Profit from the "End Game".

Yesterday, one of the protesters in Greece was carrying a placard with a sign that their Prime Minister, George Papandreou was "Goldman Sach’s employee of the month". Now that’s a good insult. If the Greeks can get it, understand it that they have been screwed tight by the Banksters, why can’t the Americans, Irish and people in similar situation?

I have mentioned before, that it is a question of when not if Greece will default. Nobody can survive with 160% debt to GDP, when the economy is shrinking and you don’t have the control of money in your own hand. One way to default would have been to devalue the old Greek currency, but that option is not available today.

Today the question is, is the end is now or will they be able to kick down the can for some more time. Knowing the politicians, they will try to kick the can to infinity and the effort is on in earnest.

Reuters, reports, Germany now "wants the deadline for a second Greek rescue package to be pushed back to September, reflecting the problems Europe is having hammering out the details, EU and banking sources said on Thursday."

One EU source told Reuters that German Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble favored a delay.

"The argument goes: We don't know what to do, let's buy more time," the source said, adding that Berlin had its customary backing from the likes of the Netherlands, Finland and Slovakia.

A high level German banking source also told Reuters Berlin was targeting September as the point at which all the problems could be solved.

The euro reached 1.4080 by 8.30 AM but is now rallying back above 1.4141. The US Dollar index which was above 76 in early morning has now come down to 75.74. All these are happening in the last one hour, indicating that the end has been pushed down for some other day. Reading between the German official statements, they are saying that their Banks will be ready to absorb the shock of the Greek Default by September. I think Germans are now ready for the default eventuality, they always were and being methodical and systematic people as they are, they have now fixed a date and time for the inevitable.

Meanwhile, jobless claim has come out and it is below expectation. Something to spin around for a higher stock price in the US Markets. Yesterday was a major distribution day (NYSE down Volume: NYSE up Volume >= 9) and the day after a major distribution day is usually a green day. Unless something happens that is beyond the control of the manipulators. And going by the Option Pain results, they will try to push the markets up today and tomorrow.

But the selling is not over yet and will not be over till next week at the earliest. They want to create panic and are almost there. Yesterday Barron’s screamed about “Bull Run” being over. Times had an article about weak economy. NY Times ran something similar. So one last time they want to buy cheap and by September will sell it back high. If we can ignore the talking heads of the televisions and MSM, if we can do just the opposite of the recommendations of the likes of Cramer, we should be OK. It is not difficult to see through their broader plan; the immediate timing may vary a bit. In the end, we might be able to profit from that end game.

Amen.

A Good Shake

I have been watching the live streaming and reading news all day about the 3rd general strike in Greece. Now it is 4 pm my time and it is night out there in Athens. Thousands of people, estimated to be around 40000+ , have blocked the Greek Parliament. Police have fired teargas towards the crowd who are slowly becoming unruly.

We are seeing it in a country which is supposed to be part of the developed world, not a third world country. The anger of the population is so immense that one can almost touch it. The same anger is growing in the youth of Spain, people in Ireland are getting restive. And I wonder, whether we shall see that kind of anger in USA.

Iceland was smart. They gave the middle finger to the European bankers and now they are on the path to recovery. Everywhere else in the developed world, the bankers have passed on all the losses to the population and now it is the bottom 90% who are asked to sacrifice, the social safety net programs are being dismantled or reduced, Public utilities are being sold off to private entities and the politicians are trying to reduce the tax rate on the rich. This is not "Democracy", this is "Oligarchy". And this is also the recipe for disaster. Social unrest will definitely follow in a big way and the capital market will be destroyed. Democracy and capitalism as we know today will not be the same. But that is another day.

As we talk, S&P 500 is sitting just above the 200 DMA. Last time it was below 200 DMA was in Sept 2010. Today S&P 500 fell over 22 points or 1.73%. All the gains of yesterday were given back and some more. This is exactly what I said yesterday, that do not believe in this bull$hit rally.  Where it will go from here, nobody can say. But we can make an educated guess, based on so many other parameters, some fundamental, some technical and some based on the observation of the market manipulation.

I think the market will close green tomorrow as they will try to kill as many puts as possible. Because CBOE equity only put call ratio now reflect more put buying by the retail investors. The short term average of the ratio now stand at 0.76 (from 0.64 last week), which is highest since last summer’s correction.

