Short term trades in the stock market •$$$$$•

[Mountain]

With SLV's pretty hard drop back so fast to about $34 and it's 100 MA I wonder if it'll hold there or maybe break down to about $30?

 

[Mountain]

With SLV's pretty hard drop back so fast to about $34 and it's 100 MA I wonder if it'll hold there or maybe break down to about $30?

Not surprised with SLV's breakdown. Don't know if it'll hit $30 but it's trying really hard to hold $34 and it's 100 MA.

 

[SpasticGramps]

I think we may see $20 again sometime this summer to beginning of fall. I would love that. I believe the DXY rising will crush commodities when QEII really ends in June.

Why Growth Is Dead

Submitted by Chris Martenson

The end of the second round of quantitative easing (QE II) is going to be a complete disaster for the paper markets -- specifically commodities, stocks, and then finally bonds, in that order, with losses of 20% to 50% by the end of October. The only thing that will arrest the plunge will be QE III, although we should remain alert to the likelihood that it will be named something else in an attempt to obscure what it really is. Perhaps it will be known as the "Muni Asset Trust Term Liquidity Facility" or the "American Prime Purchase Program," but whatever it is called, it will involve hundreds of billions of thin-air dollars being printed and dumped into the financial system.

A Premature Victory Lap

Bernanke recently stood at a lectern and announced to the assembled audience that the Fed's recent policies could be credited with elevated stock prices and an improved employment statistic while somehow keeping inflation low.

It was his own version of a 'mission accomplished' speech, just like the one GW Bush gave. And similarly, it does not mark the end of significant difficulties, but the probable beginning of a very long period of treacherous economic and financial disruption.

Here's one recent version of how the Fed's actions are being interpreted, courtesy of Bloomberg:

Bernanke’s QE2 Averts Deflation, Spurs Rally, Expands Credit

Ben S. Bernanke’s $600 billion strike against deflation is paying off, as stock and debt markets rise, bank lending grows and economists forecast faster growth.

The Standard & Poor’s 500 Index has gained 13.5 percent since the Federal Reserve chairman announced on Nov. 3 the plan to buy Treasuries through its so-called quantitative easing policy. Government bond yields show investors expect consumer prices to rise in line with historical averages. The riskiest companies are obtaining credit at the cheapest borrowing costs ever and Fed data show that commercial and industrial loans outstanding are rising for the first time since 2008.

“Looking at market indicators, you have to be convinced it’s been a success,” said Bradley Tank, chief investment officer for fixed-income in Chicago at Neuberger Berman Fixed Income LLC, which oversees about $83 billion. “When you get into periods of aggressive central bank easing, and we’re clearly in the most aggressive period of easing that we’ve ever seen, the markets tend to lead the real economy.”

When we compare the $370 billion that the Fed has printed and placed into the financial system year-to-date against the levels of money flows going into and out of mutual funds, exchange-traded funds (ETFs), and money market funds, we observe that the Fed's actions swamp those flows by a factor of roughly 2:1. That is, the amount the Fed is putting in is quite significant, and its disappearance from the markets is something that needs to be carefully considered.

On the plus side, we can all be thankful for the one thing that money printing can do, and has done, which is buying a little more time for everyone. As I consistently advocate, such time should be used, at least in part, to ready oneself for a future of less and to become more resilient against whatever shocks are yet to come.

While money printing can so some wondrous things in the short term - (Hey, give me $2 trillion to spend and I'll throw a nice party, too!) - it cannot fix the predicament of fundamental insolvency. The United States has lived beyond its means for a couple of decades and promised itself a future that it forgot to adequately fund. The choice that remains is between accepting an unpleasant but relatively steady period of austerity leading to a new lower standard of living -- and a final catastrophe for the dollar. The former is akin to walking down around the side of a cliff, and the latter is jumping off.

