October 20, 2010 posts

Business / Economic / Financial

[ This link to a somewhat more cumulative blog posts page will precede current days news since most all topics remain current in terms of impact and longer-term effect and can be searched by topical index term more easily. The same is provided since the blog site http://alpeiablog.blogspot.com has just been censored as to size by google which is typical for google as nsa / cia / gov’t shill as more are becoming aware of. The same is true for microsoft, another co. that’s seen their best days and relies on the government to maintain their monopoly. Up to now the better page http://www.scribd.com/alpeia is provided for ease of formatting and clarity thereby while the Washington Post page is the real deal but without formatting http://www.washingtonpost.com/wp-srv/community/mypost/index.html?plckPersonaPage=PersonaComments&plckUserId=alpeia&newspaperUserId=alpeia ]

This is an especially great opportunity to sell / take profits (these lower dollar, hyperinflationary currency manipulations / translations to froth paper stocks will end quite badly as in last crash)! This is a global depression. This is a secular bear market in a global depression. The past up moves were manipulated bull (s***) cycles (at best) in a secular bear market. This has been a typically manipulated bubble as has preceded the prior crashes with great regularity that the wall street frauds and insiders commission and sell into. This is a typical wall street ‘programmed computerized high-frequency churn and earn pass the hot potato scam / fraud as in prior crashes’. This national decline, economic and otherwise, will not end until justice is served and the wall street frauds et als are criminally prosecuted, jailed, fined, and disgorgement imposed.

The Stock Market's Long Decline Has Begun Smith ‘The Fed's campaign to boost the risk-trade in equities by destroying the dollar has reached its limits. Now gravity will take hold as stocks enter a Long Decline.On Monday, Daily Finance published my article Is the Market Ready to Roll Over? These Signs Say Yes. On Tuesday, October 19, the market did roll over.Is this merely a brief hiccup on the way to S&P500 1,500 and Dow 15,000, or the first stages in a Long Decline? Here is the evidence to support the idea that stocks are entering a Long Decline.Back on October 8 I looked at some of these issues in Look Out Below (I've got a bad feeling about this).As always, please note this is not investment advice, it is merely the musings of an amateur observer; please review the HUGE GIANT BIG FAT DISCLAIMER below.First up, the U.S. dollar, which the Fed has been destroying to prop up equities before the election: (Chart) Alas, there is pushback from various forces against this destruction of the dollar, and as the dollar climbs then the see-saw tips and equities decline. Those predicting the continued destruction of the dollar see a double-top pattern suggesting "the top is in;" I see a long-term uptrend line and a line of resistance around 90 that will eventually be broken to the upside. Time will tell who is right, the dollar Bears or the dollar Bulls. Mr. VIX is waving the yellow flag of "crash ahead." Complacency in the face of sobering financial realities is not just unreal but completely deranged. To note but a few:

1. A Eurozone debt crisis which has not been resolved, despite the propaganda.

2. A massive credit/real estate bubble in China which will burst, just like every other bubble in history, despite the many voices claiming "there is no bubble in Chinese real estate."

3. A foreclosure/MBS/bank insolvency structural crisis in the U.S. which has barely started.

Note that the VIX is marking out a long-term uptrend of higher lows, meaning increasing volatility is the backdrop against which the market acts out its various dramatics. (Chart) The broad-based S&P 500 (SPX) is looking toppy and vulnerable on the weekly chart. Note the declining volume as retail investors continue pulling tens of billions of dollars out of the pump-and-dump charade known as the U.S. stock market. Also note the bearish cross of the 20-day MA dipping below the 50-day MA, signaling the start of a downtrend, and the weakening MACD trend. Kissing the resistance of the 200-day moving average and then rolling over is a classic market move. (Chart) Beneath the new high notched by the NADAQ 100 (NDX) we see marked weakness.Now that Apple has rolled over, then who's left to keep the tech-heavy NDX afloat? Google (GOOG), Amazon (AMZN) and Priceline (PCLN)? Three companies out of 100 is a very narrow market, and one vulnerable to just the sort of rollover we are now witnessing. (Chart) The other "market leader" sector, the financials, are running a high fever. Bogus "earnings" from the money-center banks (reduce your reserves against losses by $6 billion and surprise, you "booked a profit" on paper) have lifted the financial ETF XLF off the crumbling edge of meltdown, but at some point the flag/wedge pattern here will break big up or down. Does anyone with skin in the game seriously think banks are poised to reap vast new profits? Really? From where? Enough to offset the tens of billions they will be losing as the MBS/foreclosure fraud bills come due? (Chart) There is very little support in this chart once it breaks below $12.50: next stop, $7.50 and then $5. Disclosure: I am short the XLF via puts and long FAZ. HUGE GIANT BIG FAT DISCLAIMER: Nothing on this site should be construed as investment advice or guidance. It is not intended as investment advice or guidance, nor is it offered as such. It is solely the opinion of the writer, who is NOT an investment counselor/professional. All the content of this website is solely an expression of his personal interests and is posted as free-of-charge opinion and commentary. If you seek investment advice, consult a registered, qualified investment counselor (As with any other professional service, confirm their track record and referrals).’

