Monday, September 27, 2010

A Planned Market

The following is from a trader , Larry Levin. It speaks great truths as to what is happening in our economy. What is happening is not a good thing and will be what further causes the economy to decline. That is my opinion and not that of those in political power. 

A Planned Market

Most people have head of the phrase "A planned Economy," which according to Wikipedia is "Planned economy (or command economy) is an economic system in which the state directs the economy.[1] It is an economic system in which the central government controls industry such that it makes all decisions regarding the production and distribution of goods and services.[2]Its most extensive form is referred to as a command economy,[3] centrally planned economy, or command and control economy.[4]"
The USA doesn't have a planned economy yet, but it sure has a "planned market." In addition to "planned market" I would accept names of; Corporatism, economic-Socialism, or perhaps the best: Kleptocracy. After all, the middle class is being looted by the White House, Congress, and the Federal Reserve, for the benefit of Fraud Street banksters and its bondholders.
One thing is now as clear as glass to all of those who are not in a cave somewhere - the "free market" is dead in the United States of Amerika.
As you know the U.S. Politburo is now in control of, or wanting control of the following...
  1. A very large section of manufacturing: Automakers. Although GM will soon have an IPO don't let that fool you - the government will still own the majority of the car maker. The government would not be made whole unless the new stock price reached $113.78. Since that will not happen, Amerika will be in a "planned economy/market" for a long time, at least a decade.
  2. Housing: Freddie Mac, Fannie Mae, and FHA. These three government agencies underwrote 90% of all mortgages in Q1 of 2009. That jumped to 96.5% of all mortgages in Q1 of 2010. Yes sir, that's a "planned market"...Amerikan housing market...alright.
  3. The government wants to take over healthcare too. Oh sure, the Politburo hasn't done it yet but a single payer system is coming to a "planned health care market."
  4. Inside the healthcare legislation Big Brother wants you to report ALL business transactions over $600. A "planned economy" indeed!
  5. Social Security
  6. Medicare
  7. The Federal Reserve has always "planned" the economy by price fixing interest rates, with the approval of the Politburo in DC, but it is now out of control.
    • When the market fell hard in 2008, the Federal Reserve came in to save its buddies: bankers. The Federal Reserve cut its interest rates to nearly zero. YOU may not borrow at 0.25%, but the biggest banks can.
    • With this free money from the Fed, banks bought Treasuries. Buying these Treasuries was a GUARANTEED profitable investment because the Fed cut its lending rates to near zero for the banksters.
    • But there was a small "truth" problem in the status of the bankster's mortgage portfolio since they had to tell the truth about the falling home prices, thus the falling value of their mortgage portfolios. To fix this the Politburo forced the FASB to change its accounting standards for the banksters, which allowed them to legally lie about the value of the mortgages on the books. Instead of marking down the value of the homes in the portfolios, the banks just made up (and continue to make up) pretend numbers for what the home may be worth in 20-years. Magically, these guesstimates are the full value of the loans. When this happened, the low of the stock market was put it place. "Controlled market" anyone? If you went into one of these very same banks to get a personal or business loan and used your home as collateral...then told the loan officer it should be valued at the PEAK of 2007's price, WHICH IS EXACTLY WHERE THEY HAVE IT VALUED ON THEIR OWN BOOKS; what do you think would happen? Yes, you would get thrown out on your fanny. It is good for them, but nobody else!
    • The FASB rule helped the banks a lot and certainly rigged the stock market, but the Fed and the banksters still knew the real score: the RMBS, CDS, etc loans on the books were rotting like dead fish. The Federal Reserve then announced "Quantitative Easing" (QE), which should have been called TARP-all-over-again as it was aimed at shoveling more money into the pockets of the banksters. The Fed bought over $1 TRILLION of these fetid, decaying mortgage "assets" at par or nearly par, when many weren't even worth 20-cents on the dollar!
    • What did the banksters do with this newly printed money? The only thing that made sense: buy more Treasury Bills, Bonds, and now stocks and commodities. It wasn't just free money, but a loss-made-good, type of free money. The banksters knew now that no matter how bad or how often they %$#*ed up, Backstop-Ben Bernanke would be there with more free money. Again, GUARANTEED profits for the banksters with YOUR money.
    • Now the Fed is regularly engaging in its POMO purchases, which are its Permanent Open Market Operations. The Fed is once AGAIN flooding the very banksters who brought down the economy with free money --- so they can make even more money (ah hem, at your expense of course).
    • You see, now that the Fraud Street banksters have already bought hundreds of billions worth of Treasuries with the aforementioned free money at guaranteed profit, they're a little tight right now. But the Politburo has more borrowing & spending to do therefore the Treasury needs to sell more IOUs. How can the "managed market" Kleptocracy keep this shell game going? By the POMO purchases of course. The FRBNY (Federal Reserve Bank of N.Y.) buys billions of the Treasuries back from the banksters, thus flooding them with more capital, which can then be used to buy AMZN, AAPL, SPY, ES futures, commodities, and of course -- more Treasuries.
    • By the way, since the banksters bought the bonds that the FRBNY is buying right now...many months ago...the Fed is once again GUARANTEEING these scumbag banksters yet another risk-free profit. Treasuries have been on a huge rally so the banksters bought low (with your money), are getting out at the high with insanely large profits (no more duration risk either!), at your expense. Once purchased, the Fed disposes the debt. A "planned market" indeed!
    • This is what POMO purchases are all about - getting more money to banksters and monetizing the debt. A financial circle jerk of epic proportions.
    • Oohhhhh but it is not over. QE2 is coming. Everyone on Fraud Street believes it, and sadly, when those banksters say "JUMP" - the Fed responds with "How high?" Therefore, QE2 will be like QE1 + POMO + steriods + your money = BONUSES on Fraud Street, as well as huge campaign "donations" for the Politburo in Washington DC.
The most recent POMO purchases were made by the FRBNY last Friday. Since the banksters do not know in advance which CUSIP number (bond identification) will be purchased, they cannot all buy stocks and commodities beforehand. Some of the Treasuries on the banksters books may not be purchased by the FRBNY. Because of this, the banksters have to wait until the very moment their lottery number is called before they can run the stock & commodity markets up again & again on pathetic volume.
By the way, as soon as POMO ended last Friday, the rally in equities ended.
A "planned market" indeed!
The next time someone would like to discuss Amerika's "free market," I do not know if I will scornfully laugh at him, or weep for him.

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