NightBlogger

As deleveraging occurs and debt is destroyed, prices of commodities and other assets will fall in terms of real money, which is gold and other precious metals. The price of oil, for example, will continue to fall in terms of gold. (Investors need to start thinking of values in terms of ounces of gold instead of dollars, because that is where we are headed) What this means is that, while it is possible that the price of oil could still increase in terms of dollars, the price of gold will increase to an even greater degree. There will be no deflation in terms of dollars Right now, everyone is buying dollars and US treasuries based on the idea of price deflation in terms of dollars. More

Financial Times
Another food crisis year looms
The world might face a repeat of this year’s food crisis as the credit crunch encroaches on the agricultural market, leading farmers to cut their planting because of falling prices and lack of finance to buy fertilisers, the United Nations warned on Thursday. “Riots and instability could again capture the headlines,” the Food and Agriculture Organisation said. The warning was made despite a fall in the price of most agricultural commodities as farmers harvest bumper crops. The price of corn, wheat and rice has tumbled between 60 and 40 per cent from all-time highs earlier this year, but in its biennial Food Outlook report the FAO warned against a “false sense of security”. “Under the current gloomy prospects for agricultural prices, high input costs and more difficult access to credit, farmers may cut their plantings, which might again result in a tightening of world food supplies,” the FAO said in the report. More

Bob Chapman
International Forecaster
Never underestimate the diabolical ingenuity of the Illuminati. They have been perfecting their techniques for a millennium. They plan decades in advance, and conduct test runs to see how people and markets will react to different types of stresses and manipulations. They see to it that any legislation necessary to achieve their evil objectives is adopted far in advance of the implementation of their criminal schemes to inflict constant and continual fraud on the sucker-dupe sheople. They handpick politicians who can be bribed or who are compromised and then see to their election, thus ensuring that any such legislation is passed by their puppets in government. They act as our “shadow government,” pulling the strings of our official marionettes so as to legalize and legitimize their foul acts before carrying out what would otherwise be deemed maleficent acts of criminality, thus ensuring the successful completion of their various shell games and Ponzi schemes. And if they are unable to pass legislation which would legitimize any part of their intended criminal actions, they needn’t worry in any case, because they have the regulators and courts in their back pockets.

All their efforts are funded by the profits and plunder which they have raped, pillaged and extorted from the people of the world over many centuries of criminal activity, which nefarious dealings include such things as wars for profit, incitement of civil wars and race wars, genocide, murders for profit, gun-running, illicit drug trade, extortion, protection rackets, slavery, prostitution, illegal monopolies and every imaginable fraud and deceitful scheme ever conceived by men, with European, debt-based, fractional reserve banking being the lynchpin of the heinous system they have devised to achieve the total financial impoverishment and abject enslavement of the sheople.

These reprobates and sociopaths are energized by the powers of darkness. They are a malevolent group of megalomaniacal, satanic trillionaires who are hell-bent on forcing the people of the world into an Orwellian police state, a state of feudality where everyone caters to every demented whim and wish of the would-be masters of the universe for money, sex and power. They plan on reducing the world population to a half a billion people in order to achieve their demonic goals, since they believe that any larger size world population would be too difficult to maintain and control in what they refer to as a state of “sustainable development.”

If you do not grasp this foul and fiendish agenda, nothing that is currently happening will make sense to you, and you will remain clueless until it becomes too late for you to do anything about it. It is the purpose of this publication to educate you about this agenda and all the evil plans which these miscreants have in store for you.

The Illuminati own our President and his Cabinet, both Houses of Congress, the judiciary and the media, large portions of state and local governments, as well as the CEO’s and directors of most transnational conglomerates and Wall Street banks and financial institutions. The same is true for all major nations that are a part of Western Civilization, and many nations outside the West are being bent to their will in a variety of ways by utilizing such things as the United Nations, the IMF, the BIS, the WTO and the World Bank to extort what they want from these nations and to plunder their resources.