We Are Heading Into a Hyperinflationary Storm? Summers ‘In the last month and a half, stocks have COMPLETELY returned to the atmosphere of March-April 2010: an atmosphere in which stocks are overbought, overstretched, and yet KEEP rallying. [chart] As you can see, the daily RSI has just touched “overbought” status at 70. From a strictly technical standpoint, the next lines of resistance are 1,180, then 1,205 on the S&P 500. We’ve now got layers upon layers of support as well: [chart] Most market analysts would look at this set-up and say that we’re in a new bull market. I do not think that is the case. Instead, I think the market is discounting major inflation and possibly hyperinflation. Indeed, if stocks are overbought and overextended, their performance is nothing compared to that of Gold: [chart] As you can see, the precious metal has erupted higher since mid-August. As I write this, bullion is up 23% since March 2010. Compare this to the S&P 500’s performance of 1.3% over the same time period, and it’s clear which asset class is the one to own. Indeed, priced in Gold, stocks have done nothing since April. [chart] This final chart is key to understanding what’s happening in the markets. In plain terms, stocks are NOT creating wealth, they are rallying based on Dollar devaluation, If you price them in non-paper currency (Gold), they are LOSING purchasing power. This is also clear when you compare the S&P 500’s performance to that of the US Dollar over the last few months. [chart] As you can see, we have a near perfect inverse correlation here, with stocks rallying as the US Dollar falls. With that in mind, we need to focus on the US currency, since its drop is what’s fueling this rampant speculation in stocks and commodities. [chart] The US Dollar is now oversold and nearing its multi-year trendline. If we DO NOT bounce here, then the next line of support is at 74. After that, it’s the 2008 low (also the 20 year low) of 71. I have to be blunt here: if the US Dollar DOES NOT bounce soon, a hyper-inflationary scenario is INCREASINGLY likely in the US. Indeed on a weekly basis a break down past 74 on the US Dollar would trigger a MASSIVE Head and Shoulders pattern which has a downside target of 40 or so (roughly 50% lower than where the US Dollar is today). If this collapse were to occur, you would see hyperinflation erupt in the US similar to that of Weimar Germany. Precious metals would erupt higher and the US Dollar would no longer be the reserve currency of the world. [chart] What’s truly worrisome is that the Fed is hell bent on enacting the exact same policies that have created the Dollar collapse (and the rally in stocks) over the last few months, namely, additional Permanent Open Market Operations (POMO) ramp jobs. The name sounds clever, but it really just consists of the Fed buying US debt from the large private banks, which in turn take the Fed’s money and buy stocks. Indeed, the Fed just announced it will be monetizing an additional $32 billion worth of US debt in the next few weeks. The schedule for these ramp jobs is as follows:
-October 15:
-October 18:
-October 20:-
-October 22:
-October 26:
-October 28:
-November 1:
-November 4:
-November 8:
In plain terms, the Fed is going to keep doing what it’s been doing: trashing the US Dollar to pump stocks. And it’s going to do this to the tune of some $10 billion per week over the next month. Thus, as ridiculous as it sounds, the stocks up/ US Dollar down trend of the last two months is likely to continue into early November. But if the US Dollar doesn’t bounce soon and start rallying with force, we’re heading into a VERY nasty period. Disclosure: None’

Markets Thrust Headlong Into the Maelstrom of Correction Now that Apple (AAPL) earnings have come and gone, the market has likely commenced its topping process and investors should expect choppy sessions ahead. Tops come in two forms. Markets either set a conclusive top, which is followed by 10-15 sessions of straight down (much like we saw in late June), or they tend to consolidate through a series of huge up and down moves (like we saw in January, April and July). Given the velocity of this move up, the bulls will simply not give up that easily. This 170-point whacking will be swiftly answered by the bulls. But don't get too complacent or think that we're headed much higher from here as we limp into the mid-term elections and QE2. We'll see a good fight from the bulls, much like we did for 10 sessions before topping in late April. But the bears will win this battle and we'll get a much needed correction. It's healthy for the markets after a move like we've had. Yet, unlike these past few corrections since April, this correction could very likely present us with a good buying opportunity. In fact, I think that this correction could be the last we'll see in a very long time. What I suspect will happen is that we'll see a very severe sell-off followed by another 2009-type leg up in the markets. There's a very large number of reasons why we're set to sell-off. But seeing as how the vast majority (>99%) of market participants simply misconstrue the difference between the weight of evidence and conclusion, I won't be surprised to see the idiocy that usually comes with the writing of these types of articles. Yet, because I like to take on tasks which are obviously futile, I'll give it a shot nonetheless. Here are the reasons why we're probably going to see a significant sell-off very shortly, if we haven't started already. The vast majority of these reasons come by way of Cobra's Market View. I'm just summarizing what he has already said over the past few weeks. But the evidence has now gotten overwhelmingly bearish.
1. Commercial Hedges are far too net short the NASDAQ-100. Whenever commercial traders get this short the NDX, there is a very high likelihood for a correction. And seeing as how the NASDAQ led this move higher; as goes the NASDAQ-100, so goes the market. Commercial hedgers took record short positions in October. More than double what we saw ahead of the 2008 top. This chart is courtesy of SentimentTrader and annotations are courtesy of Cobra's Market View. See here.
2. The AAII Bull Ratio (4-week average) is way too high. There's a very strong correlation between market tops and bullish sentiment getting over-extended. Notice the strong correlation between market tops and extreme levels in AAII (click). Again, this chart is courtesy of SentimentTrader, the find and annotations courtesy of Cobra's Market View.
3. Too many Reversals. Peter (Yong) Pan, the author of Cobra's Market View, noticed a strong correlation between market tops and multiple reversal days. We've had far too many reversal days now. In fact, this is the highest number of reversal days recorded for any rally without a correction since 2008. Good game? We've had 4 actual bearish reversals into the red and 8 or more reversals that while didn't close red, were deep reversals nonetheless. Again, notice the correlation between tops and reversals.
4. Institutional selling divergence from the market getting high. Though the market continued to rise through October, institutional selling starting to pick up. This also has a high correlation to tops in the market. See Cobra's Market View chart here.
5. VIX at 1-Month Low in October. Here's a table outlining the S&P 500's performance in the 2-3 weeks after the VIX hits a one-month low in the month of October. The odds highly favor the bears under these circumstances. See here.
6. Up Big on Off-Season. Whenever the S&P 500 is up in the off-earnings season, the tendency has been to sell the market during earnings season. The last three times the S&P 500 has been up 5% or more in the off-season, the average sell-off during earnings season has been about 5%. See here.
7. ISEE Index & ETF Only hitting too many extremes. There's also a very high correlation to tops in the market whenever, on multiple days, we see a reading of over 100 on the call-put ratio on the indices (Index & ETF Only ISEE). Whenever we start to see a lot of hedging or outright shorting near the end of a big rally like we've had, its been a pretty big sign that we're headed lower. This chart is courtesy of Cobra's Market View and the International Securities Exchange. Note the high correlation between tops in the market, and multiple days of high ISEE index readings.
8. Broken Rising Wedge. We have a confirmed broken rising wedge on the SPY as of Tuesday. That is pretty bearish. Rising wedges are by their nature bearish formations to begin with as nearly 70% of the cases will usually end with a breakout to the downside.
9. Lower Trend Line Failure. The Dow Jones Industrial Average (DJIA) broke its lower trend line Tuesday. The DJIA tends to lead the market. Tuesday's failure is just another piece of evidence suggesting we're headed lower.
10. Apple Weakening. Now for the grand finale. Apple is the unequivocal market leader and was the market leader in this huge September rally. Now just because Apple sold off on earnings doesn't mean that this particular move up is over. In fact, there are cases where Apple has reversed out of its sell-off to make new highs days later. But those cases are very few. If Apple closes under $300 a share, it will be a very bad sign for this market, and particularly for the QQQQ (given the fact that it's nearly 20% of the weighting of the NASDAQ-100).
There's some strong evidence that Apple is very overextended. You can see the arguments making a case for an intermediate term top in Apple (2-3 months) here. Now for the big disclaimer. This is the part that 99% of the people who are in the financial industry have difficulty comprehending: Just because the evidence overwhelmingly favors the bear case, just because the correlations are very high that we've either topped or are approaching a top to this rally, just because commercial traders are super net short, doesn't mean that we are going to sell off with 100% certainty! This is just evidence! Evidence needs to be weighed against other considerations. Right now the balance of the evidence supports a conclusion that the market is about to undergo a correction. If the market doesn't happen to sell-off from here, it doesn't make the conclusion or the evidence any less valid. Just because an indicator doesn't work one time, doesn't mean that the entire sample of cases becomes invalidated. Most of the indicators above have such a high level of reliability that any one of them individually can suggest we're topping when at extremes. We have several indicators at extremes. Yet, in the end, what moves this market higher is a willing buyer and a willing seller. If the supply of buyers continues to outstrip the supply of sellers, then despite the hard evidence, we're going higher. But the only common sense thing for traders and investors to do is to bet with the probability. Right now, the odds favor the bears. That's all that can be said here. But given that QE2 is right around the corner, given that the mid-term elections are right around the corner, and given that Ben Bernanke has made it painfully obvious that the Federal Reserve will do everything in its power to backstop the equities market, anything is possible. If Bernanke wants it, we can rally 100 straight days from here with every single indicator in the market hitting extremes. One more thing: These were just a selection of some of the indicators suggesting that we're at extreme levels. Good luck! Disclosure: Net long Apple with a fully hedged call-spread. Heavy puts on the QQQQ.Disclaimer: The information contained in this blog is not to be taken as either an investment or trading recommendation, and serious traders or investors should consult with their own professional financial advisors before acting on any thoughts expressed in this publication. This blog is for intellectual and educational purposes only.

