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"Extend & Pretend" Read the Series...

Stage 1 Comes to an End!
A Matter of National Security
A Guide to the Road Ahead 
Confirming the Flash Crash Omen
It's Either RICO Act or Control Fraud
Shifting Risk to the Innocent
Uncle Sam, You Sly Devil!
Is the US Facing a Cash Crunch?
Gaming the US Tax Payer
Manufacturing a Minsky Melt-Up
Hitting the Maturity Wall
An Accounting Driven
Market Recovery

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"UR all PIGS from HELL

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Current Thesis Advisory:

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Published November 2009

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POSTS: Friday, 12-31-2010
Last update:  01/01/2022 9:54 AM Postings begin at 5:30am EST
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“An optimist stays up until midnight to see the new year in. A pessimist stays up to make sure the old year leaves.” – Bill Vaugh

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Complete Archives
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Central banks in South Korea, Malaysia and Thailand intervened in foreign-exchange markets Thursday as Asian currencies surged against the dollar on optimism about the region's economic outlook, underscored by strong economic data from China and signals that the yuan will continue to strengthen.

Taiwan, meanwhile, unveiled measures to buttress its banking system against rapid movements in foreign capital, the latest Asian country to introduce stricter regulations to control the risks posed by such capital flows.

The currency moves were exaggerated by thin trading conditions, with many investors away for year-end holidays. But traders said an upward trend for most Asian currencies appears set to continue, with China's decision to guide the yuan to a modern record against the dollar cementing the bullish sentiment.

"People are making a bet that growth in emerging markets will still be on an uptrend and that currencies will continue with their appreciation," said Lum Choong Kuan, head of fixed-income research at CIMB Group in Kuala Lumpur. "With the debt crisis in Europe and with the U.S. still showing protracted slow growth, investors will have no other place to put their money but here."

Capital has been flooding into Asia this year, helping to finance investments in one of the world's fastest-growing regions. But the influx of foreign money has raised concerns in Asian capitals about the perils of fast-moving capital flows, given the damage the region's economies suffered during the Asian financial crisis of the late 1990s, when a previous boom ended suddenly and foreigners rushed for the exits.

Today's chart illustrates how the stock market has performed during the average pre-election year. Since 1900, the stock market has tended to outperform during the first six to seven months of the average pre-election year. For the remainder of the year, pre-election performance has tended to be choppy and slightly subpar. In the end, however, the stock market has tended to outperform during the entirety of the pre-election year. One theory to support this behavior is that the party in power will make difficult economic decisions in the early years of a presidential cycle and then do everything within its power to stimulate the economy during the latter years in order to increase the odds of re-election.


The Bureau of Labor Statistics' limit on how long someone can be included among the ranks of the jobless was recently raised from two years to five. The bureaucrats made the move because of what they termed "an unprecedented rise" in long-term unemployment, i.e., things look very, very bad.


The concept of 'volatility compression' is a phenomenon of overall static readings on the daily VIX. When the open, high, low and close for the CBOE Market Volatility Index (VIX) are so sandwiched together as to be virtually invisible, compression is high. We're now getting high compression readings on the VIX and other volatility indices as seen here:

And our only question is whether these readings have more to do with weak, year-end volumes, or are genuinely indicative of investor complacency. That is, there's no question holiday trading contributes to a sessile VIX, but would it already have been so despite the thinner seasonal trade?



  1. Unquestionably, the prices of silver and gold are manipulated.


  1. Today, technically, these metals are considered “commodities” and the CFTC is the government body that is supposed to oversee futures trading in these metals and prevent market manipulation; in practice, the CFTC has consistently turned a blind eye to the blatant manipulation.


  1. We must remember that there is a “Law” on the books that states that a company may legally withhold financial information from the public, when revealing that information would pose a National Security risk.


  1. In reality the manipulation of silver and gold prices is a constant currency manipulation and not a commodity manipulation.


  1. If the manipulation is actually a currency manipulation, something that goes on all the time, why is it not called that? Doing so would remove the two metals from the oversight of the CFTC and clear that body of the charge of negligence.


  1. The identification of the manipulation of the prices of silver and gold as “currency manipulations” would be highly inconvenient, for that would mean that gold and silver would immediately be officially recognized as currencies; such recognition would constitute a devastating blow to the rest of the world’s currencies since all of them are fiat money.


  1. The world’s monetary system will cease to exist the moment that gold is recognized as a currency, and silver is recognized as having monetary significance in addition to industrial uses.


  1. It is therefore necessary for the Powers That Be to continue to treat the precious metals as commodities and to divert attention, at all costs, from the fact that the precious metals – especially gold – are currencies; to allow law suits to go forward against the big banks that have participated in the “commodity manipulation” – law suits that will involve years of litigation which will finally be quashed with the Law that allows companies to withhold information related to National Security; the CFTC will be forced to bear the blame for negligent oversight of “commodities trading” and consequently one Commissioner after another will be fired as a ritual sacrifice.


  1. All of this, because: gold cannot be recognized as the world’s prime currency and the monetary component of the price of silver, of huge importance, cannot be acknowledged. See point 7, above.


2010 was dominated by talk of the European crisis and that crisis was reflected in the dramatic selloff in shares on PIIGS exchanges, according to data from S&P BMI Global Indexes (via Dailly Finance).

Four of the five worst performing exchanges in 2010 were PIIGS members, and the other is another European state with a similar sort of crisis, Hungary.

The winners, well they followed two other 2010 trends: China and rising commodity, specifically metals, prices.



Say what you will about the future of the eurozone, its corporate sector is surely showing some resiliency.

Over the past three months, the German Dax is up 11.61% and the French CAC is up a more modest 3.25%.

While this may just be another sign of investors moving out of bonds and into equities, there is further reason to be confident about the region's corporate future.

Loan growth has returned to the eurozone's corporate sector, while it slides a bit for households. Loan growth was at 2.0% year-over-year for the eurozone in November.

From Societe Generale:

There was also good news in the fact that loans to non-financial corporations increased by €11bn, just more than offsetting the €10bn decline recorded in October. The annual rate of growth rose to -0.1% yoy from -0.5%. This adds to evidence that with the usual lag, the corporate credit cycle is beginning to pick up, albeit with still weak momentum.