Insolvency Driving Future Action ~ The Risk Averse Alert

Friday, March 08, 2013

Insolvency Driving Future Action

Not quite the positive day I thought possible today. Still, certainly a step in the right direction. What's more, the market's advance off its Tuesday, February 26th low still appears to have legs. Truth is, though, these could be completely exhausted before Monday's trading upcoming finishes.

So, let's continue with possibility the 4th wave of 5 waves up from mid-November 2012 bottom has been in the midst of forming since the market's February 20th peak...


As this 4th wave continues its formation, an impending declining leg should see RSI and MACD sink below respective levels these measures fell to when the 2nd wave of 5 waves up from mid-November completed late-December 2012. Increasing underlying technical weakness, such as typically is displayed during formation of a 4th wave of 5 waves higher (this versus the preceding 2nd wave in a 5-wave advancing sequence), thus will be confirmed. Then we should have greater confidence the Elliott Wave based viewpoint presented here this week (via the DJIA and the S&P 500) finds the market drawing nearer a significant reversal lower, much as other technical measures whose persistently weakening state likewise suggest (see, for example, $BPNYA, whose negative divergence at higher $NYA peaks has been ongoing since February 2010 peak).

Of course, we could add so much more to evidence revealing the market's underlying state is crippled. Why bother, though, when you could just reread every bit of commentary presented here for months on end and find the same technical analysis exposing the market's weakness past remains no less insightful and foreboding today.

How is it that no one asks if global central banks led by the U.S. Federal Reserve were all powerful in their ability to smoothly steer provisions of finance and its subsequent, economic application, then why haven't these gone balls to the walls since day 1? What has been restraining their aggressive intervention all these decades?


Guess what? This no longer is the case! That's why central banks have gone wildly reckless with QE. This ultimately is the price of King Ponzi's work (Greenspan).

This bears repeating. The Fed's useful role as lender of last resort was ruined the minute Alan Greenspan was tolerated by Congress—indeed, revered. Lenders of last resort exist never to be tapped. Their function largely is geared toward preventing panic, this that a loosely claimed capability as lender of last resort never be put to the test. However this functional hierarchy was destroyed by Greenspan via those securities-based credit allocation mechanisms his Fed endlessly endorsed. Here, this wildcat banking system of Greenspan's we have called "Adam Smith's Leveraged Ponzi Scheme." Many in Congress took the bait, hook, line and sinker. So too, then, has the U.S. Treasury been relegated as hopelessly trapped as most every major national treasury on the planet.

Make no mistake, friend. This condition will not forever persist. It's only a matter of time when the next phase unfolds in reaction to this, while what might come of it finds variables on opposite ends of the spectrum, so there's no telling the likely detonators of panic. Yet panic is a virtual certainty. What today is being propped up simply is unsustainable. Now a rhetorical question: what happens when the solvency of an uber levered banking system no longer can be feigned? Kaboom. 

Having reached a point where accelerating shutdown of both the physical and financial economy are clearly on the horizon as a consequence of "beggar my neighbor" competitive currency devaluations gone wild (we might say yet another in the "gone wild" series to move into its bankruptcy phase), the thing to watch is politics. Anything promoting political weakness in chaos likely will serve to support hopelessly insolvent, "too big to fail" titans of tyranny at the trans-Atlantic banking system's core. Little wonder, really, Goldman Sachs is excited about Beppe Grillo. Here's something, though, the firm should think about in its kind regard expressed toward such a nation-wrecking provocateur as this Grillo: the firm's bankruptcy is exposed by its evident hunger for assets made available on the cheap.

Many evidently are betting on the EMU's imminent demise. Yet credit made available by the trans-Atlantic's central banks—this provision, of course, was made reckless by its being poured down a bottomless sinkhole of speculative garbage for which there is no market—stands as a precedent. Such credit in fact could be issued to finance productive development, as well as it has been issued to cover up the trans-Atlantic banking system's giant mountain of [derivatives] garbage. So, how long before the EMU's core countries react to the Axis of Fraud's politically charged wrecking ball is now the most relevant question. All kind of controls are available to defend against what surely must be perceived the Axis of Fraud's ongoing, European stickup (whose growing al Qaeda presence but looming on the continent's periphery probably is best seen for what it really is: Team Fraud's Foreign Legion standing ready for action)...

Word on the Street
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