Apr 24 2009 10:52AM
U.S. Treasury's Foibles And Fables In Free Fall
Timmy the G is becoming more confident on television as we watch him smile and refrain from his furtive guilty looks. As he easily slips into his new, relaxed administrative Pinocchio mode, Timmy no longer appears fearful of a severe nose extension boosted by a myriad of untruths. We should soon expect our Treasury Guy to expound upon more elegant and elaborate economic drivel designed for press consumption. Along with Chopper Ben and the Green Man still muttering to save his legacy, they’ve certainly assembled a formidable public relations team to extend the Big Myth. Timmy is getting his PR rhythm, as he now understands how Washington really works.
Obviously these news attempts are offered to sooth the herd. We’ve got some news for Timmy. That bag of tricks and sleight of hand promulgated by our government, its lackies, minions, and the Goldman Sachs crowd, is in the open and on the table. Not only are the Sheeple getting the drift but we envision pitchforks and torches after our current Tea Parties. No wonder the Defense Department is training 80,000 troops to protect against domestic insurrection this summer.
Other signs of trauma related to these messes were provided yesterday by Mr. Ken Lewis, the CEO at Bank of America. This morning’s Wall Street Journal is splashed on page one with photos of Lewis, Hank Paulson and Chopper Ben Bernanke. This latest story is not a pretty one as Liz Rappaport (the WSJ writer) sez ‘ol Hank told Kenny to shut-up about undisclosed troubles at Merrill during BOA’s Merrill Lynch acquisition. It seems Hank forbid Mr. Lewis to disclose Merrill’s woes while the international financial system was drain diving. Now, Mr. Lewis is between a rock and hard place.
CNBC reported today that Mr. Lewis was instructed to do some things by Paulson that fly in the face of SEC Rules in an effort to keep the lid on the Merrill transaction. Lewis, it appears to us, violated these rules as instructed but is now wide-open to Merrill and BOA shareholder criticism. We noticed too, that Hank Paulson was quick to pin the blame (the government’s gag order to Lewis) on Chopper Ben, so he himself is not caught-up in this mess. What a circus!
As it turns out relative to these massive acquisitions, Lewis got stuck with two huge, stinking piles of dung; one was Merrill and it’s previous good name overloaded with derivatives. And, the second big mistake was his purchase of Countrywide Financial proving to be a worse turkey than several Enron’s combined. Now, we suspect Mr. Lewis loses his job for following Paulson’s orders.
Next, it appears judicial vultures have arrived and perched in rows on the fence at Wall & Broad. Perhaps Mr. Lewis is steering toward an early and unexpected retirement. But, his proposed beach and golf time might revert to something unkind if New York’s Attorney General has something to say about these things. And, this AG is looking with new interest and a magnifying glass as lots of this naughty stuff apparently happened in the Big Apple on New York AG Andrew Cuomo’s turf.
The United States Of Goldman Sachs, Inc.
Some how, some way, despite their reptilian attempts to smother and hide these scams, the light of day is getting much brighter-much faster. Paulson and Timmy along with Benny have conspired to reflate Goldman’s balance sheet tossing nearly, or over $200 Billion of taxpayer cash to AIG. Of course it’s not AIG that’s getting healed. Its Goldman getting most of the AIG funneled billions in derivative pay-offs leaving some other scraps for a few others. We saw an email from Germany yesterday indicating a majority of the top twenty banks were toast and that Goldman in particular was 1,000% underwater on derivatives versus capital. The original information source on this was Turner Radio but the delivery man remains unnamed. Is this just internet gossip? We doubt it.
Ya gotta wonder how many other fiscal tragedies were residing in this global derivatives debacle and were made whole by similar actions. We would suggest less than five major banks and their associated cohorts were the strongest beneficiaries from this honey pot of taxpayer benevolence.
When you have your key soldiers (Goldman) in every important economic, banking, and government controlling position in the western hemisphere, you not only own Wall Street but you own the US Government’s mint keys and all related media. The next big question is; how many more bad loans and debts are out there in the economic mist? We think only 10-15% has surfaced so far. Even if our estimate is mostly wrong, capitalization of the bigger banks is a goner. These banks are technically bankrupt right now. How bad does it get? We cannot tell and neither can anyone else.
Investors and Traders Are Out In The Wind
Some of this ugly stuff is common news on the street. Some is not. We present these ideas so our investors and traders have a clear understanding they are standing in the middle of a rigged game.
What to do? As we have encouraged before, first take care your personal and practical needs of daily life. Then it’s time to go shopping for gold and silver coins and other forms of precious metals for investment, safe-keeping and your security. Beyond those ideas, investing and trading is paramount.
Look at the latest important charts to understand where we are and where we’re going:
Daily gold has broken out in a new wave three (large) above all moving averages.
Note the blue PMO momentum line is curling-up to cross-over higher into a new rally.
Daily silver is up $.50 in a strong rally resisting at 200-day moving average.
Silver has strong support and resistance at $12.85. A rally above $13.00 would positive.
Weekly U.S. Dollar peaks in a bear flag pattern. Prepares to sell.
Dollar is trading in a range of 82.50 to 86.50. Price has closed beneath the 20 and 50- Day moving averages and should gradually sell down to new support at 82.50-82.85 on the 200-day moving average and channel support. Some time this summer we forecast the dollar settles to lower support at 80.00; the very strong and old support for its price.
Gold & Silver shares are supporting within a bullish up-channel moving slowly.
The most important shares-to-gold metal ratio (bottom box) is peaking up. It needs to cross over the 20 day EMA average to ensure a secure rally. The PMO momentum in the middle box remains negative. Since it’s slower, give it time to rally following the ratio price. We want to see (1) the XAU price rally above the three moving averages and, (2) get above very hard price resistance at 120.00. The price of 140.00 would then be the next objective.
Personally, I can see unbelievable opportunities to trade that we would never see again for many years. Turn these problems into opportunities. Those on the right side of the trade might get rich. Those on the other side are just victims. Stay Alert. –Traderrog
Editor Trader Tracks Newsletter
The Jay & Rog Blog at webeatthestreet.com
Roger Wiegand is Editor of Trader Tracks Newsletter for gold, silver and energy traders. Roger provides recommendations for short and longer term traditional stock shares, futures and commodities trading with specifics for individual trades. See webeatthestreet.com for more information
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