From these positions of power they control a great many aspects of the sheople’s lives, yet the sheople remain clueless about what they are up to due to media brainwashing, news suppression, misinformation and outright, pathological lying. The dumbing-down of the sheople via our pathetic system of secular public education finishes the job lest any should escape the other methods of mind control. And those who know what these Illuminist miscreants are up to have been unable to effect a change of course because these evil elitists have infiltrated and controlled our national and state election systems for over a century. During that time, they have chosen, and continue to choose, all our major candidates for public office, especially for the Presidency and other federal elective positions. They mercilessly crush all third party opposition and they threaten, intimidate, scandalize, ostracize and/or attempt to make a fool out of any Dumbo and Jackass candidates who refuse to adopt their agenda for a one-world government which they refer to as the New World Order, which in Latin is rendered as “Ordo Novus Seclorum,” meaning a “New Order of the Ages,” all as set forth on the obverse of every one dollar bill, where you will find it under the incomplete pyramid and all-seeing eye of the ancient mystery religions which by and large are now encompassed by the New Age movement.

Our shadow government devises the party platforms for Dumbo and Jackass candidates alike, creating the illusion of a two-party system when in reality there is only one agenda — their agenda — which is split between the two bogus parties, and now they even control our voting machines, courtesy of Diebold. They Illuminati always win no matter who gets elected. Their man is always in office, because they select both candidates, who both tell you whatever you want to hear, and then do whatever their Illuminist masters tell them to do. Yet the sheople somehow are not able to grasp this obvious ploy to steer them into doing whatever the shadow government wants them to do. Just listen to the screams of adulation at political rallies and watch as the silly dolts pass out when their mighty savior candidate walks by. If that doesn’t scare you, nothing will.

Their final objective is to control all aspects of the sheople’s lives, from the cradle to the grave. They consider the people of the world, other than those who are part of their elitist cadre, to be little more than dumb animals and beasts of burden to be worked to the bone for Illuminist fun and profits, only to be discarded later when they are no longer useful, having been slave-driven to death in fascistic labor camps which are ready and waiting to receive their victims as we write this article, courtesy of Halliburton. Their motto is: “Arbeit Macht Frei.” And so we can’t help but wonder why all the admirals and generals from most of the principal NATO countries are gathering in a remote location in New York’s Adirondack Mountains. Do you suppose they are admiring the fall foliage, or catching up on their fishing? Whatever they are up to, we can assure you that it is not good. Martial law and internment camps are looking more and more likely every day.

You are about to be liberalized into oblivion whether Obama or McCain is elected, so vote for one of the third party candidates for President. Otherwise, prepare for the Fall of the American Empire. You must throw out all Congressional incumbents except for Ron Paul and a handful of others. You can use the vote on the Paulson Ponzi Plunder Plan, also known as the Troubled Assets Relief Program (TARP), or as H. R. 1424, or as the Emergency Economic Stabilization Act of 2008, as a guide to determine who is worth keeping and who is worth throwing out of office.

In our last issue, we gave you the new Illuminist formula for profitability: Profitability = Volatility + Dark Pools of Liquidity + Plunge Protection Team. We see them moving toward a two-tiered Big Sting Two operation.

First note that this new volatility and insider trading, assisted by the PPT, is payola for specs that left the commodity markets so the cartel could have their way with the casinos after the SEC stopped all shorting on some 800 financial stocks and threatened to require public disclosure of short positions, which basically amounted to strong-arming of the large spec hedgies. Note how from September 29 to October 10, the specs were given the opportunity to make enormous profits from trading on inside information provided by the PPT and enhanced by unprecedented volatility, with a grand finale on October 10. This was the elitist’s showing their good faith in the bargain, and they even allowed a rally of gold to 930 so the specs could have one final rally before exiting. Then, in return, over the next two weeks, the specs stayed out of the casinos and the cartel took the whole commodity sector down. The average daily peak to trough for the Dow from September 29 to October 24 was 622.63 points, which is almost double that of the previous 19 trading days, thus allowing for plenty of room to profit from insider trading, and that does not even take into account the many gyrations that take place over the course of any given day. The Dow could have a zero peak to trough, but if it went down 500, and then up 500, there is still plenty of room for profit for those who know which way the PPT is going to take the markets, and when. Also note how, from October 10 to October 24, both gold and silver have come straight down virtually unimpeded, with gold dropping from a high of about $930 to as low as $681, and with silver dropping from a high of about $12.24 down to as low as $8.63, while physical prices remain 50% or more over these manipulated paper prices. Incidentally, on Friday near the end of the trading session, both gold and silver turned around sharply. We also note that almost 12,000 gold option contracts for December of ‘08 were added on the COMEX on Wednesday and Thursday as gold was bottoming, which is very bullish.

