The Spastic Behaviour Of Markets

Posted On: Tuesday, August 26, 2008, 8:30:00 PM EST

The Spastic Behaviour Of Markets

Author: Jim Sinclair

My Dear Extended Family,

Before getting into today’s spastic behavior of markets certain things need to be said:

“The USA as the major power in OTC derivative manufacturing and distribution has the largest credit lockup problem of any economic area in the world.”

The USA and to a lesser degree the rest of the West’s financial system is broken like a shattered eggshell. It will be lied about, covered up, hidden after Fridays and rescued only when you are not looking. It will be labeled anything but the the bailout it is. All of that is a rehash of what got us here in the first place. It does not have even a small chance of fixing the problem for even a short period.
Because the financial system of the USA is broken to a much larger degree than that of any other country on the planet, the US dollar has limited ability to rally regardless of the arguments being blasted out by Financial TV and all who make their living as purveyors of paper so-called assets casting your attention to competitive levels of economic activity away from the real why of all of this.
Geopolitics are deteriorating with the greatest risk of all being Pakistan. That risk is reaching critical levels. The price of Crude can easily be put on a course of plus $100 from whatever level it is trading at when Pakistan blows.
The Fed is jawboning against inflation and practicing verbal intervention by placing an outlook for increased interest rates in the minutes of the last Fed meeting.
The message that would be sent by a September increase in interest rates would trigger the need for more rescues, more loans to develop electric cars and more funding for Freddie and Fanny as starters.
The Case Sheller approach to predict housing market and render valuation for the many forms of credit and mortgage derivatives only looks back with accuracy. Projecting forward is its major weakness.
You must act to defend yourselves by reducing your exposure to financial agents, ignoring the lies and spin being thrown at you until you are covered by six feet of fabricated crap.

The USA has adopted a plan of inflating monetary policy and lying in order to save USA Inc. from bankruptcy. The US dollar is the common share of the USA Inc. If you are a bull on the dollar you have bought the bull blasted at you.

You can always have a bear market rally in the common