Stock Market Thrill Ride: Dave's Daily - ‘You could take any image put up above here and whatever the image message conveys do the opposite the next day. Let's see, down 165, up 129 and it isn't any wonder retail is in its 23^rd week of equity mutual fund redemptions. I don't want to sound unhappy since we're overwhelmingly long markets but trading against this machine-driven affair becomes more difficult with each day. Basically, everything reversed from yesterday and we might just end this tale there. Materials, industrials, energy and airlines led markets higher. Commodities did an about face rising as the dollar fell which accelerated upon release of the Fed Beige Book showing slow growth. Who knew?! (It's that "win-win" stuff again.) A consequence of low interest rates is companies like EBay and IBM are or have sold bonds at low interest rates to buy back their own stock. This is just financial engineering versus innovation and growth one of the things wrong with ultra low interest rates. And, by the way, the Fed did a small POMO operation today just to let us know they're around. Volume was lighter on the reversal higher which has been the case forever it seems. Breadth was positive…’

Currency Wars: A Race to the Bottom of the Inflationary Barrel Ron Paul | Inflation fears are heating up this week as Fed Chairman Ben Bernanke gave a speech in Boston on Friday, causing further frantic flight into gold by those fearful of the coming “quantitative easing” the Fed is set to deliver in November.

From Global Depression to Global Governance Andrew Gavin Marshall | We now stand at the edge of the ‘Great Global Debt Depression,’ where nations are beginning to implement ‘fiscal austerity’ measures to reduce their deficits.

Why California is About to Fall Off Into an Ocean of Unpayable Debt EconomicPolicyJournal.com | By around 2012 or 2013, the three major state pensions’ obligations will be more than five times as large as total state tax revenue.

Fed Wants Banks to Buy Back Some Bad Mortgages To the long list of those picking fights with banks over bad mortgages, add the Federal Reserve.

The U.S. May Have To Sell Some Assets To Get Out Of Its Debt Mess Check the national debt clock: Our federal debt is $13.3 trillion, next year’s budget is $1 trillion in the red, and we have unfunded commitments for Social Security, health care and other programs as far as the eye can see. [ How about additionally ending the endless war / military industrial complex / defense runaway spending. ]

Foreclosure Expert Confirms Mortgages Pledged Multiple Times, Not Actually Securitized, Document Problem Is Really a System of “Push-Button Fraud” Yesterday, I showed that mortgages were fraudulently pledged to multiple buyers at the same time.

(10-20-10) Dow 11,108 +129 Nasdaq 2,457 +20 S&P 500 1,178 +12 [CLOSE- OIL $82.52 (-54% for year 2008) (RECORD TRADING HIGH $147.27) GAS $2.74 (reg. gas in LAND OF FRUITS AND NUTS $3.11 REG./ $3.26 MID-GRADE/ $3.35 PREM./ $3.69 DIESEL) / GOLD $1,345 (+24% for year 2009) / SILVER $23.86 (+47% for year 2009) PLATINUM $1,683 (+56% for year 2009) / DOLLAR= .71 EURO, 81 YEN, .63 POUND STERLING, ETC. (How low can you go - LOWER)/ 10 YR NOTE YIELD 2.47% …..… AP Business Highlights ...Yahoo Market Update... T. Rowe Price Weekly Recap – Stocks / Bonds / Currencies - Domestic / International This Is a Secular Bear Market and The End of Buy and Hold … and Hope MARKET MANIPULATION AND HOW THE LATEST BUBBLE-FRAUD PRE-COMING CRASH IS BEING ACCOMPLISHED 3-11-10 6 Theories On Why the Stock Market Has Rallied 3-9-10 [archived website file] Risks Lurk for ETF Investors The bull market that never was/were beyond wall street b.s. when measured in gold Property Values Projected to Fall 12% in 2010 Jan 31, 2010 The Week Ahead: Risk Is Off the Cliff; Unwind Has Begun Jan 31, 2010 01-13-10 Forecast for 2010 from Seeking Alpha Contributor THE COMING MARKET CRASH / CORRECTION 1-28-10 Maierhofer (01-15-10) 11 Clear Signs Economy Sinking Economic Black Hole 1-22-10: 20 Reasons Why The U.S. Economy Is Dying And Is Simply Not Going To Recover Current Economic / Fiscal Charts Trendsresearch.com forecast for 2009 1-7-10 Crash is coming! ‘WORST ECONOMIC COLLAPSE EVER’ Must Read Economic / Financial Data This Depression is just beginning The coming depression… thecomingdepression.net MUST READ: JEREMY GRANTHAM’S QUARTERLY UPDATE 25 January 2010 (850 on the S&P) by TPC The Next Wave of Collapse is Coming Sooner than you think Sliding Back Into the Great Depression ABSOLUTELY, ABSURDLY, RIDICULOUS! SELL / TAKE PROFITS WHILE YOU CAN SINCE MUCH, MUCH WORSE TO COME!