Too Little Debt! (or, One Chart That Explains Everything)

If I were to be given just one chart, by which I had to explain everything about why Bernanke's printed efforts have so far failed to really cure anything and why I am pessimistic that further efforts will fall short, it is this one:

There's a lot going on in this deceptively simple chart so let's take it one step at a time. First, "Total Credit Market Debt" covers everything - financial sector debt, government debt (fed, state, local), household debt, and corporate debt - and is represented by the bold red line (data from the Federal Reserve).

Next, if we start in January 1970 and ask the question, "How long before that debt doubled and then doubled again?" we find that debt has doubled five times in four decades (blue triangles).

Then if we perform an exponential curve fit (blue line), we find a nearly perfect fit with an R2 of 0.99 when we round up. That means that debt has been growing in a nearly perfect exponential fashion through the 1970's, the 1980's, the 1990's and the 2000's. In order for the 2010 decade to mirror, match, or in any way resemble the prior four decades, credit market debt will need to double again from $52 trillion to $104 trillion.

Finally, note that the most serious departure between the idealized exponential curve fit and the data occurred beginning in 2008 -- and it has not yet even remotely begun to return to its former trajectory.

This explains everything.
It explains why Bernanke's $2 trillion has not created a spectacular party in anything other than a few select areas (banking, corporate profits) which were positioned to directly benefit from the money. It explains why things don't feel right, or the same, and why most people are still feeling quite queasy about the state of the economy. It explains why the massive disconnect between government pensions and promises, all developed and doled out during the prior four decades, cannot be met by current budget realities.

Our entire system of money, and by extension our sense of entitlement and expectations of future growth, were formed in response to and are utterly dependent on exponential credit growth. Of course, as you know, money is loaned into existence and is therefore really just the other side of the credit coin. This is why Bernanke can print a few trillion and not really accomplish all that much. It's because the main engine of growth is expecting, requiring, and otherwise dependent on credit doubling over the next decade.

To put that into perspective, a doubling will take us from $52 to $104 trillion, requiring close to $5 trillion in new credit creation during each year of that decade. Nearly three years have passed without any appreciable increase in total credit market debt, which puts us roughly $15 trillion behind the curve.

What will happen when credit cannot grow exponentially? We already have our answer, because that's been the reality for the past three years. Debts cannot be serviced, the weaker and more highly leveraged participants get clobbered first (Lehman, Greece, Las Vegas housing, etc.) and the dominoes topple from the outside in towards the center. Money is piled on, but traction is weak. What begins as a temporary program of providing liquidity becomes a permanent program of printing money, which the system becomes dependent on in order to even function.

In addressing these questions in Part II of this report: Positioning for the Coming Rout, I have become increasingly confident that the Fed's efforts to exit quantitative easing will lead to a substantial market rout that will roil all asset classes this year. That's just the short-term outlook. Continued and eventually greater turbulence will result from the government's subsequent response.

Click here to access Part II (free executive summary; paid enrollment required to access) for specific predictions on what to expect in the months ahead as well as recommendations for protecting your wealth.

 

[Mountain]

I think we may see $20 again sometime this summer to beginning of fall. I would love that. The DXY rising will crush commodities when QEII really ends.

If it hits $30 would be very interesting. At this point I have a hard time believing it'll break below $25. By that point it'll be below it's 200 MA. I just don't se $20 as any major price level.

 

[SpasticGramps]

Wishful thinking perhaps?

 

[SpasticGramps]

"by Fiat2Zero
on Wed, 05/11/2011 - 18:42
#1265601

Emperor Diocletian's Reforms
History has something interesting to say about price controls:

Pull quote from: www.cato.org
-----------------------------------
Finally, the very survival of the state was at stake. At this point, the Emperor Diocletian (284-305 A.D.) took action. He attempted to stop the inflation with a far-reaching system of price controls on all services and commodities. [10] These controls were justified by Diocletian's belief that the inflation was due mainly to speculation and hoarding, rather than debasement of the currency. As he stated in the preamble to his edict of 301 A.D.:

For who is so hard and so devoid of human feeling that he cannot, or rather has not perceived, that in the commerce carried on in the markets or involved in the daily life of cities immoderate prices are so widespread that the unbridled passion for gain is lessened neither by abundant supplies nor by fruitful years; so that without a doubt men who are busied in these affairs constantly plan to control the very winds and weather from the movements of the stars, and, evil that they are, they cannot endure the watering of the fertile fields by the rains from above which bring the hope of future harvests, since they reckon it their own loss if abundance comes through the moderation of the weather [Jones 1970: 310].
​

Despite the fact that the death penalty applied to violations of the price controls, they were a total failure. Lactantius (1984: 11), a contemporary of Diocletian's, tells us that much blood was shed over "small and cheap items" and that goods disappeared from sale. Yet, "the rise in price got much worse." Finally, "after many had met their deaths, sheer necessity led to the repeal of the law."

Emporer O'Bottom Wears No Clothes."


source: http://www.zerohedge.com/article/chart-day-currency-devaluation-old-school-style

BTMFD! stay frosty,

-iD

edit- any insight on the prospective movement of the USD from the effect of breaching the debt ceiling in less than a weak? what do i do w/ all of my cash if RIN TIM TIM decides default and rollover is that dog's only trick? goodstuff gramps n every1, very enlightening. glad im not the only one.

That's exactly what I'm talking about bro. Great example!

Interesting things may happen if we come to an impasse on the debt ceiling. I think there will be enough fear mongering from Timmy Boy that it will get raised and the dollar rises short term. I don't know how it could survive QEIII. But if nothing the ponzi is resilient. I'm kind of surprised the debt ceiling debate hasn't been played up more and resolved yet. Seems to be cutting it kind of close for the markets. Uncertainty fucks up the computer algorithms.

 

[SpasticGramps]

Master Speaks.

Bernanke Cautions on Debt-Limit Bargaining Bloomberg.

Federal Reserve Chairman Ben S. Bernanke cautioned lawmakers against using the federal debt limit as a “bargaining chip” during budget talks, saying such moves could provoke market instability and harm the economy.

“I think using the debt limit as a bargaining chip is quite risky,” the Fed chief said today in testimony to the Senate Banking Committee in Washington. Failure to raise the debt limit would “at minimum” lead to “an increase in interest rates, which would actually worsen our deficit and would hurt all borrowers in the economy.”

 

[SpasticGramps]

Here comes the rhetoric for more "stimulus" monetary or fiscal. QE to infinity.

Good Bloomberg video in link of Alan Blinder of Princeton attempting to rationalize the Neo-Keyensian end game. "We really need to address the deficit, but just not now." Sounds like a drug addict. Just need one more hit. One more. One more...........Just a few trillion more. What inflation?

Alan Blinder Fires First Shot Across QE3 Bow: Says We Need More Stimulus To Boost Employment

A little under a year ago Moody's Mark Zandi and Princeton economist and former Fed vice chairman Alan Blinder penned a paper titled "How we Ended the Great Recession" which did nothing but extoll the virtues of spending trillions in both fiscal and monetary stimuli and preventing U3 from hitting 16% (of course how one proves a counterfactual is irrelevant: just remember - if the Fed disclosed its top secret bailout plans the world would end. Same thing here - accept it - after all the guy is a professor at Princeton). In a nutshell Blinder is nothing but Paul Krugman on steroids: a man who believes that there is nothing worse in this world than establishing fiscal (and monetary) discipline now. Well, in an interview with Tom Keene earlier, Blinder fired the first shot across the QE3 bow, telling his Bloomberg host that the US needs "somewhat more" fiscal stimulus once again in order to boost employment (hold on: didn't we end the Great Recession, and certainly the normal one in the summer of 2009 according to the NBER?). How this would be accomplished in the current climate is not explained. Instead what Blinder says makes one wonder just who is on the tenure committee at Princeton - when asked how we bring the deficit in without austerity, the Princetonian responds: "Unfortunately I think it is very subtle for most political processes especially for the political process in the US. What we should be doing is somewhat more fiscal expansion but at the same time legislating into law fiscal consolidation for the future. Starting 2 years from now, 3 years from now, 18 months from now. But not now." Of course never now: why bite the bullet now when it can be kicked to some other administration in the indefinite future? Especially when tenure money and/or Wall Street bribes are at stake...