However the week after Triple witching week is usually bad. Dow has declined 19 of the past 21 years in the week after.  I therefore do not think that a low has been set in. While VIX has touched the top of the Bollinger band, it has not yet jumped through it. I think, sometime in the next 10 days, there will be one night when the Futures, as well as the entire world is in deep red, and if you are long, (purchased the f**king dip) you will find it very hard to sleep and market keeps selling off until you feel pain in the stomach, don’t hit the sell button yet because most likely the bottom is in then.  

From the top of 1370, we should expect a 10% selloff as a normal correction and therefore we have to close well below the March low. I would think the range is somewhere between 1230 to 1240 when we can call a bottom. By then gold, silver, oil and every other risk trade would have got a good shake out. 

And I plan to go long thereafter.  

Risk is on for this Week.

As I have been saying here, the HFT Bots and Big Bank Algos will take SPY in the range of $ 130 - $ 132 by this Friday 17^th June, 2011, the “Risk” trade is on today. It is in perfect sync. with Euro. See the chart below:

The Euro is on the right hand side and S&P 500 is on the left hand. S&P is the red line and Euro are the candle sticks

The futures were up 15 handles before the ordinary investors could participate in the rally. That is how they game the system people. Now the lemmings will follow the pied piper and pile on to the long side. If you remember, nothing, absolutely nothing in the economic indicators changed between yesterday and today, except the bull shit economic report from China. Even that was in line with expectation.

However the selling is not yet over and once the option expiration is behind us, we shall again see renewed selling and a lower low will be visited so that all the stop loss points for the bulls are taken out. The idea is to inflict the maximum pain to maximum people.

The market will rally one last time in summer and I shall keep you informed about a good entry point soon.

So do not give much thought to the rally, one way or other. As a trader, we can take short term profits in up move or down move. But as a long term investor, we better keep our  cash ready to pile on the short side by fall.

Economy and Stock Market.

Is stock market an indicator of the economy or is it a rear view mirror?

There is no clear answer to that. I would think that in an ideal world, where Governments and central Banks do not continually try to influence the stock markets, where manipulation is within a certain limit, stock markets can be regarded as an indicator of the economic health of the country. But not so in today’s situation.

Today the biggest creditor nation of the world is trying to hold on to the proverbial straw to stay afloat. The situation has come to such that the US Government is actively monetizing its debt, although it is illegal in its constitution. They do it in a not so subtle manner. 1^st one arm of the Government sells the Tbonds to the primary dealers and then another arm of the same Government buys them back. The primary dealers who are the powerful banks and the .01% of the population who virtually control the Government, make money in the process.  By the end of June 2011, Fed will hold 16% of the US debt vs. 12% for the Chinese.

The two trillion dollars injected in the system since 2008, have done nothing to kick start the US economy except re-flating the US Stock market and jacking up the price of the commodity. Only the top 10% of the US population own any stocks. (Congratulation to you for being in that top 10%, otherwise you would not have read this blog). The bottom 90% are squeezed dry every day. They are paying more for their food and gas and their purchasing power has gone down as wages have not gone up, dollar has gone down and  today the use of food stamps are at the record high and increasing. Where is the growth they talk about?

Between the top 10%, there is another sub division. The top 0.05% and then the next 9.95%. The objective of the uber top is to take the last drop of money from the rest and leave them in semi slavery. May be that’s what capitalism is all about. That’s how human history was for all these years before western civilization invented democracy about few hundred years back where lofty ideals like equality and fairness were talked about and cherished.

If stock market were to follow the economy , S&P 500 would have been below 500 level. There is huge disconnect between the real economy and the stock market. The classic example is the Oil prices. We know that consumers cannot afford $100 a barrel oil and such high price leads to demand destruction, as consumers, those bottom 90%, live pay check to pay check, have to adjust their spending pattern and cut down on other expenses just to get by. That leads to slower growth. But the manipulators don’t really care. The oil price today is not a factor of demand and supply but of speculation. There is not enough storage in the world to hold all the oil in the oil contracts.

Today the stock market is all smoke and mirror. Very soon that smoke and mirror will crush and it will catch down the real economy.

In the mean time, S&P 500, which is having a sell off of some kind, will now rebound before the option expiration. I think the March 2011 lows will be broken in a dramatic gap down in the morning of Monday or Tuesday to take out all the bull stop loss points. Then there will be sharp turn / reversal to finish the Triple Witching week at 1300 plus level. Just when bulls get some hope, I expect the market to back test the lows again. That is the nature of the beast. It will back test the lows before a bottom is in. if you believe my theory about the top 0.05%, who manipulate and control the market, they will inflict the maximum pain on the rest 9.95%. I also expect a sustained rally in summer because everyone is expecting a crash.

