The Crack Up Boom, Part V

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As we look out over the next six months what we see will beextraordinary. The opportunities for prepared investors have never been brighteras the unfolding volatility will be incredible. Volatility is Opportunity  for the prepared investor and it will arrive in spades. After a short period of corrective activity I believe explosivemoves in almost ALL SECTORS (interest rates, stocks, commodities,natural resources, currencies, and more) lay on the near horizon.

The horrible economics of the US presidential contenders and the gang of 535 will become pricedinto the markets in an increasing manner. Their economic illiteracy and inability to understand what and whocreate wealth pose inconceivable threats. The socialization of the risks to the banking system will continueto unfold; as it must unless a deflationary depression is allowed to unfoldas the G7 money and investment banking system are increasinglyinsolvent. Ben Bernanke and Hank Paulson spoke to congress this past week andtheir message was clear: Inflation be damned, job one is to rescue the financial system! Of course they will, keep in mind that the Federal Reserve isOWNED by the very banks which they are RESCUING! They will have their hands full in doing so.

During that same congressional testimony the corruption and rotwithin the regulatory agencies was on full display as one topregulator placed a BAN on activity which has been ILLEGAL since thegreat depression. A tacit admission that the firms it regulates are and HAVE BEENabove the law. No sooner did the announced ban on NAKED short selling in 17financial and banking firms was given to CONGRESS, it was thenIMMEDIATELY delayed until Monday, July 21 st in order to provide an exit for the CULPRITS of this nefarious,illegal and predatory practice.

The BIGGEST rally in financial and banking stocks in decades wasnothing more than the perpetrators and criminals FLEEING the sceneof their latest CRIMES. Take a look at this chart of Short Interestfrom a recent Wall Street Journal:



As you can see the BIGGEST rallies occurred where the greatestamounts of shorts resided. The average gain was plus 27.5%, shades of penny stocks butridiculous 1 week gains in huge sectors such as banks andfinancials (P.S. when this is finally over in a year or two thesewill be multi- generation buys, like buying Citigroup at $5 dollarsin the early nineties). Banks are normally money printing machines and will become so onceagain in the future&but NOT now.

But what about all the NAKED shorts in the rest of the market? This is nothing more than ORGANIZED crime and you are its victims!