Bailout Failout


Get ready for the Obama Bounce. The Financial Times called it the “Big Bang” financial clean-up. We call it the Trader Tracks “Big Smash” inducement of more financial wreckage.

Get ready for the Obama Bounce. The Financial Times called it the “Big Bang” financial clean-up. We call it the Trader Tracks “Big Smash” inducement of more financial wreckage.

“My grandfather took the first dollar he ever made and put it in a frame he bought with a dime. Now the frame is worth a dollar and the dollar is worth a dime.” –from a woman investor; New Orleans Conference, November, 1974, from James U. Blanchard’s ‘Golden Insights”

U.S. and foreign central banks and markets are hyped and primed for the biggie announcement mid-month by the Obama administration detailing their quick repairs of our economic and monetary woes created by reckless bankers. The first congressionally approved version was a monster load of porky pig fat containing every stupid spendthrift idea on the planet casting billions in new bread upon the waters of welfare-socialism.

We’ve seen estimates of $243,000 to over $600,000 to be spent by TARP II for each so-called alleged new job. One wag said, “why not just give everybody a $25,000 check as they’ll immediately spend it.” That would produce a jolt all right but not the kind this phony program is supposed to instigate. While the spillover from throwing hundreds of billions in cash at these problems could produce a few new jobs, the majority of these funds will be not only be wasted but will exaggerate government debt throwing more of an imponderable load upon taxpayers.

Those government wunderkind Wall Street whiz kids tell us their latest and greatest welfare program for Sheeple control giving more cash lining pockets of crooked bankers will move credit markets off dead center, while propping failing housing. Further, they opine, the banks will be repaired once and for all. That has to be the largest lie-worst bad joke we’ve ever heard.

We expected a re-run discussion of the middle 1980’s Resolution Trust idea and sure enough it surfaced this week under the new name “Bad Banks Fund.” This sleight of hand by central banker tricksters would gather all of America’s monetary crap into one stinking pile placing it into one bank.

However, we suggest a few MINOR problems could be encountered. How can they place this trash in a bank when they cannot value it? We’ve heard tales of $500 to $750 trillion in derivatives exists out there in bad debt purgatory remaining uncounted. Next cute little minor detail is who funds the bad bank and where does the money come from? Would you work in that bank? Are they kidding?

In the old Resolution Trust, salvageable banks were indiscriminately chosen. Some were summarily killed-off and others were saved. To say politics didn’t enter in those decisions is really a stretch of anyone’s credulity. At that event, results were swift, sure and decisive. Some banks lived and some died. Those that died stomped on the shareholders while depositors were made whole. Those that lived were propped and told to behave. With no lingering Zombie banks and bad loans smothering progress, life went on.

In our current monetary extravaganza nobody knows who owes who and how much. While some bank cash is moving out in loans it’s a mere trickle. We hear the very important commercial paper market has begun to heal with government backing as banks still do not trust nor lend to each other. Unless and until these logjams are broken we are going nowhere but down.

Big Bang Obama Bounce Applauded

Tim Geitner and Larry Summers along with their other minions and lieutenants are thinking they will cure their monster mess in one fell swoop. We say market makers, Sheeple and the suckers will buy this act until reality hits home in the “April-May Sell and Go Away” annual cycle. That crash is slated to be a really nasty smasheroo with our five predicted negative events converging neatly on those dates. For those that missed our previous essay on this subject, they are: Wave two of residential mortgage failures, wave one of commercial mortgage failures, wave two in auto loan failures, wave one in $40 billion of credit card write-offs and finally the worst of all, trillions in destroyed CDS credit default swaps having no deposit or margin money. We plan to sell tickets to this event. It shall be legendary indeed.

The Sheeple know TARP I was a big banker scam to reliquify criminal bankers. This is why Paulson demanded to be held unaccountable from civil and criminal lawsuits before he implemented what we call the largest bank robbery in the world. But wait; the next one could be even larger.

Since the media and suckers caught on, the next one, TARP II, is supposed to calm the troubled herd giving them confidence that the first robbery was really a bank-saver and needed to revitalize dysfunctional credit markets. To call TARP I unpopular is an understatement. At our recent participation in the Vancouver Resources Conference (overflowing with concerned visitors) we heard plenty of anger and nasty snide remarks for New York Wall Streeter’s and the Washington, D.C. gang members who ripped off the herd. In our view, the criticism was justly deserved.

We think its highly unlikely public confidence will be restored as its been reported continually in the media, newer details of bankers buying more jets, using TARP cash to purchase other banks and in one case where a CEO spent lavishly on himself after taking millions from his failed enterprise. Make no mistake; the anger is rising and with the latest gimmicky pile of dung being flung our way to re-right the monetary ship of state, expect more outrage not less. We say this all stinks.

The Detroit Free Press cited details for spending plans in TARP II on 1-31-09. They included $345 million for Agriculture Department computers, $650 million for TV converter boxes, $15 billion for college scholarships, $88 million for a new Public Health Service building, $2.1 billion for a public housing accounts shortfall, $870 million to combat flu, $400 million to stop spread of HIV, and $30 billion for highway construction-months-years from any effects. While some of these are laudable projects most would not create many new jobs and the larger portion lands in spending years far from now. By then, if left alone, the global economy might have righted itself without all this illegal interference and waste.

Rep. David Obey, D-Wisconsin one of the chief designers of this TARP II waste said, “If the house is burning, you’re not going to worry about which hose you grab, so long as you get water on the fire.” We say you do not simply pour water on certain chemical fires either and this one is beyond toxic. This is the kind of stupid thinking that created our troubles in the first place. Can’t this dude spell targeted?