But as I said before, at some point, the smoke and mirror come crashing down and in this case the stock market will catch down with the real economy. I am betting that September 2011 will be that time when the end game starts.

US Banks sitting on another ticking bomb.

There are many reasons for the US Economy is in a mess. Undue risk taking by the US Banks and over-leveraging by the “Too big to Fail” Banks must be counted as a major reason. But the whining of the Banks never stops and the story of greed and unnecessary risk taking goes on.

Frank- Dodd bill did nothing to solve the last crisis and prevent the coming one. The derivatives are the MAD of the world and the switch of destruction is in the hands of few power drunk greedy souls. One of the major component of all the outstanding derivatives in the books of the Banks are the “ Credit Default Swaps”. The Bank of International Settlement s has presented a 146 page report on these credit default swaps with lots of data and charts. http://bis.org/publ/qtrpdf/r_qa1106.pdf

Economist Kash Mansori has done an excellent job of analyzing this BIS report and you can read his report at  http://streetlightblog.blogspot.com/2011/06/betting-on-pigs.html .  

From Kash’ s blog :

“It seems that approximately 30% of total potential exposures to debt from the PIGs are covered by default insurance (see the figures in red). Put another way, if one of the PIGs defaults, creditors who actually hold bonds from that country will absorb about 70% of the losses, while agents (primarily banks and insurance companies) that sold insurance against the possibility of default will have to cover the remaining 30%. That's not a trivial amount.”

There is “striking differences between how European and US creditors would be hit in the case of default by one of the PIGs. If Greece were to default, for example, approximately 94% of the direct losses would fall on European creditors, and only 5% would fall on US creditors. However, US banks and insurance companies would have to make about 56% of the default insurance payouts triggered by such an event, while European agents would make only 43% of those payouts.”

“Finally, it's worth noting that once you account for the substantial payouts that US agents will have to make to European creditors in the case of a default by one of the PIGs, financial institutions in the US have roughly as much to lose from default as those in France and Germany. (See the figures in blue in the table above.) The apparent eagerness of US banks and insurance companies to sell default insurance to European creditors means that they will now have to substantially share in the pain inflicted by a PIG default.”

The implications of the above observation are ominous. The European Banks, who are filled up to their gill with the toxic bonds and loans of the PIGs, know that it is a question of when, not if these countries will go broke. May be this September, 2011, may be another year. So the European Banks are systematically buying insurance to cover these ripe to explode stinks even when the price of the insurance is getting higher everyday. Basically, the Europeans are betting that a debt default will happen sooner rather than later.

Now who are selling them these insurances? Our very own US Banks. Just like AIG, they are looking to collect the upfront insurance payment and putting their head in the sand and hoping that the default will never happen. Talk about greed and risk taking!

When, not if, Greece defaults, these US banks will have to pay substantial amounts to their European counterparts and once again US Taxpayers will be called upon to bail out these too big to fail Banks. Lehman Brothers episode was just a trailer for the real show that is coming up soon.

Mid-Sell Bounce not happing yet

I was expecting a minor up move till 1320-1330 in S&P, which would have given another good entry opportunity for taking a short position. But so far it is not happening yet. Next week is Option Expiration and thereafter I expect the whole month of June to be in a down trend.
I think the major down move has taken place and the downside is limited. May be up to 2220 in Nasdaq Sept. futures. Question is should we dip the toe in the water now.
I plan to go long around beginning of July for a possible summer rally. 

Is a Tech. bubble out there or simple Ponzi schemes ?

Here and there we find mention of some possible tech bubble. LinkedIn IPO is mentioned. Facebook valuation is sighted. Groupon impending IPO is talked about. So we checked the tech index and we searched a lot for the bubble. But we could not see any bubbling valuation in the tech sector. Otherwise, Google would have been over $1000 by now. With its Android it is creating new values in the mobile sector; Apple would have been over $ 500 with its cloud entry and other plans.

Instead what we see is localized Ponzi scheme and greed of making a killing in little known tech names which are yet to prove their profitability. This method has been tried and tested and perfected on some well know MOMO stocks like PCLN or NFLX, where market movers  have relentlessly push the prices and have created a hype in the market about tech companies with little value. In the next downturn which is possibly few months away, retail investors would be holding these fancy tech shares which will not be worth the price of the paper on which they are printed. I may be wrong and I hope I am wrong but fears linger.

Let’s start with LinkedIn. This is basically an employment portal. There are other employment portals which are more profitable than LinkedIn. Only reason they have generated such hype over their share price is because it was a low float IPO. Less than 10% of the shares were offered in the market and if you want to short sell the share of LinkedIn, you will not be able to borrow it anywhere. We would love to purchase puts on LinkedIn but for the reason that the spreads are ridicules. For the share price to maintain at this level, the company will have to perform like a superman. Already from euphoric high of $100, it has reached $ 72 and we would not be surprised to see it trading below its offer price.

Groupon is another example of greed and manipulation. What Groupon does is to get local merchants to try selling at a loss just to get new customers. The revenue Groupon shows in its books are not its revenue anyway because it remits half of the proceeds to the traders after the deal is closed. We had an encounter with Groupon last year. We had a website selling gifts etc and were contacted by Groupon to provide coupons. The margins were thin, in the range of 25% on an average. We calculated that any sell generated through Groupon is actually a loss making proposition. And we decided not to go ahead with Groupon.

The same is true for every trader. Unless they have 200% margin on cost, it is well neigh impossible to make money by selling through Groupon. The traders, who try them, lose money and find that there is no customer loyalty for the new customers that have come in the 1^st place. Most traders cannot remain profitable and yet offer discount over 10%. So Groupon has to find new suckers (new traders willing to commit financial suicide) every day.  However, you cannot fool everybody for all the time and very soon traders will realize the folly of Groupon.

Apart from the faulty business model, Groupon management is withdrawing huge amounts of cash (refer http://www.businessinsider.com/groupon-ipo-insider-selling-2011-6) and creating a class B shares whereby they keep control of the company.

The biggest Ponzi around is that of Facebook. Facebook raised $ 500 from Goldman Sacs so we can imagine who will do the front running of creating all the hype and unloading their initial investment at a huge profit. Facebook has an estimated revenue valuation of $2 Billion but so has Groupon. Pray then why Facebook should have a valuation of $200 billion. The 500 million users are not generating any profit yet and knowing how the social networking ecosystem changes so quickly, who can guarantee that Facebook will be relevant 10 years down the line. Sure they would be able to sell their shares at an astronomical price, if they bring their IPO in the next two months time when investors, big and small is hungry for yield and are willing to take risk.

But once the economic cycle turns down, GDP numbers start printing zero or negative, all risk will be off.

My Stock Market Call and Bill Gross of PIMCO

My proprietary market analysis call can be divided into long term (one to three years), Medium Term (2 months to 12 months) and Short Term.( Week to two months).  

The Long Term forecast is rather easy to make. When combined with the demographics, debt and business cycle and mixed with volatile geopolitical situation developing, we are looking at a rather grim picture. The debt deleverage process has started and balance sheets will contract. Social unrest and xenophobia is increasing and will soon take an epic proportion right here in USA as well as in Europe.  I think the stock markets around the world will see their values reduced in half by the year 2015. However market can remain irrational longer than we can remain solvent. So don’t go and short the market today. There will be many rallies between now and the bottom and each one of them is a trading opportunity.

The Medium Term call is the tough one. Let us not delude ourselves with the thought that the markets are free and fair. May be I am wrong but I think the markets are manipulated to the hilt and it is our job to see that we don’t end up as suckers. As they say “Caveat Emptor”. In the medium term, the market is moved more by liquidity than by fundamentals. And that liquidity is now being provided by the central banks of the world. Banks are able to borrow at 0% and invest risk free in the treasury. So all the money that Fed provides to its primary dealers by POMO end up lowering the treasury yield, pushing the stock prices and as an unintended consequence, push up the commodity prices.  We see lots of churning in the medium term. High volatility will be norm. I expect by Sept 2011, the endgame will start and that trend will continue for a long while.

In the Short Term, things get really interesting. Please remember that I am not a day trader or scalper, so I am less interested in the inter-day movement. It seems that the stock markets in USA are reaching a top.  We are seeing a mini sell off in the beginning of June 2011. We hear talks of front running the end of POMO and people getting off the risk trade, which is equity and commodity. But I do not think that the end of the world in here yet. I am not a TA but let me make some simple suggestions about where S&P going to be in the short term and then we shall evaluate these projects as they come to pass.

From the top of 1370 in April 2011, we saw a close of 1279 yesterday (8^th June 2011). That is a 91 point or 6.7% drop. We see the channels as 5% or 10% not something in between. So I think the drop is not over yet. By end of June S&P should be near about 1230-1235 range. In the mean time option expiration is next week, 17^th June. They have to inflict the maximum pain on the maximum number of people. So they will now want to kill the put buyers and the short sellers. I expect the market to go up from here and show little pop till option expiration. Then the drop begins again till end of June.

Just when everybody and their grandmother is convinced of a crash and the air is heavy with the talks of end of POMO, thereby end of easy liquidity, and have piled on with all sorts of puts and short trade, the market starts to climb again from July onward. The retail trade will be the worst looser, as they will not believe that the market has turned till the S&P has reach or crossed 1400 by August. Then everyone joins the bull bandwagon and the last remaining dollar is put in the stock market.

Beyond August 2011, it becomes the subject of Medium Term projection. In support of my short term project, I have an unlikely witness. Bill Gross of PIMCO. Mr. Gross is one of the smartest fund managers in the world. He thinks that at the end of June, when POMO is closed and QE3 is not immediately announced, the yield in treasury market will go up. The reason treasury yield has come down below 3 is because Fed is monetizing debt and is engaged in a giant Ponzi scheme to keep the interest rate low. Gross thinks the treasury investors are destined "to get cooked like frogs in an increasingly hot pot of water,"

Now here I would like to draw your attention to the correlation between SPX and TNX.( COBE Treasury Yield Index). When TNX goes up, S&P Follows. Sometimes this correlation brakes but that is due to direct intervention of the FED. If as Gross says, the Yield will immediately go up from July, TNX will go up and S&P will follow through to the high. Till such time, the high rate of interest starts biting the growth and it becomes apparent that the 3^rd and 4^th quarter GDP will be zero or negative. By then it will be September. As far as conspiracy theories go, this one is brilliant as it gives the manipulators the chance to make a fool of everyone else.

Coming of the Lost Decades

In search of never ending growth, the present day politicians have adopted Keynesian economics as their life blood and have distorted it completely.  In order for the illusion of growth to continue, countries have added humongous amount of debt and they continue to do so. The following table illustrates the point.

The left hand column represents debt as a percentage of GDP. Japan stands at over 200% while Canada is the best of the G7 Countries at 34%.

 However the information that each country presents in not uniform. For e.g, USA does not include trillions of dollars of unfunded liabilities of its Social Security, pension, Medicaid etc. If all the unfunded liability is included, the Debt to GDP ratio of USA will push north of 90%. Talk of cleaver accounting!

Debt per se is not bad. Some would argue that debt is even necessary to efficient utilization of capital in the society whereby excess capital is used for productive purpose.  However, through centuries of data and observation, it has been found that when debt is above 90% of the GDP of a country, it becomes a drag on growth. In other word, high debt is in effect a negative factor for growth.

Then we have to consider the rate of interest that is being paid on debt. Japan is able to finance most of its debt internally. Japanese population is willing to finance its Government’s gambling habit at one percent rate of interest. But with the aging demographics, that is changing and the ability of the Japanese population to save and finance is diminishing to a point that in the next five to 10 years time, Japan will be forced to borrow money from the world and would have to pay a much higher rate of interest.

Spain, on the other hand has another problem. While its debt is only 63% of its GDP, most of its debt is tied to its banking sector which is virtually broke. The situation in Spain is similar to Ireland, where banks financed the housing bubble and when the bubble finally broke, they were left holding collateral which are worthless. These zombie banks are surviving because politicians have taken over the bad loans and garbage from the private sector and have put them in the hands of the public. So in effect the general population is now holding the smelly can and is being asked to sacrifice in the name of Austerity.

In USA, while the debt monetization by FED has kept the rate of interest at a very low level, there is only one way the rate of interest can go and that is up. It may not happen tomorrow or next month, but when the Bond Vigilantes wake up and find that US debt level is unsustainable, they will demand their pound of flesh.

All these debts are now deleveraging. Even with the best of efforts of the central banks of the world and bending all rules like “Mark to Fantasy”, even with adding billions of new debt to keep the Ponzi  scheme going, countries are unable to pull the cart any further. Growth is non existence and unemployment is high. In USA, officially the unemployment is 9.1% but unofficially over 15%. In Spain it is over 22% and most of the unemployment is among the young. These are causing social friction not seen or heard even a decade ago. Already constant unrest in Greece is pushing its national production to the negative territory. How long before we see the GDP is negative in USA. Already the last quarter GDP has been revised downward and next quarter GDP is being estimated at 1%. Too much leverage has been put into the system which cannot take leverage anymore and create growth to pay for the debt. Headwinds are strong.

According to Carmen Reinhart, a senior fellow at the Peterson Institute for International Economics and a leading expert on financial crises. "If historic norms hold, deleveraging isn't pretty, and it is not a smooth process. We're already four years into this. I don't think the next six years look great."

The bubble economy of USA was fueled by consumers, who used home as ATM. They in turn were deceived by Greenspan and Bernanke into believing the rainbow and unicorn story. The consumers and businesses took too much debt. Total private sector debt was over 280% in 2008. Since then consumers and business have been paying off and reducing their debt but all such reduction is being negated by the Government and public sector.

Today states and municipalities in USA are finding themselves looking at the debt default monster in the face. With reduced revenue, they are scrambling to stay alive. They are looting their rainy day fund, just like Federal Govt. who is drawing from the unfunded pension obligation of their employees to keep the debt issuance going.  With every level of government resorting to sleight of hand to keep the illusion going, this amounts to generational robbery where the next generation will have to pay a heavy price for today’s politicians folly.

The deleveraging process has started and coupled with the demographics shift, we are looking for a long period of depression, may be as soon as the 2^nd half of the year 2011.

The joke that is Euro

The EU bailout package for Greece, Ireland and Portugal is basically a self-serving mechanism, so that the banks in the creditor nations ( In France & Germany) can get paid back. It has less to do with the wellbeing of the average Greek or Irish citizen and everything to do with the politicians and bankers. This is a classic example when profits are privatized and losses and risks are passed on to the public.

Now there is a grab for the public service utilities in those broke countries. The public utility services like transportation or other basic infrastructures  will be put up for sale and eventually  privatized.  While it is not a bad thing per se, ( there is no free lunch) the cost will now be so high that it will inflict more pain to the general population.  With less or no income and higher cost, the lower 90% of the population is being squeezed dry to the point of social unrest. We see it already happening in Greece and in Spain. This trend will only grow in the months to come till a tipping point is reached.

But will this money grab save the Banks in Germany / France / USA ? I very much doubt it. The crisis is/was  1^st created by the politicians who promise and give all sorts of freebies to the public in order to get elected and grab the power. Now the Banks in Europe and their institutions (ECB, IMF, and the EU) are making a bad situation worse. In order to save the Banks which are actually broke and are leveraged 50 times, ECB and EU are taking the bad loans from the hands of the banks and putting it in the hands of the public.

I quote the following from Zerohedge : We estimate that the ECB has exposure to struggling eurozone economies (the so-called PIIGS) of around €444bn – an amount roughly equivalent to the GDP of Finland and Austria combined. Of this, around €190bn is exposure to the Greek state and Greek banks. Should the ECB see the value of its assets fall by just 4.25%, which is no longer a remote risk, its entire capital base would be wiped out."

From Open Europe:
"The ECB’s attempts to paper over the cracks in the eurozone may have temporarily softened the impact of the crisis, but have exacerbated the situation in the long-term. The ECB has dug itself into a hole and now we are seeing that there is no easy way out.”

“Huge risks have been transferred from struggling governments and banks onto the ECB’s books, with taxpayers as the ultimate guarantor. There’s a real risk that these assets will face radical write-downs in future with eurozone governments and banks teetering on the edge of bankruptcy. This amounts to a hidden – and potentially huge – bill to taxpayers to save the euro.”

And here we are wondering how come Euro is at its high vs. USDollar. This is a joke on us and this joke is going to end badly. However, all crises are an opportunity and I see an opportunity to short the Euro and other risk assets by end of August 2011. Technically, Euro can still exceed $1.50 in a short while but I think in a year’s time Euro will be at par or below US Dollar. Not that US Dollar is a paragon of virtue but because Euro at its present state does not have much future.

When the Lords and Barons of Europe (Both new and old types) come back from their summer vacation this August end, they might see their peasants revolting and their castles (banks) are burning down.  We better be ready to roast the marshmallows in that fire.