Basically, let's just incur as much debt as possible now, and eventually it will get better. And this is happening now almost 2 years after the recession supposedly ended. Naturally, there will be no fiscal expansion: not with the current political set up. Which leaves just one option - monetary stimulus. And since Blinder is very close to the Fed, we are confident that the two-way dialog between academia and Federal Reserve is already under way, making it clear that if no fiscal stimulus will be forthcoming, then QE3 certainly will have to take its place. Especially now that the Economy has once again taken a turn for the worse.

That said, we have to thank Mr. Blinder for providing the first direct evidence that the prevailing throught among the Princetonian circle is one of further stimulus. The only question is whether it will be fiscal or monetary.

We believe that with this the opening salvo for more cash demands, which will be met with staunch opposition in D.C., thereby kicking the ball back to the Fed (which already is doing everything in its power to deflate all commodities as rapidly as possible - a trend which will sooner or alter engulf risk assets as well) the only alterantive is monetary. Aka more quantitative easing. And when that becomes apparent, and when Goldman's Jan Hatzius is firmly on board, the full court press for another round of easing can begin.

EDIT: He even has the junkie shakes.

 

[Madrus Rose]

ProShares Ultra Silver (AGQ).

Today Silver was dropping down to near $32 at the start of premarket and anyone that was long the AGQ from the night before awoke early to find themselves down nearly 28pts . The open of premarket found AGQ down from $182 to bouncing around off $154 and touched $152 sevral times ...and the extremely oversold .

Before market opened AGQ had bounced 9pts to $161 which was the Dec/Jan pivot highs & fell all the way beaten back . If you bought that 2nd push down premarket it bounced another 7pts again then fell back the same .

Into the open if you persisted & bought that triple dip back down to $155 , the AGQ finished the end of the day up to $179 as silver bounced all the way back up to $35 . But its not finished yet for right at the EOD AGQ sold off back down to $166 !

Then after hours it drifted back up to $175, lol. There has never been a trader like this in the history of the market ...well not since 1999 anyways and still couldn't think of what that would be .

Some 60pts in total swings in just one day plus the 6pts A/H...maybe only GOOG traded with this volitility but GOOG & AAPL have been zombies by comparison.

 

[SpasticGramps]

He explains how the markets are manipulated. Good video.

Max Keiser guest Eric Sprott on commodities prices [gold,silver]

 

[Dreamscape]

http://www.youtube.com/user/TheBobChapmanChannel?blend=1&ob=5

 

[Mountain]

Good for you Madrus! Congrats!

 

[Madrus Rose]

You have to watch this thing (AGQ) trade....and now Ag is up a dollar tonight back up to $36 , this is about where i saw the fair value here's the quote
http://www.kitco.com/charts/livesilver.html

Yesterdays Applications for Unemployment Benefits indicated the best hiring market in five years & should limit the damage from inflation and position the economy to thrive in the second half of the year...or so the thesis goes . Had those numbers came in higher & proving the better Non Farm payroll number of last friday were a fluke , there would have been some blood in the streets . Most people wouldn't have noticed but a bullet was dodged & a real drop in equities was avoided yesterday.

Stamping out the high margin speculation the wild swings we've witnessed this last 2 weeks from the sell off should start to calm here & think Ag has found a home in that lower trading range Gramps was talking about . But focuss will remain fast on Oil prices & the ME which they'll need to see drawing back down giving hurting consumers more room to spend with average working household taxed with $400/mo at the pumps . Clamping down on the margins & speculation saw the sell off but still Oil wants to stay up near $100 but should see some drop in price of gas which will be a headline going into summer with busiest travel & driving months.

Huge forces at play out there with all the players seen & unseen moving billions & trillions around the Jouiji board each day at the speed of light . Many wizards from behind the green doors of OZ all trying to orchestrate their own magic . Chinese delegation in the US in high level talks with Geithner & Hillary & co and Uncle Ben promising to unviel a plan fiscal reform this summer preventing an economic meltdown .