The increase in volatility also enables the Illuminist insiders to bail out profitably in pursuit of their Big Sting Two scheme, without having to run the stock markets up to new heights, which is currently impossible due to horrendous economic news and abysmal fundamentals. For instance, if on the one hand you go long the Dow and it rallies 2000 points, or on the other hand you short the Dow and it drops 1500, and then you go long the Dow and it rallies 500 points, either way, your profit is the same. The dark pools allow you to get in and out of positions without the public markets knowing about your transactions, so covering shorts and selling off to lock in profits does not bite into your profits as much. Also, the dark pools are not regulated. They are the stock market’s equivalent of OTC derivatives markets. Since their is no regulation, as long as you do all your insider trades in the dark pool, no one will ever know what you have done as there is no investigation or oversight of these transactions. These dark pools are therefore the perfect insider trading fraud machines, which is the whole reason why they were created. Wait until you see all the losses which the sucker-dupe, non-insider, dark-pool, institutional participants suffer that no one yet knows about because these losses are off market. We see some pensions, mutual funds and hedge funds going down in the not-too-distant future. Insiders will be big winners. Non-insiders will get vaporized.

This period of volatility and market downside, together with drastically reduced commodity prices, which allow the elitists to roll their proceeds from insider trading over into commodities at bargain-basement prices, is just the first phase. A goodly portion of these proceeds will be rolled into the OTC markets via commodity derivatives so that the whole scam is done outside of public view and underneath the radar of regulators without running up commodity prices. First, you do your insider trading in unregulated dark pools, and then roll the proceeds over into unregulated OTC derivative markets. What a scam! It’s freaking perfect!

Now for the second phase. Note how everything the Illuminati are doing right now is funneling money back into the banking system in the form of bank deposits and into treasury bonds to create a demand for them. Incidentally, we note that the bank hoarding may not be due only to a loss of trust and confidence. The banks may be under orders from the Fed to hoard this money until they are told to start lending it again. This is to keep inflation under wraps and to stop gold from going ballistic and exposing the destruction of our economy by the Illuminati and their various henchmen at the Fed, on Wall Street, in corporate America and in our government. This also buys time to figure out where all the losses are, starting with AIG derivative fallout and all the credit default swaps covering vaporized Lehman bonds, some $300 to $400 billion worth.

This replenishment of bank capital is being accomplished with what may be described as a many-pronged approach. First, you have the Paulson Ponzi Plunder Plan kicking in $250 billion in the form of equity injections to the Big Nine fraudster banksters that was supposed to be used to buy toxic waste assets. Then you have the ceiling raised on FDIC insurance from $100,000 to $250,000 to stop depositors from bolting out of weaker fraudster banks and into stronger regional banks, money markets, or foreign banks whose governments have fully guaranteed deposits. Then, you have all the money being flushed out of crashing stock and commodity markets being rolled over into bank accounts and treasury bonds as perceived safe-havens. Next, some toxic waste will be bought up by the US Treasury and the bigger banks will start to use their newfound largesse in the form of taxpayer equity injections and new deposits from the rollover of market liquidations to buy up the smaller banks that stayed out of all the toxic waste, thus enhancing their financial statements via mergers and acquisitions. Finally, you have the FASB allowing fraudsters to continue to mark to model despite Sarbanes-Oxley so they can continue to hide their losses from the public and so everyone can continue to pretend that the subprime, credit-crunch and CDS debacles never happened.

