The BIS Twist: Hamilton or Die ~ The Risk Averse Alert

Monday, June 24, 2013

The BIS Twist: Hamilton or Die

Poor Confetti. He's being hung out to dry. It wasn't bad enough both ends of the Washington political spectrum plunged their knives into the Fed Caesar last week. This weekend the BIS gave the knives a twist with their annual report clearly signaling it is time to precipitate asset grabs capitalized not by further swelling central bank balance sheets, but rather quite possibly by way of "bail in."

No word on how the BIS' European fascist austerity approach will crush already swollen balance sheets its member banks have amassed. For now, commonly accepted doctrine claiming central banks operate above markets and are impervious to loss might be thought a T.F. freezing mechanism keeping central banks from the obvious next step: the Hamiltonian leap. Yes, the alternative conveniently ignored by gold worshiping Austrians and budget busting Keynesians alike.

Hey Austrian, defend your "store of value." Get behind the only scheme that, by itself, will protect sovereign currencies fortifying a framework allowing their values to increase. That's Hamilton. Certainly Buffett understands this. That's why he's no gold bug. He simply perceives better stores of value in physical economy. Nothing un-American about that.

So, as things stand right now, we might suppose central banks likely are being forced to sell gold and buy short-dated sovereign securities. Trouble is there isn't enough gold in the world to indefinitely support currencies this way. To be sure, short-dated sovereign securities are no gold mine either. Rather a symptom of a fatal disease. Debt, oh Keynesian, is a blessing when its extinguishing comes at the luxury of incredible career opportunities increasing the productive power of labor, this being "effect" paying back debts many times over and creating that healthy capital base necessary to productively growing credit further still. Today's debt, instead, is propping up a Ponzi scheme, and worse, institutionalizing the skim. Dodd-Frank's "bail in" directive a prominent provocation. Let's be honest here.

Just you wait the bad feelings "bail in" engenders. This outcome is better avoided to be sure. Hamilton is the proven way to flank any unnecessary calamity the BIS on down seem hell-bent on sparking. Nationalize the Fed. Stack Congress with yeah votes. A calamity's successful avoidance, more critically having lasting effect, is the plan. That's Hamilton's great contribution to the United States. It is high time the American republic asserted Hamilton's principle throughout the English-speaking world at the very least. Should Venetians be afforded any further avenue to destroy this language culture? Big picture, this is a very real risk.

Speaking of risk, this is not good. There is an increasing rush to the exits, and this is deepening pain's breadth, possibly confirming Hoenig's "horribly undercapitalized" thesis, one well-informed and intimately understood at that.

We're still waiting for a spike in NYSE advancing issues signaling a solid bounce likely upcoming. Straight away, $NYA support at its 200-day moving average could be thought likely, near-term, by positive technical divergences noted above.

The CBOE Put/Call ratio, too, presents a well-defined view. Its continuing assent and proximity above its 200-day moving average effectively confirms the market's weakness more or less since its May peak. A lean on the call side sinking the ratio below its 200-day moving average likewise should accompany any solid bounce upcoming, containing the initial sting of Caesar's knifing.

Is this Snowden another JFK allusion? Shall we wish him well in his search for a Russian bride named Marina? It is possible he's being sheep dipped, like Oswald. Increasing tension with China and Russia ... a gift meant to give, and certainly in Syria. Tony, Tony, Tony (link to Friday's post pending)...

Word on the Street
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