National / World

As Mid-Term Election Nears, NAACP Declares Tea Party Rife with Racists Kurt Nimmo | It appears the NAACP is drinking the SPLC and ADL kool-aid.

Violent Anarchists Help French Authorities Crush Pension Protests Paul Joseph Watson | Pointless rioting, burning of cars and smashing shop windows has “shot the protest movement in the foot.”

Alex Jones: EU Dictators Plan Fresh Looting Of Tax Slaves Infowars.com | EU is trying to fill its coffers at a time when everyone else is being told they must tighten their belts and accept draconian austerity measures.

Time Magazine: Prospect Of Civil War In U.S. “Doesn’t Seem That Far Fetched” Paul Joseph Watson | Even establishment mouthpiece entertains notion of mass civil unrest as backlash to economic collapse.

Four men railroaded in plot to bomb synagogues Jerry Mazza | If you smell rat, trust it’s our friends in Intel and Law Enforcement land, looking for their Christmas bonuses, and some more blood.

Gen. Hugh Shelton: Clinton Official Suggested Letting U.S. Plane Be Shot Down To Provoke War With Iraq Huffington Post | “A high-ranking cabinet member suggests intentionally flying an American airplane on a low pass over Baghdad so as to guarantee it will be shot down, thus creating a natural excuse to reltaliate and go to war.”

War, What is it Good For? Activist Post | Videos represent more than 75 years of separation between Smedley Butler and Michael Prysner: two military men with a conscience.

Report Shows Drones Strikes Based on Scant Evidence Gareth Porter | A new report on civilian casualties in the war in Pakistan has revealed direct evidence that a house was targeted for a drone attack merely because it had been visited by a group of Taliban soldiers.

EU Leader To Dissenter: “How Dare You Say I Was Not Elected, I Was Elected By The Commission In Secret” In democratic politics there is a distinct difference between selection and election. However, according to European Commission President, José Barroso, the two are interchangeable.

TIME Asks “Will Bankers go to Jail for Foreclosure-gate?” “The real blood on the Street would be if the Feds are looking into the some of the more salacious charges that are coming out about the securitization of mortgage bonds.”

White House officials block Obama visit to India’s Sikh Golden Temple over fears it will strengthen belief he is a Muslim White House officials have stopped President Barack Obama from visiting the Golden Temple in Amritsar, India, over concerns that coverage could strengthen a belief he is a secret Muslim.

Time Magazine: Prospect Of Civil War In U.S. “Doesn’t Seem That Far Fetched” With protesters in France entering a seventh day of strikes and demonstrations against draconian austerity measures, many political observers in the U.S. are now wondering how long it will be before similar scenes unfold on American streets, with even Time Magazine now conceding that the prospect of a civil war in the States “doesn’t seem that far fetched”. Broke UK Slashes 500,000 Government Jobs [ I highly recommend the prescient film, ‘V for Vendetta’ (underplayed to audiences here and thar’), which in portraying the Orwellian English society of a not too distant future factors in the fait accomplis of american civil war which has begun and is inevitable in light of the pervasive greed, corruption, and incompetence of american leadership, publicly and privately, as well as inherent criminality, government / non-government. ] Up to 500,000 public sector jobs could go by 2014-15 as a result of the cuts programme, according to the Office for Budgetary Responsibility.

Under pressure David Cameron faces calls for a new EU vote David Cameron was under fresh pressure to hold a referendum on Europe last night – as France and Germany called for the controversial Lisbon Treaty to be redrawn.

US Chamber of Commerce lobbyist moderated panel on outsourcing American jobs: report The US Chamber of Commerce has become the latest enemy of American liberals.

CIA ‘was warned about bomber of Afghan base’ A CIA officer was warned that the Jordanian double-agent who blew himself up at a US base in Afghanistan, killing seven Americans, might have been working for al-Qaeda, yet did not tell his bosses.

Trades Hall president Kevin Bracken calls 9/11 ‘conspiracy’ THE president of the Victorian Trades Hall has sparked outrage after controversially claiming the September 11 2001 World Trade Centre attacks were a conspiracy, not the result of terrorist activity.

Unfair Trade: 10 Questions About Our Globalized Economy That Neither Conservative Or Liberal Supporters Of Current U.S. Trade Policies Can Answer Most Americans still seem to be convinced that “free trade” is “fair trade” and that to be against current U.S. trade policies and globalization means that you are anti-business, anti-free enterprise and anti-American.

Drudgereport: SHOWDOWN: French Strikes Intensify...

BROKE UK SLASHES 500,000 GOV'T JOBS...

SHOWDOWN: French Strikes Grow ...
Tourists warned to stay away as violence spirals...
'Birthright' of privileges...
Will Americans Follow Mass Civil Unrest?
Will the Federal Reserve Cause a Civil War?
NJ Toll Worker Earns $321,985... [Such is life in the multi-ethnic mob-infested / controlled, pervasively corrupt, garbage state (ny, northeast, dc metro/ va, cal, not far behind) … could you imagine the figures for pols / judges, etc., if bribes and drug money, etc., were included. ] ‘…It took place as tolls were being increased. The biggest expense uncovered in the audit was $30 million in unjustified bonuses to employees and management in 2008 and 2009 without consideration of performance…’
Sarkozy vows crack down...
DAY 6: Violent turn...
Thousands protest against looming cuts in London...
SHOWDOWN: China halting key minerals to USA...
ANGER...
HAS THE FED RUN OUT OF IDEAS? [ Quite some time ago, actually. ]
THE 'INFLATION' OPTION...
Dollar Declines for Fifth Week...
Support for Afghanistan war at all-time low...
17 SOLDIERS KILLED IN PAST 3 DAYS...
Limbaugh: Obama looks 'demonic' in new photos … and limbaugh knows demonic, himself and relative wobama ... [Obama Distant Cousins with Palin, Limbaugh, Bush | CNSnews.com Obama Distant Cousins with Palin, Limbaugh, Bush. Obama's Related to Palin. Wednesday, October 13, 2010. By Jocelyn Noveck, Associated Press ... www.cnsnews.com/news/.../obama-distant-cousins-palin-limbaugh-bushes (wobama, palin, limbaugh, bush distant cousins … I knew there were some dark secrets there … hillbilly heroin, etc.. – Wow! Talk about the nation-declining dangers of inbreeding! Poor defacto bankrupt, pervasively corrupt america never had a chance! ) ]
ABCNEWS: 63 Dem House Seats in 'Serious Danger'...
Barone: Dems find careers threatened by ObamaCare votes...
GALLUP: Unemployment at 10.0% in Mid-October...