 

[SpasticGramps]

Uncle Ben promising to unviel a plan fiscal reform this summer preventing an economic meltdown .

I'm going to go out on a limb here and say that it will be some kind of money printing scheme to dump billions into the market and zero interest rate policy. Probably not named QEIII because that's just too obvious that the party is over. Maybe it will be called Uncle Benny's Bond Buying Bonanza Program.

 

[SpasticGramps]

John Taylor: "The Nice Risk Rally Since The First Half Of 2009 Is Ending" And Will Be Replaced By A "Scary Descent"

In the last two years, one of the most accurate predictors of both long and short-term trends has been FX Concepts' John Taylor, whose April call for a EURUSD peak of 1.4925 was almost to the dot. Which is why he is either about to cheapen his predictive record by being wrong, or the days of the rally are ending. In a statement very comparable to that from Jeremy Grantham released a few days ago, Taylor tells Bloomberg that: "the rally in higher-yielding assets is coming to an end with Europe’s sovereign debt crisis resurfacing, growth sluggish and banking systems unsteady. “This is the end of the nice slow moving risk rally that has lulled us pleasantly to sleep since the first half of 2009,” Taylor, chairman of New York-based FX Concepts LLC, said in an interview. “This warning is worthy of a brass band and bright lights as the other side of this low volatility rally will most likely be a scary descent that will have a very negative impact on markets. Our statistical models say we are about at the end of the road for risk.” Taylor gives a deadline to his prediction: "Higher-risk assets, such as equities, the euro and emerging market currencies, have either peaked or will do so by end of July." If Taylor's previous predictive record is any indication, it may get volatile soon. On the other hand, his forte is FX not stocks, and many other forecasters have been burned (or should have been) at the stake of predicting capital markets in a time of central planning.

From Bloomberg:

Higher-risk assets, such as equities, the euro and emerging market currencies, have either peaked or will do so by end of July, according to Taylor, who manages about $8.5 billion and uses statistical models to help predict future movements in assets. Global investors have tempered their optimism about the U.S. and world economies and plan to put more of their money in cash and less in commodities over the next six months, a Bloomberg survey released today found.

FX Concepts, whose returns last year were the company’s best since 2006, reaped gains in the first half of 2010 betting on a slide in the euro against the dollar and then profited by its rise the rest of the year. At present, the fund is short the common currency, which means it will profit if it declines.

Taylor, who predicted several times since 2010 that the euro will eventually fall to parity versus the dollar, boosted returns by wagering on short term swings higher in the shared European currency. FX Concepts, in a Jan. 27 note, said the euro would move higher in a medium-term trend and in April predicted the currency was poised to reach a technical target of $1.4925.

Taylor had some choice words for Europe:

“There is absolutely statistically no way that Greece can survive,” said Taylor, who just returned from France. “There is a one in 10,000 chance; if the Germans give Greece their money to pay back their debt then they’ll be fine. But there is no way Germany will do that.”

Greek government bonds fell today, pushing the two-year note yield to a record high of 26.77 percent. The bonds have lost investors 11 percent this year.

“As the spread of Greek two-year debt goes absolutely crazy over German, it means that at some point we are going to have to have a crisis,” said Taylor, whose Global Currency fund gained 3.33 percent last month. “And I think it’s very soon.”

 

[Mountain]

Does look like SLV will stabilize around here unless something major changes. It's fighting to hold it's 100 MA and around $34 is an important level for it. I quickly figured how many billions of dollars each day change hands with SLV...ha ha.

 

[SpasticGramps]

It dominates the market if I remember reading correctly.

This Euro is starting to pullback. It's been on an absolute tear against the dollar recently.

DXY is at 75.71. There could be a short squeeze on the dollar and it may not be good for equities or commodities.

