This morning’s key headlines from GenerationalDynamics.com
- Wall Street stock market continues dangerous parabolic bubble
- Libor banker fraud may be eclipsed by the ISDAfix fraud
- Orthodox Jewish woman sues Lancome over makeup failure
Wall Street stock market continues dangerous parabolic bubble
Long-time readers are well aware of the Generational Dynamicsprediction that the world is headed for a major global financial panicand crisis, causing all bubbles to implode, including the stockmarket, commodity and gold bubbles. It’s impossible to predict whenthat will happen, or what event will trigger the panic, but every oncein a while I try to point out a time when things look particularlydangerous.
One of those times is now. A couple of months ago, I warned that thestock market was rising rapidly and becoming dangerously parabolic.That parabolic rise is continuing. The S&P 500 Price/Earnings ratio(also called “valuations”) was at 18.45 on Friday morning, accordingto the Wall Street Journal. Friday’s huge stock market surge spiked the P/E ratio upto 18.63 by the end of the day — above the extremely high levels thatit reached during the massive real estate and credit bubble of the2006-2007 time period. The S&P 500 P/E ratio has been above itshistorical average (14) continuously since 1995, and by the Law ofMean Reversion will crash to around 6 or lower, as it last did in1982, and stock prices will fall proportionately.
According to my Dow Jones historical page, the market is now at 218% of its current long-term historicaltrend line value of 6838. This is an extremely high bubble level,though not as high as the 264% that it reached on the peak on October8, 2007. However, this may indicate that the new parabolic bubble maysurge even further before crashing.
To say that there is no rational explanation for this parabolic stockmarket spike is an understatement. China’s economy is slowing, andEurope’s economy is going down the tubes, while America’s economy isabout to be hit by the Obamacare train wreck and financial disaster.
The major factor causing the stock market spike is the Fed’sAccording to mainstream “economists,” that money should be going outas loans to individuals and small businesses, which it is not.Instead, that money is making its way to investment bankers andwealthy investors who are using the money to expand the stock marketbubble. (See my report in 17-Apr-13 World View for how wealthy investors can borrow millions of dollarsfrom Interactive Brokers at 1.3% interest and then invest the money inthe stock market.)
A second reason why money is pouring into Wall Street is apparentlythat many investors are fleeing Europe. The Cyprus bailout, whichconfiscated 60% of the assets of wealthy investors, and the statementsof European politicians that it could happen again, is frighteninglarge investors into taking their money out of European banks,according to some reports, and some of this money is reaching WallStreet.
It used to be that I was advising (American) readers to keep theirmoney in FDIC insured bank accounts, and that’s probably still thebest bet, though if you live in a house with a safe basement, you maywish to keep some cash hidden behind a loose brick. Some peoplesuggest “investing” your money on self-defense and survival typeitems, everything from food to weapons.
The Cyprus bailout shows what happens when politicians becomedesperate. Three months ago, confiscating 60% of bank accounts was socompletely unthinkable that the mere suggestion would have drawncontemptuous laughter. But now it’s a fact. What will thepoliticians in the Obama administration do when they become desperate?It’s impossible to predict, but it’s certainly clear that nothing isoff the table.
Libor banker fraud may be eclipsed by the ISDAfix fraud
I was amused by the beginning of Mike Taibbi’s story in Rolling Stone:
“Conspiracy theorists of the world, believers in thehidden hands of the Rothschilds and the Masons and the Illuminati,we skeptics owe you an apology. You were right. The players may bea little different, but your basic premise is correct: The worldis a rigged game. We found this out in recent months, when aseries of related corruption stories spilled out of the financialsector, suggesting the world’s largest banks may be fixing theprices of, well, just about everything.”
Well, I’m certainly not a conspiracy theorist, nor have I ever blamedthe Rothschilds, Masons or Illuminati, nor have I ever said that theworld was a rigged game. What I HAVE said is that manyGeneration-Xers, united in their hatred of the Boomer generation oftheir parents, got masters degrees in “financial engineering” in the1990s, and then went into the big banks and purposely created tens oftrillions of dollars in fraudulent securities. And I’ve said thatjournalists like Taibbi paint these financial engineers as innocentvictims, and that nobody in the Obama administration, which receiveshuge campaign contributions from the banksters, is willing to processthese criminals. And I’ve related this generational behavior togenerational hatreds in other places and times. (See “The Legacy of World War I and the Holocaust”.)
So now Taibbi is changing his mind and apologizing, as he comes tounderstand what I said years ago: That the same people are still inthe same jobs in the same banks, looking for new ways to defraudpeople. He’s just discovered a new form of fraud, many times largerthan the Libor fraud. The Libor fraud affected possibly tens oftrillions of dollars in loan agreements, as banksters manipulated therates so that they could make as much money as possible. But theIDSAfix is a number computed by a similar process, but it affectsHUNDREDS of trillions of dollars in interest rate swaps. Thebanksters manipulated IDSAfix rates fraudulently for their ownfinancial gain.
The Commodity Futures Trading Commission is investigating ISDAfix ratefraud, but don’t expect the Obama administration to prosecute anyone,no matter how massive the fraud. Campaign contributions from banks arejust too lucrative. Rolling Stone / Mike Taibbi and Bloomberg
Orthodox Jewish woman sues Lancome over makeup failure
Orthodox Jewish women are not permitted to apply makeup on theSabbath, and so they buy “24-hour” makeup and apply it the afternoonbefore, so they’ll look fabulous all day. Rorie Weisberg, an OrthodoxJewish woman from Monsey, New York, is suing L’Oreal, claiming thatthe company’s Lancome foundation Teint Idole Ultra 24H “fadedsignificantly” overnight. Weisberg was testing out the makeup inpreparation for her eldest son’s bar mitzvah in June. Times of Israel