuses to admit that he is wantonly debasing the US Dollar, and once again promises that current economic weakness is "transitory" growth will improve "in the second half of the year".  How many times do we have to hear that "growth will improve in the the second half of the year" before America asks for this clowns head?  At this point, America will be lucky if growth improves by the second half of this century!

According to our Fed chairman, "current conditions" do not warrant QE3.  So now we wait, while the stage is set for conditions to scream for QE3:

And More Cold Water From Goldman: "Bernanke Speech Suggests Fed Squarely In Zone Of Inaction"
From Zero Hedge
No surprises in the commentary on monetary policy: "QE2" is to wind down at the end of the month, but reinvestment of principal payments on the Fed's securities holdings will continue. In Bernanke's words: "Although it is moving in the right direction, the economy is still producing at levels well below its potential; consequently, accommodative monetary policies are still needed. Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established." That implies a fairly high bar for any monetary tightening. At the same time, there is of course no mention of the possibility of another asset purchase program--this would require a notable further deterioration in the outlook to be considered seriously. In short, we remain well within the “zone of inaction” for the Fed.

Bernanke Says ‘Frustratingly Slow’ Recovery Warrants Accommodative Policy
By Caroline Salas Gage and Steve Matthews
Federal Reserve Chairman Ben S. Bernanke said the “frustratingly slow” U.S. recovery warrants sustained monetary stimulus while predicting that growth will gain speed in the second half of the year.

“The economy is still producing at levels well below its potential; consequently, accommodative monetary policies are still needed,” Bernanke said yesterday in a speech in Atlanta. At the same time, the Fed “will take whatever actions are necessary to keep inflation well controlled,” he said.

Oil prices have climbed 160 percent since February 2009, while non-fuel commodity prices gained about 80 percent, Bernanke said. The increase in commodity prices reflects “strong gains in global demand that have not been met with commensurate increases in supply,” he said.

The chairman rejected criticism that the Fed’s actions have pushed down the foreign exchange value of the dollar, and thereby boosted the price of commodities, saying “many factors other than monetary policy affect the value of the dollar.”

Commodities as tracked by the 24-member Standard & Poor’s GSCI Spot Index have rallied about 9 percent this year, led by gasoil and Brent crude.

Bernanke said the central bank’s efforts to keep inflation low and stable are helping the dollar.

“There is a very strong case that what the Fed needs to do to provide good fundamentals for the dollar in the medium term is to first keep inflation low and stable, and secondly to help the economy recover and be strong,” he said in response to questions after the speech.

Ben Bernanke is FULL OF SHIT.  The WORLD disagrees with him entirely.  Inflation is NOT low and stable and the globe is presently flooded with Oil.  Has Bumbling Ben checked inventories in Cushing, Oklahoma recently?  OPEC even disagrees with him:

OPEC leaves output on hold, causing oil price jump
VIENNA (AP) -- OPEC unexpectedly left its production levels unchanged Wednesday, causing oil prices to jump, as senior officials said their meeting ended in disarray -- a stunning admission for an organization that places a premium on consensus decision making.

OPEC officials said that because of a policy deadlock, the group will maintain present output ceilings with the option of meeting within the next three months to consider a hike.

Saudi Arabia and other influential Gulf nations had pushed to increase production ceilings to calm markets and ease concerns that crude was overpriced for consumer nations struggling with their economies. Those opposed were led by Iran, the second-strongest producer within the Organization of the Petroleum Exporting Countries.

Oil minister Rafael Ramirez of Venezuela-- like Iran, a price hawk -- said there was a "very tight" discussion in OPEC, in comments to his nation's state media. Any production increase "could cause a collapse of our price," he added.

The high price of Oil, and in turn gasoline, are a direct result of the falling value of the US Dollar because Ben and his Fed heads have been printing Dollars out of thin air for the past two years.  He can blame whomever and whatever he wants, but the blame lies with the man he sees in the mirror as he grooms his little beard every morning.  It long past time for Americans to recognize Ben Bernanke for the failure that he and the Fed are, and DEMAND their immediate removal. 

How about this offer from the Republicans to the Democrats to raise the Debt Ceiling:  Vote with us to disband the Federal Resreve, and we will raise the debt ceiling one last time.  This one act should open the door to much needed reconstruction of our financial system.

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