Beginning to wonder about this “transitory” period Bubbles (aka Alan Greenspan) is rambling on about every week from some distant locale. What might lay at the end of this period and just how the transition’s progressing; how’s the view from Basel Bubbles; is it unobstructed? How’s “housing;” things becoming clear there or are we still in search of more data?

Here are some more damning Credit Bubble Blow Off/Up factoids:

1. “House price increases have outstripped gains in income and rents in recent years,” YOUR words Bubbles my man. A “Wealth Effect?” only if you realize the gain to income by cashing out your “New Economy” Savings, which as a matter of course you have cited as a NET BENEFIT. Perhaps I am confused by your wisdom, but to me this appears to be more of the “Money for Nothing” Ponzi scheme you and your ilk have bestowed upon Americana.

2. Interest rates near historic lows and your advice is to float along with one ARM hanging out the window in oncoming traffic. I suppose one can drive with one ARM, but I prefer to keep both hands a-FIXED to the wheel. Sounds to me as if Bubbles is simply trying to keep his fantasy alive by any means necessary and sparing no expense.

3. Mortgage Back Security (MBS) activity is currently breaking records in terms of issuance this quarter… and hand in hand goes the unregulated OTC “Insurance” used to “offset” all this bubbling insanity… otherwise know as Derivatives (aka WMD’s).

4. YOU warned that the GSEs weren't just unstable, but also posed a "systemic risk" to the economy of the United States. Pardon me while I Fan my Freddie.

What a complete sideshow carnie, Bubbles…. I suppose we get the representation we deserve, but that’s the collective, which remains huddled like toadstools in a dark forest.

I’d certainly like to understand this Derivative thingy and see if I cannot assist others in doing so as well, so please feel free to correct my inaccuracies:

According to the Bank of International Settlements (BIS, aka Global Statists) June release for 2003, the Total Gross amount stood at $293 trillion. Shortly thereafter the July release stated as of March 31^st, 2004 the figure has risen to, get this… $403 trillion. That is $110 trillion Federal Reserve Notes (non-dollars) in 91 calendar days or 37.5%. It’s now August 26, 2004… by way of a little extrapolation I’ve arrived at, sweet ginger brown can this be correct?!?!?

$554 trillion at the close of JUNE.

Now I know these “Financial Weapons of Mass Destruction” will need to square up in September at which time, the projected Gross Value of Leveraged Speculative Excess will have approached… HOLY __! UN____ believable!

$671 TRILLION ______!

Good Lord, the Twin Towers of Derivatives have given birth to quintuplets.

Just a hunch, but I’m guessing the June number’s low due to record asset backing and the need for heightened Financial Terror INSURANCE!

May the FARCE be with you leveraged speculators.

I guess this is where all those formerly disgraced Wall Street broker types end up… in the OTC Derivatives Pyramid. You don’t even need a license to create this garbage, just a vapid imagination.

May be that Noland guy's right and I’m waxing on about hyperinflation when the train wreck's just around the bend up ahead.

And I thought Congress would have intervened in this madness around $200 trillion. I can be really stoopid sometimes. Why on earth would a bunch of PACmen/women give a whit about me; they represent the machine, not the ghosts within.

I noticed the Federal Reserve’s Temporary Open Market Operations were quite large once again. We do, after all, have the Grand Old Party assembling in New York for their pre-November cheerleading festivities. Amerkia must look as shapely as Vicky’s Secret Trim Spa Blonde.

Today’s TOMOs are exorbitant:

Cheese Platter #1

Delivery date: Thursday, August 26, 2004
Maturity date: Friday, August 27, 2004
Type of operation: O/N RP
Operation close time: 09:45 AM
Total Money Value of Operation (in $bil.) = $11

Cheese Platter #2

Delivery date: Thursday, August 26, 2004
Maturity date: Thursday, September 09, 2004
Type of operation: 14-day RP
Operation close time: 08:35 AM
Total Money Value of Operation (in $bil.) = $8

That’s a lot of cheese, $19 billion, being used to implement “monetary policy” and it’s my understanding it’s not removed until the end of the business day on which it expires, so in effect, prior TOMO’s are available and on overlaps until that end of day expiration.

I often wonder what percentage of this could end up on the tip of 990N’s (remember 990?) robotic fingers. It certainly does not require that much given the lack of volume in the E-Mini Futures pit. 3500 contract here, 5000 there… bid, offer, offer, bid… flip flop… pork chop. It’s comical to me at this point many individuals still find this “impossible”, “absurd” and the imaginative machinations of some “Lunatic Gold Bug,” that one 990N even exists.

Again, if your only tool is a hammer… you’re bound to be in search of ONLY nails.

990N squats on this bid to this day, like an overprotective Hen coddling infertile eggs; if you do not look, you certainly will not see.

If you’ve never heard of the Working Group on Capital Markets, it’s best to remain silent and observe as opposed to remove all doubt.

Tomorrow’s Fed Speak will be incredible in it’s nothingness, we have Bubbles himself blathering on from up on the hills of Jackson Hole, Wyoming and I suspect 990’s going to be out in force to ensure there’s a bid under this MESS to instill CONfidence and float HOPE.

Some horrific investment strategies for our futures, one and all.

© 2004 John Mackenzie
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