Once this is all in place, there will be one last attempt to re-inflate the system with a sudden surge in lending and speculation to create a final blow-off top to complete the Big Sting Two. Anything they were unable to unload in their previous insider trading will be unloaded in the dark pools behind the backs of the sucker-dupe sheople. The proceeds will be rolled over at first into commodity derivatives in the unregulated OTC to keep commodities from rising too sharply too soon, and then after the Illuminists have sated themselves on their initial positions, they will rollover their proceeds publicly into the commodity markets and send gold and silver to the moon for their fun and profits. Their fun may be spoiled, however, if the Derivative Death-Star decides to detonate before they can re-inflate the markets. Make sure have your precious metals positions in place before this happens so you can join in on their fun, or, if they fail, you can enjoy the price increases that will result as everyone realizes that gold and silver are the only things left that will go up in value while the whole world financial system comes down around everyone’s ears!

Check out the yen. It has gone ballistic. Worldwide stock markets are crumbling. The Nikkei is in total meltdown, and we have joined the Japanese in a sympathetic explosion of US markets. The yen has risen by an astonishing 10 yen per dollar and 20 yen per euro just this week, and as of 6:15 am on Friday, the yen stood at $.918208 yen per dollar and 115.411 yen per euro, up a stupefying 6 yen per dollar and 10 yen per euro just from yesterday’s close. When the yen blew through 93, it hit a 13-year high against the dollar. We are looking at a major bloodbath on Friday. Many already stressed hedge funds will not survive this total massacre of the carry trade. Liquidations have once again caused huge downturns in gold and silver, which is already happening. The whole system has started to unravel again. The Japanese people must be on the verge of committing Hari-Kari en masse.

Fortunately, as the day progressed on Friday, the yen backed off substantially, and the stock markets and precious metals and their shares reversed course. The yen ended at about 94 yen per dollar and 119 yen per euro. The Dow clawed back from a 500-point deficit courtesy of the PPT and the Japanese bankers to end with a loss of 312 points. Gold shot from $681 to $749 before settling at about $730 while silver scooted from $8.63 to $9.69 before settling in at $9.28.

Adding to our woes, we now have hundreds of billions of losses on the credit default swaps that covered Lehman’s bonds floating around in the never-never land of OTC derivatives, totally undisclosed and lurking in the background, waiting to show up as a hidden IED in the year-end financial statements of some very unfortunate financial institutions. The unknown location of the losses that were suffered on CDS’s covering Lehman bonds may destroy what little remains of confidence and trust in the system, as everyone fearfully contemplates the potential for a devastating thermonuclear chain reaction once these losses are finally disclosed early next year. The Derivative Death-Star is running out of the fuel it needs to keep glowing and expanding and to prevent it from imploding, and soon it will collapse into a super-massive financial black hole that will suck the worldwide financial system into it’s ominous, pitch-black singularity. So much for reviving bank lending and credit amongst the fraudsters if this happens. Of course, the fane-stream media has announced that the whole Lehman CDS situation was anticlimactic, that nothing much happened, and that the piddling $6 billion or so lost shows that the CDS markets were run tightly after all — and never mind that a $6 billion loss is mathematically impossible. This is the United Goldilocks Matrix after all. Reality is whatever we the Illuminists say it is. Those hundreds of billions in losses floating in never-never land are just a figment of your imagination.

