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I can't conceive. Me and my best pal, Edward attended the Strategic Investment/Intelligence Digest conference in Washington, D.C. (or "Warshington as Saskatchewanians would say). It was held over the October 20th week-end. Some of the discourse was tame, some lame and there was occassional flurries of absolute brilliance. I seldom take notes at these affairs. If I do, I find myself going back on the speakers months later, throwing their own words back in their faces. There is no longer any sport in telling Jim Davidson and company, that their prognostications are dead wrong. They have been wrong since I started subscribing to his publication and reading his and Lord Rees-Moggs's books in 1989. The fact is, James takes Second Prize in the "Spectacularly Wrong for a Decade Contest". First Place goes to Wall Street Underground's Nick Guarino, resoundingly. Davidson et al, have been spectacularly wrong with their Gloom & Doom scenario. At least as far as timing of the big event is concerned. They've been sounding the alarm for over a decade now. In the end, when the Great Reckoning does arrive, they'll be the vindicated visionaries. People have lost money following SI's investment advice, to be sure. But it should have been discretionary funds if everyone was paying attention. Guarino's followers however, have been wiped-out, save for the exceptionally wealthy among them, following his S&P short contract reco's. Lumping S&P short contract, upon short contract, while the market did a slow tango upward toward 9000 over the last ten years certainly sounds dangerous. I shutter to think that I should ever be party to such a colossal loss of wealth as that scenario imply's. Getting back to the SI conference though, I went there thinking that there were to be a number of speakers, all basically preaching the gospel to the converted. Which to some degree was true. However, there were little snippets of info, occassionally thrown out, that made your eye-broughs rise. One such piece was a talk given by Mr Davidson that told us of the crony-izing of the Fed and the markets essentially, by a group called "the plunge protection team (PPT)". Of course, we've all read of this group's existence in the past, in various forums. It's very existence has been acknowledged by the administration. Mr Davidson told us the PPT is using the pensions and tax monies of the U.S. citizenry to finance this massive manipulation. They alert friendly agencies such as large banks, brokerage houses and even other governments as to when they are going to make their move, buying S&P long contracts. The friendly's then move just prior to the PPT and make nice profits when the PPT comes in behind them. The combined volumes make for some nice increases in S&P contract prices. I know this has been true in the past because a friend of mine has tracked "unusual volume" transactions in the S&P futures contracts markets for months, beginning back in September. What this imply's is that there is a group of conspirators which includes, some banks, funds, institutions and government agencies both U.S. and foreign that are making huge money by manipulating the markets and defacto, public confidence. Mr Davidson mantains that this manipulation can't go on forever and when it is finally no longer effective, the gig will be up and the world will crash into a deep depression, liquidation and deflation. When one sits reading the latest issue of Strategic Investment, the commentary sounds very reasonable and logical and above all, acceptable. At least to people who think like I do. And lacking the time or the will to spend many hours pondering what is written, we go on with our evenings or our afternoon, comfortable in our belief that the end is nigh. Spending four solid days immersed in this subject however, gave me a different perspective. For this revelation alone, I am happy to have paid the admission. For I found myself considering "what if it can continue?" I'm not talking about a constant dance toward 10,000 and beyond on the Dow, I mean, what if they can continue to manipulate the markets, keep companies afloat with equity investment so they can tread water waiting for the government funded recoveries to begin taking hold in Asia including China and Japan. I don't know what the next trigger will be that gets comsumers buying and businesses hiring in S.E. Asia, but it will come. As surely as the deep recession in the 1970's here in N. America turned into the greatest prosperity known to the planet, Japan, China and Asia will also turn the corner and start back upward. Is it logical to assume that with only a fraction of the dough they are using to manipulate the N. American markets, they could also manipulate Asian markets upward? Should we look for evidence of manipulation beyond our shores? The Japanese government has admitted that they have "selectively" bought into the Nikkei to support prices. A leaf out of the PPT's handbook? Or perhaps, the PPT is involved directly. With advance warning to funds, banks, etc, the PPT would surely have some big markers to call in. And who would dare not follow when told to? Would you risk being dropped from that phone list? No, as James Davidson say's they don't call him. But they are calling. And the people on the other end do exactly as they are told. I've come to the conclusion that the PPT has cut it's teeth in the U.S. markets. They know the IMF and World Bank can't bail-out the world because that kind of money simply can't be raised. But by manipulating the confidence of the world's consumers, just as the confidence in the markets and the economy has been manipulated in the west, maybe they can just get the ball rolling and then let the consumer take over. If this isn't the ultimate glorification of Ronald Reagan's economic policies, then I'm Roger Clinton. It might not sound like it on the surface but think about it. A tax cut to put more money in the hands of consumers is no different really, from governments putting invisible pension funds and the like into the hands of business, who in turn maintains jobs that would have been lost, paying people to produce goods that because they still have jobs, they can still afford to buy. The net result is still putting money in the hands of people who will spend it, invest it or otherwise. Eventually, the thing starts to feed on itself, presumably and the original investors get their money back without ever knowing they had invested in the first place. Commodity prices will recover. Oil will recover. China will begin to grow again. Japan will rebound. India will grow and the latins will rediscover their prosperity. Tourism will rebound. There is no need for the wheels to fall off this cart so long as the investors in the North American markets stay invested just as their brokers tell them they should. With the massive wealth of the greatest nation on the earth at their disposal, the PPT will ensure that the Dow stays at a relative level. They will make sure that everyone stays in, afraid to miss the next run upward. And the rest will trickle-down, through Japan, into China and Hong Kong, west to India and possibly beyond into even Iran. Maybe "they" are right. Perhaps, it really is different this time. Then of course, there's Y2K. It's true. I can't conceive. | ||||||||||||
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