Feds press mortgage lenders to fix documents (Washington Post) [ Fix documents? In matters involving far more serious crimes of far more significance longer term to the nation, I’d be content with mere adherence to clear law applied to the documented facts, no matter where and to whom the crimes lead … see infra… ] White House says Obama will not sign foreclosure bill [ Oooooh, whoops … Sounds like a plan!] Consumer advocates and state officials argue legislation would make it difficult for homeowners to challenge documents prepared in other states. [When talking about the pervasively corrupt american legal / judicial system, you’re truly talking about tips of the iceberg! Judges rule without title, lenders can't foreclose (Washington Post) [ Rules of law? I didn’t think they cared. That’s certainly the direct experience I’ve had with the pervasively corrupt american legal / judicial system (along with the other two branches of the u.s. government and defact bankrupt america generally). Court decisions could call into doubt the ownership of mortgages, raising urgent challenges for both the real estate market, wider financial system. Connecticut, California join probe of Ally (Washington Post) [I’d be much more impressed if they initiated a probe of more readily discernible criminal offenses in violation of the RICO Act http://albertpeia.com Frauds/Liars (sic-lawyers)Covering Up for Other Frauds/Liars (sic-lawyers). In Productive Societies as China, Japan, etc., Fraudulent Liars (sic-lawyers) and the Fraudulent u.s. System They're a Part of Are Unheard Of/Non-existent. List of Files Regarding Filed Attorney Grievance Against Fraud coan et als Or Here For A Clearer View Of Filed Grievance Complaint, Response, Exhibits, and Related RICO Filings Note the Committee of Frauds/Liars (sic-lawyers). Included are DOJ Rep., State Court Rep., State Atty. General Office Rep., and even a Vegetable Garden yale law prof who probably never practiced law in his life. How Pathetic! http://albertpeia.com/fbiofficela91310 ] Justice: FBI improperly opened probes (Washington Post) [ I just hope they’re as zealous (in probing readily discernible crime) with regard to my RICO matters and the corruption in the (judicial / legal) process since, in the final analysis, it will have been the corruption within that will have brought the nation down irrevocably and totally.

October 15, 2010 (*see infra)

Steven M. Martinez, Assistant Director In Charge
Federal Bureau of Investigation, USDOJ
11000 Wilshire Blvd., Suite 1700

Los Angeles, CA 90024

Dear Sir:

I enclose herewith 3 copies of the within DVD rom autorun disk (which will open in your computer’s browser) as per your office’s request as made this day (the disk and contents have been scanned by Avast, McAfee, and Norton which I’ve installed on my computer to prevent viral attacks / infection and are without threat). I also include 1 copy of the DVD as filed with the subject court as referenced therein (which files are also included on the aforesaid 3 disks in a separate folder named ‘112208opocoan’). The (civil) RICO action (as you’re aware, the RICO Act is a criminal statute which provides a civil remedy, including treble damages and attorney fees, as an incentive for private prosecution of said claims probably owing to the fact that the USDOJ seems somewhat overwhelmed and in need of such assistance given the seriousness and prevalence of said violations of law which have a corrupting influence on the process, and which corruption is pervasive). A grievance complaint against Coan was also filed concurrently with the subject action and held in abeyance pending resolution of the action which was illegally dismissed without any supporting law and in contravention of the Order of The Honorable Robert N. Chatigny, Chief Judge, USDC, District Connecticut. The files below the horizontal rule are the referenced documents as filed. (Owing to the damage to the financial interests of both the U.S. and the District of Congresswoman Roybal-Allard, viz., Los Angeles, the Qui Tam provisions of the Federal False Claims Act probably would apply and I would absent resolution seek to refer the within to a firm with expertise in that area of the law with which I am not familiar).

The document in 5 pages under penalty of perjury I was asked to forward to the FBI office in New Haven is probably the best and most concise summary of the case RICO Summary to FBI Under Penalty of Perjury at Their Request (5 pages) [ ricosummarytoFBIunderpenaltyofperjury.pdf ].

The correspondence I received from the Congresswoman by way of email attachment (apparent but typical problem with my mail) along with my response thereto is included on the 3 disks as fbicorrespondencereyes.htm . With regard to the calls to the FBI’s LA and New Haven, CT offices: There was one call to the LA office and I was referred to the Long Beach, CA office where I personally met with FBI Agent Jeff Hayes to whom I gave probative evidentiary documents of the money laundering which he confirmed as indicative of same (he was transferred from said office within approximately a month of said meeting and his location was not disclosed to me upon inquiry). The matter was assigned to FBI Agent Ron Barndollar and we remained in touch for in excess of a decade until he abruptly retired (our last conversation prior to his retirement related to the case and parenthetically, Rudy Giuliani whose father I stated had been an enforcer for the mob to which he registered disbelief and requested I prove it, which I did – he served 12 years in prison, aggravated assault/manslaughter? – and no, there is no Chinese wall of separation – Andrew Maloney’s the one that prosecuted gotti).

In contradistinction to the statement in said correspondence, there is a plethora of information including evidence supporting the claims set forth in the RICO VERIFIED COMPLAINT (see infra). Such includes and as set forth in the case, inter alia,

