Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
The S&P 500 appears ready to correct, and that is a good thing - 18th Sep 20
It’s Go Time for Gold Price! Next Stop $2,250 - 18th Sep 20
Forget AMD RDNA2 and Buy Nvidia RTX 3080 FE GPU's NOW Before Price - 18th Sep 20
Best Back to School / University Black Face Masks Quick and Easy from Amazon - 18th Sep 20
3 Types of Loans to Buy an Existing Business - 18th Sep 20
How to tell Budgie Gender, Male or Female Sex for Young and Mature Parakeets - 18th Sep 20
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Dot.com Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20
Does the Stock Market Really "See" the Future? - 12th Sept 20
Basel III and Gold, Silver and Platinum - 12th Sept 20
Tech Stocks FANG Index Nearing Critical Support – Could Breakout At Any Moment - 12th Sept 20
The Tech Stocks Quantum AI EXPLOSION is Coming! - 12th Sept 20
AMD Zen 3 Ryzen 4000 Questions Answered on Cores, Prices, Benchmarks and Threadripper Launch - 12th Sept 20
The Inflation Mega-trend is Going Hyper! - 11th Sep 20
Gold / Silver Ratio: Slowly I Toined… - 11th Sep 20
Stock Market Correction or Reversal? The Jury Isn't Out! - 11th Sep 20
Crude Oil – The Bearish Outlook Remains - 11th Sep 20
Crude Oil Breaks Lower – Sparking Fears Of Another Sub $30 Price Collapse - 11th Sep 20
Inflation by Fiat - 10th Sep 20
Unemployment Rate Drops. Will It Drag Gold Down? - 10th Sep 20
How Does The Global Economy Recover After This Global Pandemic? - 10th Sep 20
The Best Mobile Casino - 10th Sep 20
QE4EVER! - 9th Sep 20
AMD Ryzen Zen 3 4800x 10 Core 5ghz CPU, Cinebench Benchmark Scores (Est.) - 9th Sep 20
Stock Traders’ Dreams Come True – Big Technical Price Swings Pending on SP500 - 9th Sep 20
Should You Be Concerned About The Stock Market Big Downside Rotation? - 9th Sep 20
Options Traders Keep "Opting" for Even Higher Stock Market Prices - 8th Sep 20
Gold Stocks in Correction Mode - 8th Sep 20
The law of long-term time preference and Gold ownership - 8th Sep 20
Gold Bull Markets: History and Prospects Ahead - 8th Sep 20
Sheffield City Centre Coronavirus Shopping Opera Ahead of Second Covid-19 Peak - 8th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

The ShamWow Stock Market

Stock-Markets / Stock Markets 2011 Sep 19, 2011 - 03:40 PM GMT

By: Barry_M_Ferguson

Stock-Markets

Best Financial Markets Analysis ArticleLet us record history as it happens. Let us not let the truth become altered by the hands of time so that it fits a message of those who seek to rule us. Let us make permanent a recording of the week that passed in real time so that generations of the future will be able to look back to the moments that changed the rules that govern their life. 


Week ending 9/16/2011: This just in for the week - jobless claims rose, US median income slipped 2%, mortgage foreclosures increased 33%, Greece edged further  toward debt default,  Bank of America prepared to layoff 35,000, the US Post office announced the same layoff number, stock markets rose! ShamWow!!!. Maybe just sham. Certainly wow! Once again, central cabal banks continued to turn the stock markets into stock shams. The problem is this. The big banks in Europe loaned the weaker sovereign economies of Europe too much money so that those weaker nations could feign prosperity. You know - they all want to imitate the US. Now those sovereign nations, with Greece at the forefront, cannot repay the loans. The solution is this. The big banks will be given more free money by the central banks of the world! Central banks now act like one of those ShamWow towels that clean up spills. It is a sham! It is a wow! It is a ShamWow!

In fact, the central banks of the US, Europe, Japan, and Switzerland have pledged an ‘unlimited’ amount of US dollar ‘loans’ to the troubled big banks of Euroland. It’s just too bad that the money the central banks are pledging is the money of the US citizens. ShamWow! The big banks recklessly loan money out, leverage it with derivatives and swaps, inevitably face default, and then turn to central banks for a ShamWow towel to mop up the mess. (Interestingly enough, the ShamWow towel proclaims to hold 12 times it’s weight in liquid. Central banks strive to do the same to perpetuate sovereign debt!) This has happened over and over and over again through history. Tax receipts are confiscated, fiscal autonomy is compromised, and capitalism is circumvented all by the hand of central banks. The result is wealth continues to get soaked up by those who extend the ShamWow towel. When will the populous of the world put a stop to it?

