ANTIESTABLISHMENTARIAN

There can now be little doubt about where all that bail out money is going. Crude oil rockets up over $7 in intra day trading. Dow is up 255 pts. Nearly all commodities are up big including gold and silver. What’s going on?

The yen carry trade is back in business as the G7 successfully forced the yen back above 100to the $. BoJ is merrily turning out dollar loans to hedge funds again which is pouring money back into markets, drawing individuals back into stocks again too. Brokers all report huge increases in Joe Plumber buying (silly fools). And most likely there has been some resumption of US bank lending to hedge funds as well.

Unfortunately, this is a fool’s rally just like occurred in 1930 which went on to see an 89% wipe-out. Hedge funds are back buying up some of the metals and commodities they sold off to pay loans and margin. Virtually nothing has changed in fundamentals except they get worse.

As I predicted, all the government bailouts are showering money at the top of the financial pyramid while the base economy is like a fish out of water. That money has to go somewhere and I figured it would go right back into stock and commodities markets. If there is one thing we know for certain, it is that markets are not rational, so just because the economy is going to hell is no reason not to throw billions at the stock markets. The irrational lust for high risk profit has still not been sated. Apparently it won’t be until the casino gamblers are squashed like bugs.

I will keep saying it: you can’t solve an excessive debt problem with more debt.

Retail investors push trading to record levels

By Deborah Brewster in New York

Published: November 3 2008 23:31 | Last updated: November 3 2008 23:31

US retail investors have been trading stocks and options at record levels in recent months, apparently responding to the financial crisis by taking greater control of their own investments.

The level of trading has helped brokers such as TD Ameritrade, Charles Schwab and Fidelity to lift their brokerage commission revenues, making this one of the few areas where financial services companies are making money.

The derivatives beast is now chewing up the international shipping industry. Yep, they even have a derivatives gambling casino for shipping rates, which has driven down shipping rates by 80% and beginning to bankrupt shipping companies. Reports are coming in from around the world of ports filled with empty ships and cargoes piling up on docks for lack of letters of credit which bankers are refusing to issue. But don’t worry about that, just keep buying stock because everything will be just fine.

• Circuit City to close 155 stores.
• Auto sales are a total disaster, more bailouts coming

• US manufacturing index falls to 26 year low.
• Hotel industry sees vacancy rates climbing to 58%.

• New York City commercial property sales plummet 61%.

• Big media mounts a massive campaign against gold with stories appearing daily. I wonder why they are so terrified of gold? Gold is now biting back, spitting in their eyes.

There are still tens of trillion of bad debts yet to be liquidated, and this won’t be over until they are. All they can succeed in doing is pushing the day of reckoning a few months into the future, but there is little time left.