1. A judgment had been entered in my favor in the case, United States District Court Case #3:93cv02065(AWT)(USDCJ Alvin Thompson), worth approximately now in excess of $300,000 remains unaccounted for and which could be used for payment to creditors, Los Angeles, etc..
2. Counsel Robert Sullivan on my behalf documented by way of certification upon investigation that Alan Shiff, USBCJ, had falsely stated a dismissal upon which false statement he predicated a retaliatory and spurious contempt proceeding against me causing substantial damage, and for which he sought Judicial Notice of those and related proceedings as did I in some of my filings.
3. The Order of Dismissal With Prejudice by Alan Shiff, USBCJ, owing to Defendant Coan’s failure to file anything whatsoever by the court’s deadline causing creditors and me substantial damages: [ Shiff Order of Dismissal With Prejudice on Coan’s Failure to File Page 1 Page 2 ]
4. Defendant Coan had filed an action against me to prevent me from suing him which necessitated me to fly to Connecticut for a hearing before The Honorable Robert N. Chatigny, Chief Judge, USDC, District of Connecticut, who denied Coan’s requested relief as to Coan but precluded my action against Shiff (although there is no immunity, judicial or otherwise, for criminal acts, ie., fraud connected with a case under Title 11, USC, etc.) . [ transcript in pertinent part - crossexamofcoanbypeia.pdf ]
5. Newly appointed judge, Maryanne Trump Barry, Donald Trump’s sister, was assigned the RICO case despite the conflict of interest in light of hundreds of thousands of dollars of illegal (drug) money being laundered through the Trump casinos by the RICO defendants, and despite my motion to recuse her which motion she heard herself and denied, and U.S. Trustee Hugh Leonard with whom I met personally refused to join or file a separate motion to recuse and not long thereafter left said office for private practice at Cole, Shotz, et als on retainer with the RICO defendants as his primary client.
6. Probative and evidentiary documents, affidavits, exhibits, including those turned over to FBI Agent Jeff Hayes in Long Beach, CA, had been given to Assistant U.S. Attorney Jonathan Lacey with whom I met personally at the U.S. Attorney’s Office in Newark, N.J., at which time Samuel Alito was U.S. Attorney, and went over said documents and their probative value with him. Within approximately a month thereafter upon inquiry I was told that Jonathon Lacey was no longer with the office, that the file/documents could not be located, and that there was no further information available concerning contacting him or his location. I thereupon delivered by hand, copies of said documents to the office of then U.S. Attorney Alito, addressed to him, with assurance they would go directly to him. In addition to being inept [ I looked in on the one mob case he had brought, bungled, lost (accidently on purpose?) since I was suing some mob-connected under RICO and the court (I had known / previously met outside of court the judge Ackerman through a client) was absolute bedlam and a total joke since incompetent corrupt Alito brought in all 20 mob defendants (rather than prosecute one or a few to flip them first) who feigning illness had beds/cots in the courtroom along with their moans during testimony and had the jury in stitches. As much as I hate the mob, it truly was funny, if not so tragic.], Alito is also corrupt (and maybe corrupt because he is inept). After a reasonable (but still rather short) time I called to determine the status and was told that Alito was no longer with the Office of the U.S. Attorney, that he was (appointed) a federal judge, and that neither the documents nor any file or record of same could be located. Alito did parley the same / cover-up into quid pro quo direct lifetime appointment to the Court of Appeals, 3^rd circuit, despite the absence of judicial experience or successful tenure as U.S. Attorney (Maryanne Trump Barry as well). This is the same Sam Alito that now sits on the purported highest court in the land. The real application of the illegal rule ‘don’t ask, don’t tell’.

There is applicable insurance / surety coverage and neither LA, nor creditors, nor I should continue to have been damaged by this brazened corrupt and illegal scenario, which should be resolved in accordance with the meaningful rules of law apposite thereto.

Sincerely,

Albert L. Peia

611 E. 5^th Street, #404

Los Angeles, CA 90013

(213) 219-**** (cell phone)

(213) 622-3745 (listed land line but there are unresolved problems with the line, computer connection may be the reason but I hesitate to chance greater non-performance / worsening by their ‘fix’ so cell phone best for contact).

----------

*The foregoing and as indicated therein was previously send 9-14-10 but delivery confirmation was flawed as set forth below and my inquiries to the u.s. postal service rebuffed (I believe tampered with inasmuch as your office could not locate same). This cover letter (9-13-10) is on the 3 disks with navigable hyperlinks to the subject files for ease of reference, including the files in the RICO action as indicated. (10-15-10) I spoke with Rose, FBI, ADIC Secretary, who indicates once again that your office has not received the aforesaid and which can reasonably be presumed to have been tampered with, and hence, a violation of the federal statute concerning same.

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Label/Receipt Number: 0310 1230 0000 0862 8183

Expected Delivery Date: September 15, 2010

Class: Priority Mail®

Service(s): Delivery Confirmation™

Status: Delivered

Your item was delivered at 10:14 am on September 15, 2010 in LOS ANGELES, CA 90024.

Track and Confirm

Enter Label/Receipt Number.

Enter Label / Receipt Number.

Detailed Results:

Bullet Delivered, September 15, 2010, 10:14 am, LOS ANGELES, CA 90024

Bullet Arrival at Post Office, September 15, 2010, 4:12 am, LOS ANGELES, CA 90024

Bullet Processed through Sort Facility, September 14, 2010, 8:29 pm, LOS ANGELES, CA 90052

Bullet Acceptance, September 14, 2010, 4:04 pm, LOS ANGELES, CA 90017

----

Sent Postage Prepaid: United States Mail - VIA Priority Mail, Delivery Confirmation and VIA Certified Mail this ___ day of October, 2010.

Signed: ___________________________________

Albert L. Peia

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Label/Receipt Number: 7009 2250 0002 1116 5915
Expected Delivery Date: October 6, 2010
Class: Priority Mail^®
Service(s): Certified Mail^™
Status: Delivered

Your item was delivered at 11:42 am on October 06, 2010 in LOS ANGELES, CA 90024.

Detailed Results:

Delivered, October 06, 2010, 11:42 am, LOS ANGELES, CA 90024

Arrival at Unit, October 06, 2010, 4:15 am, LOS ANGELES, CA 90024

Acceptance, October 05, 2010, 11:12 am, LOS ANGELES, CA 90017

---------------------------

Label/Receipt Number: 0309 3220 0000 4028 9039
Expected Delivery Date: October 6, 2010
Class: Priority Mail^®
Service(s): Delivery Confirmation^™
Status: Delivered

Your item was delivered at 9:03 am on October 06, 2010 in LOS ANGELES, CA 90024.

Detailed Results:

Delivered, October 06, 2010, 9:03 am, LOS ANGELES, CA 90024

Arrival at Post Office, October 06, 2010, 6:10 am, LOS ANGELES, CA 90024

Acceptance, October 05, 2010, 11:11 am, LOS ANGELES, CA 90017

-------

Sent VIA UPS Courier this 15th day of October, 2010.

Signed: Albert L. Peia

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] Federal regulators seek to prevent the growing furor over improper foreclosures from escalating, pressing mortgage lenders to replace flawed and fraudulent court documents while insisting that foreclosures continue apace. But advocates say the policy is soft on banks and may have little effect, because many lenders are already taking such steps.

Survey: Half of Wall Street expects bigger bonus this year (Washington Post) [ This is nothing short of incredible … What they should be expecting, for the sake of the nation and the world, is an 8 by 10 jail cell! ] Bloomberg The percentage anticipating a bigger bonus increased from last year.

Gerald Celente: “The selloff of America” Financial institutions on Wall Street are preparing to pay a shocking record $144 billion dollars in compensation & benefits. This amid spiraling foreclosures and an economic crisis that has devastated Americans, leaving many out in the street. Gerald Celente of the Trends Research Institute says that the gap between rich and poor in the US will continue to get larger because of the bank bailout that Washington shelled out in 2008.

