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News Link • Corruption

Karl Denninger: Another 20 Point Overnight Range

You cannot be an "investor" in this market. Today marks yet another 20 point S&P (and near 200 point DOW) overnight range. This has been going on now for a couple of weeks, and it makes actual investing impossible. You wake up and are up or down 2% or more, and there's absolutely nothing that a prudent investor, acting in the cash markets, can do about it. Oh sure, the days when your account is up make for smiles with your morning coffee. The others feel like you were violated in your sleep - because you were. Trading is ok in a market like this, even if I should change my schedule and become nocturnal. Safety demands that I not hold positions overnight and trade only futures. That kinda sucks. Since I have other obligations than trading, I get to play only during normal hours and thus miss a huge part of these moves. So be it, but my liquidity is mostly sitting on the sidelines too, because this sort of crap makes it impossible to determine even a reliable a short-term direction and thus on days like this you either chase (and take a big risk of loss) or sit it out. Fine by me; just as the government can't force me to start a business with my capital, it also can't force me to expose myself to a 2% buttrape overnight due to it's refusal to rein in the thieves guild. All of this is coming from Europe, and our politicians and so-called "regulators" are explicitly to blame for all of this impact on our markets, because they have utterly refused to force those financial institutions that wish to operate here - and that would be virtually all of them - to comply with reasonable safety and soundness laws in order to hold a US banking license. To put this in perspective the DAX, the German stock index, is down something like 25% this month. It "flash crashed" yesterday with a roughly 4% swing in minutes and is down another 3% as I write this, yet their big banks operate here in the United States with impunity and one of them, Deutsche Bank, is even a primary dealer and privileged to bid on Treasury auctions! Has our government made clear that this crap is not going to be allowed to stand? Nope. Not a damn peep out of them. Not one word out of Ovomit and the Democraps or the Rethuglicans and the so-called "Tea Party", all of whom seem to think that it's no big deal because the markets are only down "a few percent" and thus "there is no crisis." Oh really? Have you looked at some individuals stocks? You know, things like Caterpillar, Cummins, Alcoa and other similar institutions? Many are down 30 or 40% - and some more - from their peaks just a few months ago. That's approaching half of their value lost, and if you hold those stocks, your 401k has been similarly trashed. Have you taken a look at your account lately? Or how about Greece's 2 year bond? It is trading at nearly fifty percent (interest) at present. That's not a coupon payment (nobody borrows at 50% interest) it's an implied recovery on a default the market has now said is not only inevitable but imminent. Yet we continue to pretend this is all "no big deal" and we can "put off our own fiscal consolidation"? That's utter and complete crap.

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