Note that OPEC cut production by 1.5 million barrels a day, to no effect. Usage is going to drop much faster than they are cutting due to a disintegration of the global economy, which is happening before your eyes. Also, most oil investors feel that OPEC will not follow through on the cuts because they are all desperate for money. We also note that while the dollar has risen from $72 to $87 during the same period that oil dropped from $147 to $64. While most of their currencies are pegged to the dollar, which has gained about 20%, their oil profits have dropped about 55%. That’s not a very good trade off as far as these nations are concerned. A reduction in inflation does not help when revenues are plummeting at almost triple the rate that inflation is being reduced by virtue of a stronger currency. The OPEC nations are not going to tolerate having oil used to produce a euro effect to save the dollar so the US bond and treasury markets do not collapse. They have a lot of treasuries, so they have to be careful, but all the nations are now on to the fact that the US is totally bankrupt and the run for the exits could start at any time. You can expect a new OPEC nation currency like a gold-backed dinar, which could be part of a regional basket of BRIC nation currencies, while the G-7 countries form their own regional basket of currencies, also with some gold backing. Things are about to change quite drastically on the currency scene as OPEC oil producers stick together and Russia potentially takes the place of the US as protector of Arab sheikdoms. Things are getting wild and wooly very quickly.

(Bloomberg)
Commodities headed for their biggest weekly gain in 33 years as oil rose for a third day and a weakening dollar revived demand for raw materials as alternative assets. Every commodity on the CRB except hog futures moved higher today. Cocoa jumped 6.8 percent, silver rallied 5.3 percent and crude oil gained 4.4 percent. Oil and gold both headed for their biggest one-day advances since June. Platinum jumped 6.6 percent, the most since September 2001. More

Financial Times
Commodities prices suffered their largest monthly drop in 28 years in July as crude oil prices nose-dived more than $20 from an all-time high of $147.27 a barrel. The Jefferies-Reuters CRB index, a global commodities benchmark, lost 10 per cent, its largest monthly decline since it fell 10.5 per cent in March 1980, amid worries about lower economic growth damping demand for raw materials. Natural gas, corn, wheat and freight costs plunged last month between 10 and 30 per cent, although from record levels. However, lead, used in car batteries, surged almost 25 per cent on tight supplies.

Source: Seeking Alpha.com
We are a year into the financial pain and virtually no systemic problem has been solved. Markets have entered into a new unsustainable cycle. The new dance is a two-step. Home prices slide, delinquencies rise, defaults rise. This puts additional pressure on housing going forward. Financial firms announce greater write-offs. Retailers slump and contagion goes global. Selling grips the markets, the good and the bad are sold off indiscriminately. Commodities rise, fear escalates and reaches a crescendo as at least one major institution nears or reaches insolvency. Forecasts of impossible return to the good old days are debated and rebound timetables are pushed back. In the depths of the swoon, the Fed opens the discount window to some new and previously barred set of institutions. Bail-outs are readied, Treasury checks are cut and we rebound off the lows. Bad news becomes good, commodities sell-off and financials soar.

We are at least three episodes deep. Discount window borrowing is open to anyone not convicted of a federal crime. Interest rates are under half the official rate of inflation. House prices keep falling, delinquencies keep rising and losses keep mounting. Mountains of dubious debt have and will be parked on the Government’s books. Bad mortgages, mortgage bundles and sundry cycle on and off Fed books as the Treasury writes checks to the public, maybe JPMorgan Chase (JPM) and likely Fannie Mae (FNM) and Freddie Mac (FRE). The dollar rallies when folks ignore that the Greenback is ever more backed by home mortgages. Interest-rate jawboning replaces inflation management and traders adapt to buying policy driven rallies and shorting on rising fear and fading intervention. Fear returns, babies are tossed with bath-water, commodities rally and short attacks batter firms based on rumor and trend.

Each round sees lower lows and greater intervention. Early on, reassurances and rate cuts rallied the believers. When that failed, new regulation and credit action were added. When that failed, Treasury assisted liquidation, greater assurance and rebate checks were put into motion. As that failed, direct mortgage aid, tightened regulation and enforcement of short position mixed with explicit assurance of implicit guarantees. New housing assistance is now forthcoming and another round of rebate checks appears increasingly likely. Now that we know this cycle is not working to solve any systemic or structural problem, we will do more. How much bad debt can Uncle Sam paper over or eat? How much household and financial pain can be pushed onto government books? How much more will the Fed, Treasury, SEC and Congress have to do to reverse the next leg down? Are we flirting with disaster? With a loss of confidence in state intervention to slow or reverse the slide?