'Systemic failures' led to attack, CIA says (Washington Post) [Riiiiight! And if the cia says it, it must be true … NOT! … what a hapless bunch of criminals / frauds … CIA sues former agent for publishing book... Gertz [ Suit filed in virginia, near Langley and D.C., you don’t have to be a clairvoyant to know how that suit turns out … which is always great for the court hearing the case since ‘bonus money’ is invariably involved ... such an outcome is a real tragedy for this defacto bankrupt and pervasively corrupt nation and the world. ] ‘The CIA has filed a breach of contract lawsuit against a former deep-cover agent who published a book critical of the agency without allowing CIA censors to remove large portions of the manuscript before publication. Ishmael Jones, pen name for the 20-year CIA veteran and Arabic speaker who said he sought to expose corruption in the agency, is facing a civil lawsuit over his 2008 book, "The Human Factor: Inside the CIA's Dysfunctional Intelligence Culture."The book is a detailed account of his career inside the CIA's clandestine service and his work as a "nonofficial cover" operative in the Middle East and Europe."The book contains no classified information and I do not profit from it," Mr. Jones told The Washington Times. "CIA censors attack this book because it exposes the CIA as a place to get rich, with billions of taxpayer dollars wasted or stolen in espionage programs that produce nothing …’ ] The CIA was cautioned last year that a self-proclaimed al-Qaeda turncoat might be luring the agency into an ambush, a warning that came weeks before the man killed seven agency operatives in a suicide attack in Afghanistan, an internal investigation finds.

Federal Reserve moves to close credit card loophole (Washington Post) [ How ‘bout moving to close the ‘fed fraud loophole’ … abolish the fed … the country’s gone totally downhill with the fed’s incompetence, protected frauds and wall street collaboration, etc.. I mean at this point in the nations decline, what’s to lose? The fed has a track record of failure and wall street’s ever larger frauds. ] The proposal is aimed at "fee-harvester cards" that carry interest rates as high as 79 percent

N.Y. Fed joins cry for mortgage buybacks (Washington Post) [ How about the new york fed first account for the missing $4+ trillions at said bank before demanding B of A do anything, just as a matter of chronology, common sense, and reality. ]The Federal Reserve Bank of New York has joined a group of investors demanding that Bank of America buy back billions of dollars worth of mortgage securities that are plagued with shoddy documentation and lending standards, according to sources.

Taking Down The FED With RICO - Margot B World NewsThe Federal Reserve Bank of New York is the official depository of the United States government. ... Catherine Austin Fitts was the Deputy Secretary at HUD under the first ... This video is about the missing trillions from the DOD ...margotbworldnews.com/archives/2008/Nov/.../FEDdanfey.htm - Cached

Meyerson: Wrong way for banks to get rich (Washington Post) [ Goldman Sachs Beats Estimates as Banking Revenue Rises Christine Harper (bloomberg.com) ...Oct. 19 – More unequivocal proof that crime in defacto bankrupt america pays … and pays well … especially with other peoples money … though many don’t realize that yet … no there’s no alchemy that produces real money out of thin air and the money for the wall street frauds, high-frequency computerized churn and earn must come from some place … guess … ]

U.S. investigating criminal violations in foreclosure crisis (Washington Post) [ Still ‘no touchey de frauds on wall street’ , among other proected american criminals… Cartels beef up presence in U.S. (Washington Post) [ I strongly recommend the entertaining, albeit exaggerated for shock effects, films by the talented director Robert Rodriguez, ‘Machete’ and ‘Once Upon a Time in Mexico’. The important point in the films is the manipulation and interwoven money connections, pieces of the action, bribes, etc. (see infra, RICO case, 10-15-10 letter to the FBI , ( http://www.albertpeia.com/112208opocoan/ricosummarytoFBIunderpenaltyofperjury.pdf http://www.albertpeia.com/112208opocoan/PeiavCoanetals.htm ). While I assume he’s of Mexican-American descent, and only slightly biased as a consequence, realize that a real life american story, names, etc., wouldn’t get made / distributed. Those Cartels referenced in this article wouldn’t be here without inside american help, very, very high up and quite officially unofficial. ] When a major Mexican drug cartel opened a branch office in San Diego, U.S. authorities tapped into their cellphones -- then listened, watched and waited. ] The administration seeks to send a public message that banks will be held accountable.

N.Y. Fed joins cry for mortgage buybacks (Washington Post) [ How about the new york fed first account for the missing $4+ trillions at said bank before demanding B of A do anything, just as a matter of chronology, common sense, and reality. ]The Federal Reserve Bank of New York has joined a group of investors demanding that Bank of America buy back billions of dollars worth of mortgage securities that are plagued with shoddy documentation and lending standards, according to sources.

Taking Down The FED With RICO - Margot B World NewsThe Federal Reserve Bank of New York is the official depository of the United States government. ... Catherine Austin Fitts was the Deputy Secretary at HUD under the first ... This video is about the missing trillions from the DOD ...margotbworldnews.com/archives/2008/Nov/.../FEDdanfey.htm - Cached

Narco News Publishes Part III of C.A. Fitts on Narco DollarsThe potential capital gains are in the trillions of dollars. ... CRA$HMAKER: A Federal Affaire, a novel of love, death and the Federal Reserve, Victor Sperandeo & Alvaro Almeida, ... "Albert Vincent Carone: The Missing Link Between Iran-Contra Cocaine ... Has Dirty Money Polluted Bank of New York? Kelly O'Meara, ...www.narconews.com/narcodollars3.html - Cached - Similar

Catherine Austin Fitts: What can anyone do? A lot! | Gold Anti ...Apr 27, 2008 ... We have seen leading members of the New York Fed and other Federal Reserve banks ... trillions of dollars missing from the U.S. Treasury, ...gata.org/node/6257 - Cached

The Real Deal: Saving Tennessee, by Catherine Austin Fitts, 7/4/02U.S.'s Missing $Trillions Make Mainstream At Last, Scoop, 5/26/03 ...... New York Federal Reserve (US Treasury Depository, www.ny.frb.org) (+) ... www.ratical.org/co-globalize/savingTenn.html - Cached - Similar

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The Precious Metals Market is Manipulated: Gold, GATA and the Turn ...Apr 22, 2008 ... The following is Catherine Austin Fitts' presentation at the “GATA Goes to .... We have seen leading members of the New York Fed and other Federal Reserve banks ... trillions of dollars missing from the U.S. Treasury, ...www.globalresearch.ca/index.php?context=va... - Cached - Similar

Catherine Austin Fitts; NWO Economics & Wealth Destruction ...Oct 15, 2010... the $9 Trillion that went missing from The Fed in May, 2009? ..... According to the Federal Reserve's most recent report on wealth, ... California, Illinois, New Jersey and New York) and growing at an alarming rate nationwide. ... by trillions given the country's current economic trajectory. ...