In my state of Michigan we see a microcosm of what we see nationally in waste, misdirected spending and no budget control. Our state is $1.6 billion in the budget hole and by law states have to balance their books even though the federal government does not. We’ve lost a reported 500,000 Michigan jobs since 2000, mostly in manufacturing (official reports) which means we’ve really lost 1,000,000 jobs unofficially.

Our governor continues to lash out at and blame others when state government remains a social welfare dream turned into a nightmare. This lady has no ideas except to tax and spend, and strip small business of any chance of success. Many former-residents are now gone-residents voting with their feet. She still doesn’t get it and said, “The truth is, another round of budget-cutting alone cannot solve the fiscal crisis. In fact, a cuts-only solution would destroy the state’s ability to recover. Too late lady; we in Michigan are toast and the toaster is burning hotter. Give me the budget cutting knife and I could balance those books in a flash. Some smarter people might even engineer a surplus.

Our shorter term solution would be to kill-off the failed banks and use TARP II funds to pay back depositors. The survivors would march onward. Tax cuts always work and have proven themselves to do so many times but the current administration is tossing spendthrift cash to hold power and buy votes. They have no compunction about taking your money and spending as they see fit and, of course, taking a slice for themselves first. Speaker Pelosi was quick to disparage businessmen flying on private jets. Guess who flies in a government one?

In our state, an elderly man froze to death in his apartment because the utility company turned-off his gas for an unpaid bill. While this has been stopped (supposedly) by new rules, you can expect more of the same. Remember the 700 who died from a summer heat wave in Chicago? With our current disturbed weather cycle this heat is coming again this summer in our opinion. Somebody tell Al Gore. The last winter I remember like our current one was many years ago. How about global freezing? This week London had a 20 year record snow and they don’t have any plows.

Our leaders should be working feverishly right now greatly expanding food pantries and emergency housing. They are stupid and always behind the power curve. Expect more of these heartbreaking disasters magnified many times over. The Department of Homeland Insecurity did a marvelous job on Katrina right? Watch for ten or even 100 Katrina disasters as American poor starve, freeze and die, or succumb to summer heat stroke over the next five years of this banker-credit induced mayhem.

Of course after way-late government responses they will proclaim victory and pat themselves on the back for only killing a few thousand instead of a few million. The few million will die in the poorest foreign nations as western nations’ food aid will be either absent or reduced thanks to our credit-monetary upheaval. Government corn-ethanol programs were disasters and helped drive food prices even higher making the poor go hungry at a faster pace.

This TARP II con game was supposed to be “Temporary, Timely, and Targeted.” We say its spending will be cast in bronze, never go away, and is so untimely they cannot tell time. Also, it’s targeted all right; directly to more social-welfare schemes promoting political power. As one wise man said, “the voters are going to get it (what they want and voted for) and get it hard.”’s Alison Vekshin tells us, “The Obama administration is considering government guarantees for home loans modified by their servicers, seeking to stem the record surge of foreclosures that’s hammering U.S. property values. The proposal, which may also have the taxpayer’s share in the cost of reducing mortgage payments, is aimed at shielding lenders from default after they loosen loan terms for struggling borrowers.”

Ms. Vekshin elaborated further that when “banks dump on the market the properties acquired through borrower defaults, they are contributing to the biggest slide in property values since the Great Depression. Meanwhile, Treasury aides have approached Wall Street firms to gauge their appetite for participating in a so-called aggregator bank (Bad Bank) designed to remove toxic assets clogging banks’ balance sheets. They are also asking how a pricing model for the investments should be set up, financial-services industry officials said on condition of anonymity.”

We say they are clueless. We also say no banker with a brain of any kind would buy shares or, engage in any way participation in a Toxic Bank as suggested by government idiots. They are too busy cleaning up their own in-house banker messes to jump into some more.

Survivors and Those Who Win Buy Gold And Silver

We think the secret to getting through this is to hunker down, eliminate debts, keep a low profile, trade in gold and silver shares during this first quarter along with futures, and then adjust in April when stocks sell off. Gold topped out near $850 years ago. This morning, the April, 2009 futures are $908.50. We forecast 80% of the gold upside is still ahead in these markets. Silver is behind gold for now but will catch-up. They never trade like twins most of the time. We think the worst silver could do is $50; but expect much higher prices.

We look forward with anticipation to some great fun in these markets. The announcement of TARP II should kick-off the stock markets in mid-February. If you are not in a position now, hurry-up and get it done. The door is open for all the shares’ markets including our precious metals. Futures traders in gold and silver have been trading this past week finally peaking for profit-taking. The next rally should be under way over the next few days. It seems the new trend is established and our long awaited rallies are underway.

In Trader Tracks, we provide weekly guidance and extra e-mail alerts to report our best new trades and offer suggestions for trade management. Visit our website at for more information on our spectacular futures and commodities trading record.

Whatever you do, make a concerted effort to stay with our trend and hang onto your core holdings of favorite shares, cash, and coins. Physical gold should never be sold or, traded but rather accumulated steadily on a monthly savings plan.

Recent news says you cannot find any coins or, others. We see delays and back-orders but some dealers have goods in hand right now. Go shopping. Should you have difficulty buying physical metals, we suggest placing an order and being patient. Big traders are always ready to buy the dips and normally never sell their gold and silver. You would be amazed how quickly your physical gold and silver will accumulate using this strategy.

Roger Wiegand is Editor of Trader Tracks Newsletter for gold, silver and energy traders. Roger provides recommendations for short and longer term traditional stock shares, futures and commodities trading with specifics for individual trades. See for more information.

Contact Claudio Bassi, at Trader Tracks New York City publishing offices for a free 30-day trial subscription 718-457-1426 Monday through Friday, 9:00am to 5pm or, e-mail Claudio at [email protected]

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