Russia Rejects Cyprus Deal – Watch France
The deal with Russia collapsed as sources there claim there were phone calls burning up the wires in that part of the world. They say USA made calls warning Russia not to intervene and others claim this will help Europe. I do not know about the phone calls. But this by no means will create a stronger Europe – it will be the worst.
The lawmakers in Cyprus are now forced to turn back to Europe. Within a matter of hours, the politicians in Cyprus are trying to satisfy Europe. They are now considering proposals to nationalize pension funds, pool state assets and split the country’s second-largest bank in a desperate effort to satisfy exasperated European allies. None of this would have happened had Europe properly designed the Euro with a single national debt from the outset and then each state thereafter who created debt would have been on their own and the debt they created wouldNEVER have been reserve quality. But politicians refuse to do the right thing. They are only concerned with winning elections. The markets may rally as the mainstream media portrays this as some sort of resolution and Europe will now be back to normal. This is a time bomb waiting to explode. The Euro cannot survive without major restructuring. This is not a question of bailout Cyprus – watch what happens in France just around the corner.
Hollande is taking France Downhill Super Fast.
President Francois Hollande is the true champion downhill racer of all time. His polls have collapsed the fastest than anyone to ever head a government Hollande is now taking France downhill so rapidly, it is just astonishing. His latest proposal is to cut the salaries of France’s top private sector bosses. Their salaries will be capped under a bill being tabled by his Socialist government, in the latest high-profile move aimed at punishing the rich. Hollande believes his support has collapsed because he has NOT been hard enough on the rich.
Country-Club Republican Bullshits His Own Party
House Speaker John A. Boehner (R-Ohio) sent President Obama a bill Thursday that averts a government shutdown. The Republicans in the House were trying to force Obama to accept deep cuts and managed to come close to shutting down the government before and appeared ready to do so again.
However, Boehner, the Country Club Republican, has bullshitted the Republican majority telling them that the real strategy should be long-range objectives. When people are their for 2 year terms, that was a real whooper. Boehner managed to get them to blink ahead of schedule without the midnight-hour brinkmanship that has come standard in Congress where people vote without reading bills. Boehner has no intention of actually helping the economy. These people ASSUME that government is the exception to economics and can borrow forever without any consequence. Boehner is about as concerned about the long-term as Barbara Boxer of California.
Boehner let politicians slip past a crucial fiscal deadline without a dramatic confrontation. The bill, which needs to become law by Wednesday, keeps the government open through the end of the fiscal year on Sept. 30. The parties agreed to continue the deep “sequester” cuts, but lawmakers found common cause and created bipartisan coalitions to lessen the effects on their favored programs.
Therefore, the April/May period that we see a rising volatility may this time be caused by international events rather than drama in Washington.
Corruption & the Rule of Law
Sarkozy, former President of France, is now under investigation for ‘abuse of someone in an impaired state’ for receiving donations from L’Oreal heiress. This may be politically motivated for the current socialist/communist president, who should win the Olympic Gold Medal for being the fastest in modern history for taking a nation and indeed Europe downhill with incredible speed, is at historic lows in approval ratings in France. This charging of Sarkozy conveniently removes a rising opponent.
Religious Wars Reemerging?
Religious wars always reappear whenever economic stress emerges. The rise in Christianity really became exponential only with the economic collapse during the their century thanks to Gallienus. India and Pakistan split because of the conflicts between Muslim and Buddhists. We are now starting to see in line with the 2014 turn in the War Cycle that mobs set fire to Muslim homes and mosques in frenzied sectarian rioting in a town in central Myanmar, leaving at least 20 people dead. This was not a small event for it left more than 6,000 homeless. There is a risk that this latest bout of Muslim-Buddhist bloodshed could spread beyond Myanmar and into the entire region.
Gold – Dow – Dollar
The dollar is not sinking and will actually rise on geopolitical concerns as the safe harbor in tempest of conflicting trends. Keep in mind that the majority of people who put themselves out there as analysts only focus domestically. They analyze everything as if all roads lead to Washington. That myopic viewpoint is why they are typically wrong in key events. Most preach the Fed has increased money supply, that is inflationary, buy gold, sell the dollar, Dow and everything else. They ignore the basic concept of what they are preaching against – leverage. When the economy was leveraged just 2:1, an increase in money supply of $3 trillion is still deflationary. Until the money supply exceeds the capital destruction from deleveraging the economy, then deflation rules. This was the criticism of the Fed during the Great Depression – they failed to increase the money supply inproportion to the collapse in leverage. If you ONLY look at one side of the equation, you are going to lose your shirt, pants, and everything else.
Gold will bounce because of the Cyprus event but the Daily Bullish Reversal is 1652. So we have plenty of room for a bounce. Gold has not yet been broken until it elects the 3 Monthly Bearish Reversals. The dollar can rise far beyond what most people suspect largely because the ECB and Germany are doing whatever is possible to destroy the Euro right now. With the German elections, this Cyprus event has Merkel written all over it. She will not bailout Cyprus because of the elections.
The Dow Jones Industrials reached its highest close on the Ides of March (3/15) and the Daily Bearish Reversal lies at 14306 right now. The Weekly level support lies at 13824. At the very least, we need a month-end closing ABOVE 14122 or else we will see a decline back to retest major support at 13010. May should be an important turning point in the Dow. If we extend the rally making new highs then, we will most likely turn down from there perhaps even hard. However, if we back off now, then a May low can be a staging ground for a surge to the upside there after.
The Euro has critical monthly closing support at 12195. Take that out and we then retest the long-term support at 11800 and a monthly closing BELOW that area warns you perhaps better get out of Europe fast.