Speculative Long EUR Positions Tumble By 38%, Bullish Bets In Dollar And Yen Rise

It was to be expected: as of the just released CFTC Commitment of Traders data, the net exposure of non-commercial EUR longs, arguably a bubble far bigger than gold and silver combined in terms of volume and participation, tumbled from 99,516 to 61,447 long contracts, or a nearly 40% drop in net short positions in one week after everyone long the EUR experiened one of the biggest one week tumbles in the European currency in history. And this is happening even without the CFTC hiking margins. Notably, Yen shorts have now abdicated, and following its drop into steep negative speculative territory, when it hit -52,983 contracts on April 19, it has now moved into the green, adding 32k contracts to a total of 13,054. Lastly, and not at all surprisingly, the gradual contraction in bearish dollar bets continues to abate, and at a just barely negative net position of -4,563, the USD is now back to February 2011 levels. It appears that the great unwind of the USD short trade is almost over, and from this point on it will be just the retails, the momos and the robots.

 

[SpasticGramps]

The groundwork is laid. Goldmans says, "Give me more money." The entire release from Goldman is in the link. Looks like Alan Blinder is going to get that smack for his shakes. One more hit. 5 trillion more hits. We're like a famous Hollywood star ODing in the bathroom. Goverment Sachs and the day the dollar died.

Goldman Fires The Second Shot Across The QE3 Bow: "Successful Fiscal Consolidation Needs Monetary Policy Help"

Yesterday, when we presented the Bloomberg interview of Princeton economist and former Fed vice chairman Alan Blinder, we speculated that his statement that "more easing is necessary" was the first shot across the QE3 bow. Today, Goldman's Sven Jari Stehn has fired the second one in a paper just released titled: "Fiscal Adjustment without Fed Easing: A Tall Order" in which he basically takes our conclusion from the Blinder interview to the next level. As Blinder said previously, in order to improve the once again deteriorating labor picture, more fiscal stimulus would be necessary. That, however, is impossible, especially in a Congress where everyone is now promising $4 trillion of deficit cuts over the next few years. The only difference is how this cutting will be achieved: republicans want spending cuts, while democrats are demanding tax hikes for the richest. While neither approach will work in the US without the shock of a bond-crash induced austerity, Goldman conducts an thought experiment in which it evaluates the effectiveness of a tax-based and a spending-based fiscal consolidation. While finding that on average spending based deficit reduction is more effective, it only truly works in parallel with assistance from monetary policy: be it an interest rate decrease (impossible due to ZIRP) or further Large Scale Asset Purchase (QE) program. In other words, the only thing that can prevent an economic contraction in the next 2 years of semi-austerity, will be more monetary easing.

Furthermore, Goldman also openly admits that in either fiscal case, the drag on economic growth will be substantial. "A number of studies have shown that adjustments focused primarily on spending cuts (“spending-based consolidations”) tend to be notably more successful at delivering such large consolidations than revenue-based ones. Building on work done by the IMF, we identify two reasons for this difference. First, spending-based consolidations are usually more persistent, as they are often combined with structural reforms. Second, spending cuts tend to be less damaging for growth than tax increases...A key factor behind this difference in success, however, is the response of monetary policy. While spending-based adjustments are typically accompanied by monetary easing, tax-based ones often see monetary tightening. Using a counterfactual experiment which “shuts down” the interest rate response, we show that the difference in growth damage between spending and tax-based adjustments narrows sharply..With the funds rate close to zero, our analysis implies that both spending and tax-based consolidations are likely to act as a significant drag on growth. Nonetheless, spending-based adjustments might still be the lesser of two evils, particularly if combined with entitlement reform and fiscal rules that come with a strong enforcement mechanism." Translation: the economy will slow materially regardless, but without monetary easing it will crash. Next up: cue an enjoinder by the New Jersey installment of the Ivy League, and the balance of Wall Street, all of whom realize that their bonuses are suddenly at steak.

We said yesterday that "we believe that with this the opening salvo for more cash demands, which will be met with staunch opposition in D.C., thereby kicking the ball back to the Fed (which already is doing everything in its power to deflate all commodities as rapidly as possible - a trend which will sooner or alter engulf risk assets as well) the only alternative is monetary. Aka more quantitative easing. And when that becomes apparent, and when Goldman's Jan Hatzius is firmly on board, the full court press for another round of easing can begin." Well, Goldman just got on board. Look for the cries for more monetary intervention courtesy of a Congress which can't make up its mind about a debt ceiling hike for 4 months to escalate over the next 2-3 months as the economic reality turns aggressively south. At that point the Chairman will be faced with a daily barrage of "experts" who are screaming "deflation... or printing." We have a guess which one Ben will chose.

