Thursday, June 09, 2011

Moody’s Puts Bank of America, Citigroup and Wells Fargo On Ratings Watch. Banking Index Back In Bear Market Territory. Wall Street Banksters Have Trillions In International Exposure.

I think we have a pretty good handle on what is going on in our banking system.  For new readers, we beat the bear drum incessantly and called the top in the banking index within a few percentage points before the 2008 collapse; we issued an ominous depressionary warning about credit markets just a few days before financial markets collapsed;  we remarked numerous times in late 2008 when countless Wall Streeters were calling a stock market bottom, that a bottom was not in as many experts on Wall Street choked down more and more losses; when Citigroup reached 99 cents we called off our bearish stance on banks and said the future of banks would be determined by exogenous factors aka intervention; and we wrote that a stock market rally was coming in early 2009 before ample liquidity shoved tradable asset prices through the roof again.    Then over the last quarter of last year we said the global trading pariah was repatriating money from emerging markets.  Shortly thereafter, capital flows confirmed the largest exit from emerging markets since the 2008 collapse.  Then in the first quarter of this year we said we were once again bearish on banks and that profits had peaked.  Soon thereafter bank profits were being reported that were padded against lowered loan loss reserves -  a criminal act of corporate negligence comparable to Enron’s shady accounting practices.  Banking stocks have been moving in the wrong direction since.  All while 2011 had Wall Street (dumb money… but endless oligopoly money)  the most bullish since the 2008 collapse.

Now we see that global equity markets are either down for the year or have gone no where as in the U.S.   Moodys has temporarily awoken from a stupor of malpractice to place three Wall Street firms on credit watch.  Ya think?!  Giving incompetent Wall Street criminals money to pad their insolvent balance sheets while they area allowed to keep gambling away society’s capital is one of the greatest crimes in American history. 

And just a little reminder, our position that  Goldman Sachs’ business model is completely unsustainable and that without transformation the company could be toast, is still in play.  A far cry from the perceived group-think that Goldman Sachs is run by the most  brilliant minds on earth.   That’s the same nonsense from the same incompetent bureaucratic toadies who awarded Al Gore a Nobel Prize for junk science, our President the Nobel Peace prize for blowing up people and all of the other generally accepted bureaucratic bulloney of our time.

That industrial company equities are languishing below their 2000 peak while the banking index roared to new highs post 2000 is simply a graphical representation of the wealth-transferring financial predation that now completely consumes  our economy.  Pushing around paper, junk financial science, economics as a professional crime and trading away our future both in financial assets and intellectual assets to often evil and corrupt countries has become the lunacy of elites who subvert virtue, compassion, justice and the rule of law in favor of their endless psychotic attempts at manipulation.   The human tragedy and devastation left in the wake of Wall Street CEOs makes John Wayne Gacy and the BTK Killer look like alter boys. 

Obviously all of this is enabled and endorsed by Ivy League economic idiots whose ridiculous ivory-towered theories would land them a home on a heating grate were they to actually have to participate in the Mad Max post-apocalyptic economy defined by the junk economics they espouse.   We have kids selling crack on the street corner because of these economic policies.  Ain’t no jobs in Compton, Detroit, New Orleans and countless rural areas of massive American poverty and ain’t no banking money to create jobs there either.  But plenty of banking money to speculate and pay Lloyd and Jamie hundreds of millions of dollars or finance the exportation of American intellectual capital – most of it publicly-owned capital – an act of treason, class warfare, racism and tyranny perpetuated by the relic of times gone by; a private banking system.  Put another way, the graph of the banking index shown below is a representation of the criminalization of America by a corrupt ruling class of bureaucrats and a completely fraudulent banking system. 

The chart of the banking index includes the massive predatory Wall Street institutions.  Yet for a country whose political class glorifies finance (a tax on society)  above all other economic endeavors, (because criminal banksters spend more of society’s money bribing politicians)  do you see a recovery?  That’s a joke by the way.  

We have remarked numerous times that the banking index has not retaken its May of 2010 high and that is an ominous sign when America’s corporate profit engine is driven primarily by financial Ponzi schemes; the biggest of which is the massive con game we call globalization.  And we were a first, if not the first, to call globalization as dead back in 2008.   All we do now is wait for idiots to quit spending every ounce of other people’s money they can possible get their criminal hands on.

Something broke in May of 2010 and many global markets have not recovered beyond those highs over a year ago.  I have written what I believe broke.  That is, demand.  So, markets in the U.S. in particular have been rising on artificial demand (unsustainable) driven by derivatives leverage since as we have discussed quite a few times.   All of this because the 2010 financial reform bill never really reformed anything.  Instead it is nothing more than political propaganda.  As we harped before the 2008 collapse, we need a return to Glass-Steagall at a minimum.  And has we have remarked since, Wall Street should be completely banned from trading all derivatives and from any type of financial speculation.  Period.

For new readers, our downside target for the S&P has always been the 1995 price pivot; or 400-450.   There is substantial reasoning for that price but we changed that some years ago to 200-450 on the S&P mainly because of political corruption and the lack of financial and economic reform that will make this crisis all the more difficult before it ends.  200-450 would take us back to the early 1990s, which interestingly is the same place the banking index went during the 2008-2009 collapse.   Even with trillions of dollars wasted on saving a crooked economic and financial system, the banking index is still languishing at 14 year old price levels.

I am a big fan of ABC patterns as we have discussed before. They are in some ways a linear representation of the Fibonacci spiral with the B component of the pattern being the eye of the spiral and the A and C components being the leading and lagging spiral.   (As we have compared this economic storm to one of nature’s most devastating storms, the Fibonacci spiraled hurricane.)  The ABC pattern also plays a substantial role in time symmetry and the theory of middle sections we have remarked of on a few occasions.  And most importantly, the pattern is repeatedly countless times in financial markets.

While the ABC pattern marked on the banking index chart below highlights the 12 year 1995-2007  move, it is quite apparent we are in a new ABC downward pattern that started with the 2008 collapse being the A wave and this countertrend move being the B wave.   You’ll notice the time compression associated with volatility, another one of our themes, as markets retraced twenty years of gains in the matter of two years.  There is ample evidence that time itself is actually nonlinear and that plays a major role in my theory of volatility cycles. 

The next wave down in the banking index will likely coincide with the S&P’s final collapse and the complete obliteration of any remnants of globalization and the complete exposure of the massive fraud of our political system. 

Curiously, as a side note, the U.S. economy can be described by one massive ABC pattern going back to the recovery of the Great Depression collapse, another Wall Street/political corruption-created  Ponzi scheme.  The pattern plays out as follows: 

A:  The rise of labor and the middle class and a period of relative prosperity for those who had access to society’s capital.  B: The rise of the war state, the monetization of military profligacy, international meddling and the runaway inflation associated with these dynamics into the late 1960s into the early 1980s.  C: The collapse of labor and by conclusion the middle class and the reliance on credit to survive in parallel to the rise of the fascist state, the financialization of the American economy, the investor class (crooks), the lobbyist bubble, the debt bubble, the criminalization of America and the corporate takeover of democracy.

I’ll show this to you graphically some time and we’ll discuss it in more detail.   

We must consider that what is believed to be impossible is more than likely probable. 


20 year banking index graph above.


The banking index has spent most of the last fourteen months in bear market territory post the equity market’s 2010 April-May mini crash.

posted by TimingLogic at 9:59 AM