A Vote for Armageddon

By: Graham_Summers

I wanted to start off this week discussing the political climate that surrounds the markets today.

With the entire financial system on life support from the Federal Government either directly in the form of transfer payments (food stamps, unemployment, etc.) or indirectly via the Federal Reserve’s countless lending windows and back-door schemes to funnel taxpayer money to Wall Street Banks, you simply cannot analyze the market without accounting for Government Intervention.

On that note, I’d like to share the below quote with you:

"I was advised that rejecting [Bernanke's] nomination would cause markets to nose dive, which would hurt retirees and families saving for their future. I am not enthusiastic in my support. " - Senator Barbara Mikulski (D- MD)

Source: http://www.zerohedge.com/article/feds-racket-exposed

The above quote is truly staggering when we consider its implications. In plain terms, here is an adult human being (an elected official or so called “leader,” no less) admitting that she and her ilk operate under the childish belief that Ben Bernanke HAD to be re-elected as Fed Chairman in order to prevent a market nosedive.

The implications of this quote are vast. Among the more serious:

1. Any and all claims of recovery or a new bull market in stocks are lies (if things were fine, why would a new Fed Chairman cause everything to collapse?)
2. The stability of the entire system is contingent on continued funny money and easy access to credit for the Wall Street elite (our stock market is the equivalent of a drug addict needing a new “hit” weekly)
3. Whoever advised Senator Mikulski essentially committed an act of financial terrorism, threatening disaster to get what they wanted. Wall Street and its cronies have played this card several times in the last few years, most notably Hank Paulson and Ben Bernanke’s “give us $700 billion or the whole world will implode” act in 2008 (by the way, didn’t the market collapse DESPITE them getting the $700 billion)?
4. The entire financial and political world have “bet the farm” that Ben Bernanke and the world’s central bankers know what they’re doing.

This last implication is the most serious.

For 30+ years, the financial world has operated on the idea that the Federal Reserve can solve any problem. This not only induced unsavory risk taking and over-leverage, but masked the fact that the Federal Reserve itself was in fact one of if not THE cause of most of the problems created in our financial system.

As is widely know today, the Fed kept interest rates below the real rate of inflation FORCING people to engage in financial speculation in a desperate attempt to maintain their purchasing power/ savings.

However, as everyone knows, what goes on at Wall Street is not about wealth generation but fleecing clients as much as possible. So the Fed’s policies should be viewed as funneling trillions in middle class savings to Wall Street banks. After all, STOCKS are down for over 10 years and Wall Street is back to paying out 2007 level bonuses.

Guess who came out on top from that deal?

And yet, earlier this year, elected officials were told that a vote against Bernanke was a vote for financial Armageddon, a vote to destroy Americans’ savings. Sorry, but I gotta call BS on that one. A vote for Bernanke was a vote AGAINST American savers and those with fiscal common sense. It’s a vote AGAINST the US Dollar, a vote AGAINST common sense, and indeed, a vote AGAINST the US’s best interests.

 This guy supervised two of the biggest financial Crashes in history (one as Alan Greenspan’s right hand man, the other as Fed Chairman himself). He’s literally overseen the destruction of TRILLIONS in household wealth. And under his watch, the only time the Dollar strengthened was when the entire financial system collapses.

Which brings us to today.

Bernanke has gone thrown everything including the kitchen sink at the financial crisis. And as the last few weeks have demonstrated, he’s done nothing but pave the way for an even bigger Crisis. What should have taken down a handful of Wall Street banks is now going to wreck the US currency (what’s happening with the Euro today will eventually happen in the US).

The time to get prepared is now, while the destruction is still largely occurring outside the US.  It’s coming here, it’s only a matter of time.

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Graham Summers: Graham is Senior Market Strategist at OmniSans Research. He is co-editor of Gain, Pains, and Capital, OmniSans Research’s FREE daily e-letter covering the equity, commodity, currency, and real estate markets. 

Graham also writes Private Wealth Advisory, a monthly investment advisory focusing on the most lucrative investment opportunities the financial markets have to offer. Graham understands the big picture from both a macro-economic and capital in/outflow perspective. He translates his understanding into finding trends and undervalued investment opportunities months before the markets catch on: the Private Wealth Advisory portfolio has outperformed the S&P 500 three of the last five years, including a 7% return in 2008 vs. a 37% loss for the S&P 500.

Previously, Graham worked as a Senior Financial Analyst covering global markets for several investment firms in the Mid-Atlantic region. He’s lived and performed research in Europe, Asia, the Middle East, and the United States.

© 2010 Copyright Graham Summers - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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