Look Closer - It's a Giant House of Cards Simon Maierhofer, On Tuesday October 19, 2010, 7:14 pm Call me a hopeless 'free market' romantic, but I believe that the natural forces of supply and demand (and cause and effect) will eventually trump the Federal Reserve's underhanded, yet obvious, efforts to pump up the market. If you are curious to know how the Fed massages the stock (NYSEArca: VTI - News) and commodity markets (NYSEArca: DBC - News) in an effort to keep the economy from collapsing, keep reading. But before we get there, let's take a look at a problem that is as obvious as it is ignored.
Bad News is Good News and Good News is Good News If you've ever been asked: 'Honey, does this skirt look too tight,' you know there's only one response that won't have negative consequences. Right now, the market - at least according to Wall Street and the media - is in a win-win position. Any commentary to the contrary is met with disdain. Good news means the economy is improving. Bad news means more quantitative easing is on the way. Any news is good news. But what about the foreclosure debacle or mortgage bust 2.0? It seems like investors have not even begun to price in the eventual ramifications. Without going into too much detail, courtesy of faulty foreclosure procedures, many mortgage payers may have the legal right to walk away from their debt. Banks (NYSEArca: KBE - News) and other financial institutions (NYSEArca: XLF - News) on the other hand have no recourse of getting their money back. The plot for the financial sector continues to thicken ... and continues to be ignored.
Obvious and Ignored Simultaneously, Bloomberg featured the following two headlines on Monday: 'Citigroup profits exceeds estimates on decline in provision for bad loans' 'Mortgage buybacks may cost lenders $120 billion, JPMorgan says' In case the irony of the headlines isn't obvious, here it is again: Citigroup rallied over 5% because profit increased due to a reduction of bad loan provisions, while a fellow banking giant sees a $120 billion future liability caused by bad loans. Is this a problem that can be hidden via another round of accounting rule changes? As I look at the performance of stocks, I wonder how long it will take for investors to realize the magnitude of the problem. Stocks don't care, which means investors don't care - at least not yet. Overall, the market reminds me a lot of April 2010. For a period of weeks, the S&P (SNP: ^GSPC) and Dow (DJI: ^DJI) kept inching higher, making incremental new recovery highs and thereby pushing sentiment readings to an extreme. It seemed like the rally would never end, but it did. On April 16, the ETF Profit Strategy Newsletter took note of this unhealthy behavior and stated that: 'The message conveyed by the composite bullishness is unmistakable bearish.' Note the reason for investors' bullishness in April and compare it to today. The newsletter continued: 'Most bulls have no clue why they are bullish except for the fact that they feel the need to play the momentum game. It doesn't take an economist to see how fragile the economy really is.' Have things improved since April? Let's see; unemployment has gone up, GDP has been revised down, banks are struggling, real estate (NYSEArca: IYR - News) continues to slide, Europe has been patched although hit with more downgrades and the foreclosure landslide has hit the fan. Things have gotten worse, yet stocks have come back to revisit the April highs. How come? There's an explanation with an 89% accuracy ratio; more in a moment. Crushed by an Elephant You can't write an article right now without commenting on Apples earnings. In case you haven't heard, they were outstanding. Apple has a variety of great products. After countless crashes, I switched from a PC to Mac and haven't regretted the move. I'm the proud owner of the 'iTriple' (iPod, iPad and iPhone) and have no complaints. But investors are a fickle and insatiable bunch. No matter how good things are, they want better. How much better can it get for Apple? More iPhone sales through Verizon, is huge. Christmas season is big, but hasn't that already been priced in? The entire technology sector (NYSEArca: XLK - News) collapsed in 2000. Busts are always a surprise and they always occur at the top. AAPL (NasdaqGS: AAPL - News) accounts for 20.93% of the Nasdaq (Nasdaq: ^IXIC), as much as Google, Qualcomm, Microsoft, Oracle, Amazon and Cisco combined. As Apple goes, so goes the Nasdaq. In Monday's after hours trading, Apple is down over 5%.
More than a 'Rotten Apple' Apple is not the only liability to the market. Complacency is another. The VIX (Chicago Options: ^VIX) is trading at the lowest level since April and small option trades are about as hopeful as they were in April. Small option traders are one of the purest real-money sentiment gauges as they aren't clouded by institutional hedging cross currents.
Rising Prices, How and Why? Since the Fed has been unable to create consumer inflation (why else would we need QE2?) it has shifted its focus to another type of inflation - asset inflation. As the administrations attempts to propel the economy have failed, it realizes that the stock markets role as a nation's mood barometer is crucial to the economy's survival. A declining stock market would surely deliver a depression.
Monetizing Debt Monetizing debt was the buzzword in early 2009, when the Federal Reserve agreed to buy $1.2 trillion of government and government agency debt (such as Fannie Mae and Freddie Mac). By so doing, the Federal Reserve exchanged crisp new dollar bills against toxic debt. This also meant that the U.S. dollar was not only backed by U.S. Treasuries, it was also backed by toxic mortgages. Quite a departure from the gold (NYSEArca: GLD - News) standard. The chart below shows the soaring balance sheet of the Federal Reserve. [chart]

In POMO They Trust Who are 'they?' POMO is the Federal Reserve's Permanent Market Operations. Via POMO, the Fed buys back T-Bonds from banks and financial institutions. 'They' are banks. Banks sell the T-Bonds at a profit and invest the additional funds in stocks and commodities. A rising stock market - even if devoid of any fundament reason - is what the government wants. It doesn't matter that the same banks that started the financial wreckage now make money with the clean up. The chart below illustrates this process. Entire books have been written to explain the unethical role of the Federal Reserve. The November issue of the ETF Profit Strategy Newsletter explains the process concisely and understandably in a few pages. [chart]


POMO vs. Free Market As mentioned above, I am a free stock market romantic and believe that normal market forces will drag the market down as swiftly as it's come up. But, POMO should not be underestimated. It's success rate in lifting the market is in some instances higher than 80% and the Fed is holding a lot of POMO purchases before the November 2nd elections, probably in an attempt to keep prices up (a detailed analysis of the POMO effects on the S&P and schedule of future POMO purchases is available in the November ETF Profit Strategy Newsletter). Whether you are bullish, bearish or confused, the coming days/weeks seem to be pivotal in determining whether POMO will drive prices up, or market forces will push prices down. The ETF Profit Strategy Newsletter includes a forecast for the days, week, and month ahead, along with safety and target levels that help navigate the market and stay on the right side of the trade.