There are distinct patterns emerging. Slides are lasting longer and falling to new lows. More dramatic and extensive interventions are required to generate shorter rebounds. These factors do not augur well. Fed and Treasury actions stall downslide and nibble at the edges of larger problems. Nothing like an actual solution is in the offing. Time buying and slide soothing will have to continue long enough for an organic turn around to take effect.

Otherwise, we will ride this unsustainable wave into the rocks. Rates are below comfort levels. Consumer, producer and import price inflation are well above stated target levels and recent historic norms. Deficit spending is rising fast. There are few candidates left for discount window action that have not already been invited. Recent slides in oil and commodity prices are creating some rotation back into equities and financials in particular. There is no meaningful improvement in fundamentals - yet.

The weakness of US and EU demand has put downward pressure on oil futures prices. This is combining with housing policy, Fannie Mae and Freddy Mac assistance to breathe new life. Folks are buying on oil and commodity declines. There has been some dollar strength as US economic weakness pressures oil and commodity prices. Does that sound sustainable? The dollar has done some strengthening - further pressuring oil and commodities - as Congress and candidates get down to promising spending and tax cuts that can not possible be paid for out of tax revenues? Oil is down on declining demand from economic pain. Federal Deficit spending is spiking on bail-outs, bail-ins and rebate checks. This is good news for American equities and the macroeconomic outlook?

If this bounce is like those leading into it, I expect a real show as it reverses and greater drama is called for form the Fed, the Treasury and traders. Who will get creative temporary assistance next? Who will be attacked suddenly by a rabid short crowd on 3 month old news? What further guarantees are forthcoming? What will they say when the discount window gets a “billions served” sign a la the golden arches?

The Market Oracle
…I wanted to make a special point to the folks who are viewing this week’s two-day rally as the potential start of a massive bull-market upswing. And that point is this: None of the factors that we were worried about before the rally have changed or gone away. Nor have any of the other potential pitfalls that we’ve repeatedly warned you about. The U.S. Federal Reserve is still scrambling to deflate the asset bubble it created - and is trying to do that in an orderly manner (a mistake on both counts). But the backstory isn’t pretty. Banks are still taking big write-offs, and in some cases also are under investigation. And there still are many reasons to be worried about commercial real estate, the U.S. housing market, inflation, stagflation, soaring food and commodities prices, and stratospheric energy costs.

The other thing that concerns us is that the markets tend not to do well when bad news is interpreted as good news - as Citigroup Inc.’s ( C ) latest numbers were overnight. Somehow the Street thinks that Citi’s loss of a mere $2.5 billion this quarter is good because it was less than the $2.86 billion of red ink that the Street was expecting. Let’s not forget that the beleaguered banking giant has written off nearly $40 billion in the past 12 months, revenue has fallen 29%, and that it is laying off 15,000 employees. That brings us to the broader markets, and our belief that rallies like those we’ve had in recent days are suspect, at best. The data seems to support this.

The bottom line: As much as we wish this weren’t the case, the strength we’ve seen in recent days may be nothing more than a massive short-covering rally. [Interestingly, Money Morning Contributing Editor R. Shah Gilani said precisely the same thing in his “Inside Wall Street” column published earlier today (Friday).] While it’s true that we may have a tradable bottom here that takes us as high as 1,370 or thereabouts on the Standard & Poor’s 500 Index (only about a 9% increase from current levels), such numbers are hardly impressive when viewed against the harsh light of history. More

Photo courtesy of dirty bodega
Patricia Hill

The upswing in prices has been exaggerated by the massive influx of investors and speculators seeking to profit from rising prices for corn, wheat, oil, gold and other commodities. Big Wall Street firms and hedge funds have taken huge positions in futures markets that once were dominated by relatively small operators such as farmers and grain-elevator owners. Small investors, who see fast-rising commodities as good hedges against inflation and a falling dollar, also are getting a piece of the action by investing in index funds that are tied to commodity prices.
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