Take a contrarian view

On the current crisis the financial market is holding up on to, we sure have to salute the top guns for being able to us their stature and influence to put up with manipulation of funds to shore up investments and the equity market. Treasury yields are still near all time low and getting lower every minute, as i assume there would still be some problems getting people to buy those notes more over hold. If i were treasury holders i would have sold all the bills and shift to anything that is safer or holdings that will protect my assets against depreciation of the dollar.

If one steps back again, and take the birds eye view, Mr. Paulson although adamant but contradictory, has always wanted to back the dollar badly, he acclaims that his motives are to defend the dollar from a further depreciation and 25% was suffice to diminish the value of the US debt they were holding, but from his latest act to propose for the bill to finance 700billion USD in the market would certainly boost the US nation into a 6.6 % increase in national debt. It is suffice to say that the actions to have the" troubled asset relief program " would debase the currency and suppress any yields still exist in them, all from the action of both the feds and the treasury secretary. The view now is certainly paradoxical.

Now we must always access the situation from both sides, yes the debt will be increased to a level where dollar must depreciate another 1 % minimal to justify any increase in debts, but who is going to continue selling the dollar cheaper? To what level are they going to give up the entire dollar as the common denomination used, it is not impossible to have such a scenario since the Euro has a more stable outlook compared to the dollar, at least they are not giving the money out at such a rate us printing press are.

The Euro interest rates are still at least double of those in US, but ... there is always a but Henry Paulson is putting his hopes high on the appreciation in inflation to boost the CPI and the price of real estate which may have a very feeble push in certain parts of America where real estate have already down 30% average speaking, although pricing is very individualistic and objectivity bears on buyers. They are running the funds on a reverse auction for the lowest and most competitive pricing from banks. If anyone is going to take it harsh it is the further write downs after the Troubled Assets Relief Program buys a property or default or security from 60 cents to the dollar , at the price of 20 -30 cents, that halves the value of securities held by banks.

This would be taken badly by banks and in terms of liquidity they are going to be dried up even more, but i view as long as the real estate market does not bottom and rebound we are not going to be able to feel the effects of the TARP yet, they are engineering a bottom, giving hope that they will buy only at the cheapest and receive warrants for the cent they pay in, returning the gains to the US government and from the returns covering back the loans and debt from the US foreign counterparts holding bonds and buying treasuries and the dollars.

But with all the dust and mist surrounding the asset market and the diminishing valuation of dollars from the heavy selling of yields would turn the entire economy into a hyper inflationary recession cycle before going deep into a depression. The only people happy now are Americans spending habits using more credit cards to pay for goods as their repayment would be in cheaper dollars, no wonder they are happy to take up even more loans.

I believe that asset prices will stay afloat for a while since the US government is going to buy them , but afloat at what level and for how long until we need to see the people suffer another round of Bailouts as banks took too much of a writedown, and a rate cut is either imminent or targeted loans by federal reserve parties come to their doorstep.

But, if this bill passed is well accepted and manage to stimulate bankers to lend, for business to be financed and turnovers, for mortgage loans pending for the past 6 months approved, auto sectors will see some light as well, the nation will benefit from our socialist government to help us invest the money we pay in tax, and hopefully it will not go to the top guns and financial institutes who benefit from offloading mortgage holding cheap and gain off disposal. As the trend of paying high rank CEOs with fat luscious bonuses continue , I dont see the need for the Feds to intervene, moreover risk the money of the US nation.

Of the acts, and a conspiracy theory by nations around America, would we see the demise of a great economy

Everybody is facing it besides the corrupts and crony. A true story and destructing in wealth, who should be blame? Federal reserve board chairman requires no election of public but they manage the wealth and money creation, so it's not about blaming but making a change.

George soros have the brain of Einsten and he was famed by draconian moves in currency trading, was a scapegoat like all the short sellers now, being blamed for causing the massive selldown of AIG and Lehman, they must have no idea what is market force, and they think everybody is imbecile to believe their conspiracy. Soros saw this ahead and like as usual he sounded to the public that further damage in wealth destruction was coming.

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China and all the big guns are waiting to start shooting, CIC is making its move and Buffet is taking advantage in the crisis to bang on companies that involved in power production, with so much storms and casualities, I foresee more spending would be incurred in this sector, Buffet is scrapping an elephant with a small scapula.


Did this help contribute to the surge, i dont see a down fall caused by shorts but the shorts sparked yesterdays opening rally.``So many shorts were pushed into covering,'' said Jean- Marie Eveillard, who manages $35 billion at First Eagle Funds in New York.

The regulators and financial institute giants, market leaders are revisiting the same route that ended them here in the first place, why not be critical and do something that would be beneficial and not further land US in banana republic (bigpicture.typepad.com).Indeed a nostalgic new chapter of the feds and the financial legislator boards.

I have a conspiracy theory that i do not know could be true, but the big guns could have been planning to accumulate as much USD as they can in term of bonds and treasury, etc and they are waiting hawkishly and patiently, a vulture of nature to devour the failed American Nation, all the reserves would be converted to their strengthening currency and with the conversion of currency shore the SWF they own nationally, and carry out a acquisition so big it could replace the world largest economy. This transition at least does minimal damage as private equity does not change in operations but only ownership in terms of nationality.

Lets take a look at countries with massive USD reserves:

• It used to be japan to suppress the Yen value


• Current Standings of reserve in terms of country and their SWF


• Talking about US Reserves, bills , TIPS, STRIPS how they manage.


• These Black Gold SWF are waiting too AbuDhabi


• This is the start , there will be more LBO

What would happen when stock market capitulation takes place, the ratio between bank assets and Stock market Capitalization is almost 1:1 , the relief i take is that the significance of equity protectionism is being upheld at the cost of a different asset class, but will this spark the era of massive Asian-American MNCs? Middle Eastern owned American corporations? LBO is not out of the picture yet!!!! There would be a price for everything.

• Brazil wants to start their own SWF
• Brazil SWF express way
• Presumed Brazil SWF structure
• CIC
• China SSF
• SAFE-china
• HKMA
• Kuwait
• UAE-AbuDhabi
• Emirates-UAE
• Singapore Temasek