The Cypriot Death Cross ~ The Risk Averse Alert

Friday, May 03, 2013

The Cypriot Death Cross

Don't be fooled. The trans-Atlantic Open Society for the Perpetual Levitation of Garbage has its work cut out for it. There's not a captive, criminally reckless central bank on the planet with power to forever forestall a fateful reversal of fortune at the core of today's gigantic pile of trash...

Ooopsie. That "death cross" (circled) in the going rate for paper gasoline has got to be a huge concern to witch doctors of the Ivy League whose answer to the problem of insolvent banks throughout the trans-Atlantic—a problem their own reckless incompetence created—is bankrupt the lender of last resort, the state. Good luck pushing down the 200-day moving average of rates on 10-year U.S. Treasury notes, Confetti, when the plan by necessity requires exploding the supply of these securities, as must be if the banking system's collapse is to be forestalled. Europe, indeed, is a relevant template here. The euro-zone's sovereign debt explosion over the years since 2008's collapse of Adam Smith's Leveraged Ponzi Scheme graphically reveals what's needed to prop up a banking system swamped with AAA-rated trinkets unfit for American Indians. In light of this, too, we might better speculate on Count Draghi-ula's coming career in comedy than take seriously his dream of reviving the ABS market. As if this objective could somehow stabilize sovereign finance! We are way beyond recovery of illusive confidence in Ponzi finance capable of restoring a status quo built on the foundation of central bank recklessness facilitating illusory wealth.

Way beyond ... and, indeed, Cyprus vividly proves this. The timing of the imposition of the Cypriot template for broad daylight theft of capital needed to keep alchemists of imperial finance living in fantasy yet another day longer in fact might have been signaled by this year's "death cross" of rates on 10-year U.S. Treasury notes. As such, too, the stock market's continued advance this year might be better seen a "move along, nothing to see here" diversion serving to entice the greatest number of suckers possible before the trap door finally is sprung. Today's lift bringing only the better part of a rising phase of a corrective wave (i.e. the 3rd wave of a "c" wave of a "b" wave up from April 18th bottom) on volume screaming contrived demand, of course, is widely celebrated in fantasy land, but is likely to be given back as the market continues to base in preparation for its final move higher preceding its rather still probable collapse.

Word on the Street
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