Fed Proves We're in a Bad Spot

The debate over how bad this crisis we have will be, and ultimately where it will end - has been the ongoing debate for several years between myself and Dr. Vlado. As a trader for over a decade, i learned first hand in 1998 how the intervention process works. Our Fed did something today that Greenspan would have never done. But all this is beside the point. Because of the action today, shorts had to cover equities and the dollar is dropping even further.

Which is why I was right. THE CENTRAL BANKS will do everything to stop systematic risk. The question is: Will this be enough? I believe in the short term, the players left will eventually climb out of this mess, but there are still tougher numbers ahead to deal with. Consumer spending and overall GDP growth remain weak. The fed is clearly indicating that NO MATTER what, they will supply dollars. Until one day the dollar is no longer enough, and this "AMERO" takes root.

Our biggest risk in this debacle is Europe. Europeans have alot MORE to possibly loose in this debacle then the US institutions. This is precisely how the US smashed Japan down in the 90's, and now its the EU's turn to deal with our overinflated assets. Don't let the short covering, sigh of relief rally fool you. There is more to come. 2008 should be an interesting year.

I believe this move gives my prediction for 2010-2012's economic outlook certainty. I suggested that this fallout would occur, the central banks and governments would intervene, as they are - and the eventual worldwide economic problems would occur around that time (2011). The Penguin Society rages on, and the hopes of a gilded age seem apparent to most who are getting squeezed in a burn rate that hasn't been seen since the explosion of Dot-Com's.

We should easily be able to make new highs in some indexes in the next few months, the shorts are crushed here.

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