 

[SpasticGramps]

Druckenmiller Calls Out The Treasury Ponzi Scheme: "It's Not A Free Market, It's Not A Clean Market", Identifies The Real Bond Threat Full interview in link

We hadn't heard much from legendary investor Stanley Druckenmiller since last August when he decided to shut down his Duquesne Capital hedge fund. Until today. In a must read interview, the man who took on the Bank of England in 1992 and won, says that he join the camp of Bill Gross et al, making it all too clear that all the recent fearmongering about the lack of a debt ceiling hike by the likes of Tim Geithner, Ben Bernanke and, of course, all of Wall Street, is misplaced, and that the real threat to the country is the continuation of the current profligate pathway of endless spending. From the WSJ: "Mr. Druckenmiller had already recognized that the government had embarked on a long-term march to financial ruin. So he publicly opposed the hysterical warnings from financial eminences, similar to those we hear today. He recalls that then-Secretary of the Treasury Robert Rubin warned that if the political stand-off forced the government to delay a debt payment, the Treasury bond market would be impaired for 20 years. "Excuse me? Russia had a real default and two or three years later they had all-time low interest rates," says Mr. Druckenmiller. In the future, he says, "People aren't going to wonder whether 20 years ago we delayed an interest payment for six days. They're going to wonder whether we got our house in order." Which begs the question: if interest rates are so low today, is the market not appreciating the current path of "financial ruin"? And here is where Druckenmiller joins the Grosses and the Granthams of the world.

Asked if the future is not so bad judging by today's low bond rates he says, "Complete nonsense. It's not a free market. It's not a clean market." The Federal Reserve is doing much of the buying of Treasury bonds lately through its "quantitative easing" (QE) program, he points out. "The market isn't saying anything about the future. It's saying there's a phony buyer of $19 billion of Treasurys a week." Of course, there is another name for this type of arrangement and so far only Bill Gross has used it: Ponzi Scheme.

Here's Timmy playing the Mutually Assured Destruction (M.A.D.) card again. How dare all these institutional investors question his ponzi skills.

Tim Geithner Responds To Druckenmiller With More Fearmongering And "Assured Destruction"

Not even 24 hours after Stanley Druckenmiller said to ignore all threats by the kleptocratic kartel [sic] of a world collapse should the debt ceiling not be hiked, as if on cue the tax-troubled treasury secretary has released another letter, this time to Michael Bennet, D-Colo, in which he rehashes all the usual threats that Hank Paulson pulled out of his sleeve when he presented his 3 page term sheet demanding congress give him unlimited powers to do anything Goldman, er, he saw fit to preserve the banker status quo. Nothing new in the letter, just more of the same: “A default would inflict catastrophic far-reaching damage on our nation’s economy, significantly reducing growth and increasing unemployment...Even a short-term default could cause irrevocable damage to the economy. A default on Treasury debt could lead to concerns about the solvency of the investment and financial institutions that hold Treasury securities in their portfolios, which could cause a run on money market mutual funds and the broader financial system. A default would call into question the status of Treasury securities as a cornerstone of the financial system, potentially squandering this unique role and the economic benefits that come with it." It is sad that the Treasury has succumbed to another bout of fearmongering because as Zero Hedge has been claiming since late 2009, and as Gross and Druckenmiller have recently reaffirmed, the only threat to the "confidence" of the US is if (or more correctly "when") the legislative bodies of the US succumb to this latest round of completely flawed, irresponsible and wrong mutual assured destruction rhetoric, and once again hike the debt target, this time to a total that is about 115% of US GDP.

 

[thebigz0]

Really hoping QE3 doesn't come around... at least not before a correction... got a 1/3 of my portfolio in SDS...