Most likely the answer to that question is never. Did I mention that the stock market went up this week? Isn’t that all that counts? The populous is clueless to the role of central banks acting as a ShamWow towel. Besides, the populous thinks the central banks are here to help us. What if the central banks had to use their own money and not ours? Would they still be so quick to extend a loan? Loans go bad sometimes. That is a risk of lending. Why should citizens surrender money from their Treasuries so that central banks can use that money to make lending risk free for the big banks of the world? 

What prompted this latest central banker intervention? The excuse given was there was a need to alleviate fear of runs on bank deposits in Europe. Oh really? Consider something else from the US Fed.

The Federal Reserve also said industrial manufacturing production rose .5% in August. This hardly seems plausible given that the Fed’s New York and Philadelphia regions reported continued slowdowns. However, the Fed did say the increase was almost all due to an auto manufacturing uptick. Pardon me while I inject some skepticism.

Haven’t we been told over and over that banks in Europe are fine? Aren’t they all well capitalized? Haven’t they all passed their ‘stress tests’? If the answer to these questions is ‘yes’, then why would any of them fear a run on deposits? Now for the big question. Why are the central banks orchestrating US dollar swaps so that the European banks will have ample supplies of US dollars? If there is indeed a run on bank deposits in Europe, would having ample US dollars at the teller windows really help? If the situation was reversed, would Americans accept euros from their banks instead of US dollars?

As we search for the truth in central banker action, we should consider this. First, this is the same deal that got Greece into trouble in the first place. Greece breeched loan limits by working with Goldman Sachs to disguise loans as currency swaps. Second, no lender loans money unless they think they have the default risk under control. Sovereign lending is backed and leveraged with derivatives and swaps. As the risk of default increases, as it has with Greek debt and others, the cost of insuring that default through credit default swaps increases. Generally the collateral on a swap is 20% or less of the notional value and generally the preponderance of such instruments are denominated in US dollars. Thus, we might assume that the real reason for the ‘unlimited’ availability of US dollars is to facilitate an expansion of credit default swaps. As the debt expansion increases, so too does the need for credit default swaps, the amount of collateral to propagate the swaps, and in turn the need for more US dollars particularly in the European theatre.

Finally, Americans should take note that the Federal Reserve Bank is again engaged in currency swaps that send US dollars abroad. This should further amplify the fact that this currency is the Federal Reserve Note. It is owned and dispensed at will by the Federal Reserve Bank and not the Congress of the US. The Fed did not need to check with anyone before making such deals. Not the Congress. Not the Treasury. Not even the so-called President.

Let history record accurately the events of this past week. Future generations might want to know why and when their money changed so much from past money. And today, no one raises an objection. Part sham. Part wow. The central bank uses the US currency as a ShamWow towel to mop up uncollectible debt, re-capitalize bank balance sheets, and to proliferate credit default swaps.

Oh, and one more thing. Whenever anything gets offered in an ‘unlimited’ supply, doesn’t its value trend towards worthlessness? But who cares? The Dow rose this week - right? I wonder who made it rise? 

Barry M. Ferguson, RFC
President, BMF Investments, Inc.
Primary Tel: 704.563.2960
Other Tel: 866.264.4980
Industry: Investment Advisory
barry@bmfinvest.com
www.bmfinvest.com
www.bmfinvest.blogspot.com

Barry M. Ferguson, RFC is President and founder of BMF Investments, Inc. - a fee-based Investment Advisor in Charlotte, NC. He manages several different portfolios that are designed to be market driven and actively managed. Barry shares his unique perspective through his irreverent and very popular newsletter, Barry’s Bulls, authored the book, Navigating the Mind Fields of Investing Money, lectures on investing, and contributes investment articles to various professional publications. He is a member of the International Association of Registered Financial Consultants, the International Speakers Network, and was presented with the prestigious Cato Award for Distinguished Journalism in the Field of Financial Services in 2009.

© 2011 Copyright BMF Investments, Inc. - All Rights Reserved
Disclaimer: The views discussed in this article are solely the opinion of the writer and have been presented for educational purposes. They are not meant to serve as individual investment advice and should not be taken as such. This is not a solicitation to buy or sell anything. Readers should consult their registered financial representative to determine the suitability of any investment strategies undertaken or implemented.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules