SOS CRB Index & Crude Oil Index

Study the charts carefully. You may benefit from them.

SOS Earnings

Foreclosure on houses in USA = non performing, but can continue to accrue interest, buy the houses are sold back to the bank at a lower price at a small loss and hold it in their books while accruing interest on the house instead of completely write off as no one wants the houses.

From boom bust blog.

MyView

This is creative accounting. This is a way of delaying the full write down, while the bank continue to make "money" and the executives enjoy more bonuses. Principally, this is a legalised Ponzi scheme.

SOS US States will be Underwater soon

In the words of now famous Wall Street analyst Meredith Whitney, the state-to-state shortfalls are "certainly the largest threat to the US economy." (CNBC) Last September, Whitney -- known as "The Prophet of Doom" -- released a 600-page paper with this bold prediction: "States are poised to be the next credit crisis."

Some Capital Hill policymakers even suggested passing a bill that would enable states to declare Chapter Nine bankruptcy. In a January 21 New York Times article, one pro-state bankruptcy official expressed his concerns:

"All of a sudden there's a whole new risk factor. Beyond short-term budget gaps, states have deep structural problems like insolvent pension funds that are diverting money from essential public services like education and healthcare."

MyView

The debt that is issued can be quantified. The capability of repayment is also quantifiable. That is what Meredith Whitney has researched over thousands of pages of documents to make herself being called the "Prophet of Doom predictions". I believe she has put in lots of man hour before she make this comments. Hence, the collapse is predictable. It is a matter of timing, give and take, 6 months, it will eventually "pop".

SOS DJIA vs CRB

1980 to 1999 both DJIA in term CRB index, both increase in nominal value (so is DJIA with Gold)

2000 to 2010 DJIA went down in terms of CRB and Gold. But DJIA on its own were flat.

Some says because it was credit inflation, when the credit bubble is burst in 2007, DJIA falls in terms of CRB and Gold, and all DJIA, CRB and Gold may all fall in nominal value (over a long run) due to credit implosion.

Believe it or not?

SOS WikiChina

China is already home to the world's largest shopping mall in Dongguan, which - apart from a few foreign fast-food chains - has lied 99 per cent empty since it was built in 2005.

He claims that these are New York City high-rises with prices to match, for a population that earns roughly a tenth of the US per capita income. Chanos dismisses the myth of a Chinese migration to cities, and claims that Chinese property has become a market for high-end speculators

An Al Jazeera report from November of last year covers "China's Empty City" in Ordos, Inner Mongolia. The new city in Ordos is a state-sponsored construction project that helps achieve growth targets, but creates little value. The most curious thing about the newly built city is that even though no one lives there and there is no local economy, every apartment complex has been sold out.

The above is the extracts from rediffBusiness.com. I believe some of the areas of concerns are:

• Bank credit growth mainly towards states own SPVs
• Large stimulus which normally leads to resources wrongly allocated
• Central policies, i.e. government driven, may not work in long run
• Bubble in properties is bigger than expected

SOS Printing Money

Fed or central banks cannot really print money, but it can control the reserve requirements of banks, but it has no control over loan given to the private sectors.

1. Fed can do bailouts, i.e. buying toxic assets from banks, so its reserve remain afloat.

2. Fed can buy bonds issued by banks, in turn become its assets and increase its reserve and hence can have more capacity to lend out.

Hence, money can be loan out to customers when reserve is improved. However, if the private sector is over geared, hence, there will not be many takers. Therefore, the access cash will goes back into reserve. Some are use to get higher yield assets, therefore inflating other assets along the line.

SOS Euro Debt Reveiled

An interesting diagram. Italy will the next elephant in the room. Off balance sheet debt can really do wonders.

Some of the following countries may be in trouble, like Canada, Australia, or China. 2011 will be a more interesting year than 2010.

I believe every western countries (including Down Under) has a fair share of off balance sheet debt that is "difficult" to quantified at the moment. On top of that, creative accounting does help to prolong the life of an economy.

MyView

The danger could lie in two areas, one is the total foreign debts over GDP, which could cause a tsunami in the currency trades, and the other, as what Warren Buffet called it the weapon of mass destruction, Derivatives, that conveniently deemed as off balance sheet items.

Japan spends over USD4 trillion stimulus to revive its balance sheet over the last 15 years, the property prices is still around 87% from its peak, and stock market (Nikkei) is about 74% from its peak.

China is not far behind with its IOUs to the state government's SPV, funnily, the banks also owned by the government, how convenient.

I wonder whether there is another Tsunami this or next year. Well, everyone is certain that 2011 is a bullish year. Thanks to the QEs & zero interest and government guarantees.

SOS What is Money

Money

Then: Tangible (gold, silver, money with gold as backing)

Today: Intangible (digital figures in a computer screen)

Then: 1971 gold lifted as official reserve by President Nixon

Today: In name fractional system is use but in reality, it is manipulated, bank holding co can raise money via equity, bond and other commercial paper and injected into its subsidiary bank, which in turn will lend the money out.

As a result of the "loose" regulation, most assets are inflated (all types) via loose debt created (good and bad) and further gear up via DERIVATIVES.

The figures is beyond repair, period.

So, when trillions and trillions of IOUs turn bad, it will evaporate from the MONEY SUPPLY SYSTEM, way more than the Fed can moneytize the financial system. Think about it.

SOS KLSE

11 brokers' forecast on KLSE for 2011 (average)

1703

For reference only, some of the brokers are, MBB, UOB Kay Hian, HDBS, ML, UBS, Alliances, Affin, CIMB, ECM Libra, etc Lowest was 1560 and highest is 1900.

Chartist SN Lock is bullish as well.

MyView

This year have 100% concensus, a BULL, period. Can all of them be right? Even Barron's expert, 100% is bullish about NYSE. Well, it is fruitless to debate their forecasts, but I am more concern of the aftermath. Will a 2008 repeat or can it sustain? Will be like, peak (for a short time) and then follow by a CRASH, like oil price in 2008. So it appears 2011 is HAPPY for all brokers or share market participants all over the world. Then again, can it?

Let us look at the shipping market for a moment, it peak and then tumble down, Bultic Dry Index BDI went up to 11,000 during its peak few years back and today is about 1600. Do we think it will goes back to 11,000 after it reaches its bottom at around 800 points. Let us look further, what happen to the ship owners who bought during the peak? And not able to get the high charter as expected? How long can it nurse itself back to financial health? Most would fail. Now, of course it does not represent the entire world economy, but does have an indirect indication of the health of the "real market" on transportation.

What about the over gearing in developed countries, can it be resolve just by printing money? If there is no adverse financial implications, whenever a country goes into recession, just print, problem solved, period. Surely there are consequences. What about Derivatives, one of the most unregulated industry, and the largest, i.e 10 times the world GDP?

The issue here is HOW to then protect your hard earned money?

SOS Financial Crisis 2008

Is it officially over?

Seems like it, stocks has gone up about 13% in 2010 (NYSE)

Commodities I think went up around 20%

What about US currency?

According to the experts in Barrons.com, 5 out of 5 experts is BULLISH for 2011.

Top 10 funds in USA is bullish in 2011

Wait, unemployments did not resides

Wait, private credit contracted

Wait, number of bank fails increased

Wait, housing hardly move

Wait, what is happening with US Currency

Well,

Oil went up at least 20%

Gold is up 22%

Silver is up 77%

Palm oil up 15%

Hmmm, how do we reconcile the two. First, let us divide the financial market against the real economy. Financial market (gold, silver, stocks, commodities) did well in 2010. Economic data did show a little bit of improvements. So, does that mean the crisis is over?

Did the government did the right thing? What is the consequences? If it is so easy, then, it would be any problem if US is in trouble again, just print its way out. Problem solve, period.

If it is so EASY, why are theare still 9.8% UNEMPLOYMENT?

Why then another QE2?

Maybe the bull run is OVERDUE. For the strong hearts, perhaps try shorting the market with TZA at USD14.80? The last it was discussed this was at USD21.00. Perhaps time to average?

SOS Why is USA broke?

Why is USA broke?

• War (spend about USD700bil), none recorded about another USD700bil


• Rich evading taxation (offshore companies), hence, taxpayers paying for it (out of bailouts)

USA 1 dollar = 1 vote not per citizen

Global Currency War?

• IMF says they are selling 403 tonnes of Gold at market prices in 2010


• IMF takeover Greece & Ireland via money raised from sale of Gold

Tony Blair is paid USD43million by JP Morgan as advisor to Kuwait.

Gordon Brown said in his new book there are trillion toxic assets in banks (another USD20 trillions to go).

UK recovery is weaker than expected according to official data.

ELLEN BROWN on reforming the financial system suggested deficit easing, like have their own bank and lending to itself (like Dahkota). Generate your own credit for your own internal purpose not paying off external debt.

What the QE do to the countries? More debt, private debt collapse is replace by public debt. QE2 allows US to fund deficits at low interest.

MyView

Why is USA broke? Mainly because of derivatives and so is Europe.