How Judges Are Destroying the World Economy

Judge Loretta A. Preska

Federal Judges will routinely rule in favor of government to the point they just lack the comprehension that their rulings are destroying the world economy. There is no qorse court than that of the Southern District of New York where judges claim the right to even alter the words spoken in count (see UNITED STATES v. ZICHETTELLO , pg 97).  Recently, U.S. District Judge Loretta A. Preska ruled from the bench on Thursday after hearing oral arguments in Manhattan.a court ruling involving Microsoft’s offshore data storage. Her ruling offers an instructive lesson on the long reach of the US government-and what you can do to mitigate this political risk – just do not use any American firm.

Preska agreed with the US government, as always, that Microsoft must turn over its customer data that it holds offshore if requested in a search warrant. Microsoft had refused because the digital content being requested physically was located on servers in Ireland. Microsoft correctly argued that “a US prosecutor cannot obtain a US warrant to search someone’s home located in another country, just as another country’s prosecutor cannot obtain a court order in her home country to conduct a search in the United States.”

The Judge Preska naturally disagreed circumventing territorial jurisdiction completely. She ruled that it’s a matter of where the “control” of that data is being exercised, not where the data is physically located. This ruling is extremely dangerous for it states that effectively any American company operating offshore has no right under any other nation’s laws to circumvent US law. Therefore, the US law applies worldwide. Anyone with have a brain will conclude DO NOT DO BUSINESS with an American firm or its subsidiary.

At the time of the Revolution, you were the property of the king. If you were English and killed someone in Paris, the French were obligated to send you back to your owner (English king) stating you did this or that. Because the US revolted against monarchy, they refused to acknowledge such a king. Hence, territorial jurisdiction was born.

Preska’s ruling means we have returned to being just the property of the state. The US will aggressively claim jurisdiction if the situation in question has even the slightest, vaguest, or most indirect connection to something the US government wants to accomplish. Worse yet, as we’ve seen with the extraterritorial FATCA law, the US is not afraid to impose its own laws upon foreign countries acting in a dictatorial manner. The two greatest exports have become US law and blue jeans.

Lately, the US prosecutors are using just the US dollar to claim jurisdiction. The US government claims that just using the US dollar gives it jurisdiction, even if there were no other connections to the US whatsoever. This pretext supported by pro-government judges is squarely destroying the use of dollars in international trade.

Recently the US government fined (i.e., extorted) over $8 billion from BNP Paribas for doing business with countries it doesn’t like. The transactions were totally legal under EU and French law, but illegal under US law. The US successfully claimed jurisdiction because the transactions were denominated in US dollars-there was no other US connection.

All that can be done now is to abandon US companies. This on top of FATCA is setting the stage for the worst economic decline in modern history.

DEFLATION and yet another reason to Buy Equities

NASDAC-Y 8-22-2014

With the Sovereign Debt Crisis, Bail-Ins, Cycle of War, Global Contraction if Capital Flows & Investment, welcome the age of DEFLATION and yet another reason to BUY equities. The NASDAQ Composite is up 50.9% from the 2007 high as of the close of July. This index still has the capability of reaching 650000 level compared to the 2000 high of 513252.The S&P500 is up only 22.49% for the same period while the Dow Jones Industrials is up 15.9%,

There is no question, where do you put your money? If you cannot trust banks, bonds are risky, cash is being eliminated, FATCA is reducing investing overseas, just ask yourself – what is left? Capital is being driven into equities and the retail public is still not in like it was, liquidity remains low, the talking heads keep saying this is a bubble so sell and buy exactly what? Then the Fed along with the Bank of England are contemplating rate hikes of quarter point changing the trend in interest rates. The central banks will recognize that Europe is caught in the Euro vortex of disintegration and will depart from their policies and pay attention to the asset booms domestically.

There will just be no place to stuff serious money BUT equities and corporate bonds. It becomes a process of elimination.

Bail-In v Bail-Out


The stark difference that is being marketed behind the curtain is that taxpayers should not be burdened with bailing-out banks. Depositors and bond holders should be made to pay as in any other situation. The “bail-in” v taxpayer-funded “bail-out”, is a philosophy that is sweeping the entire political system. But there is a serious problem. Those who deposit money in banks should have FULL disclosure if the bank is involved in proprietary trading even through a subsidiary. Bondholders and shareholders in banks should be aware that their capital is going to be at risk for proprietary trading in banks that ALWAYS, and without exception, blows-up in everyone’s face consistently since Philip Brothers took over Solomon Brothers..

Glass-Steagall Signing-Repeal

HILLARY-TIME-COVER-570The repeal of Glass-Steagall by President Clinton instigated by Goldman Sachs’ Robert Rubin was the worst event in post-Great Depression history. Electing Hillary Clinton will be a huge disaster for she will NEVER admit that this was even a mistake. After all, it was really Hillary who was running the White House back then – not Bill. So there is no possible way Glass-Steagall will be reversed any time soon for the Democrats will not accept responsibility for the error of their ways. Hillary will not admit such a mistake that Bill signed for she was deeply a part of that decision.

It simply looks like we will have to suffer the next great banking collapse that will make the 1930s appear like child’s play. The integration of these derivative products that are far too complex for bankers to even understand is so wide-spread, that the contagion will be devastating and cross borders rapidly. Even the absolute immunity for NY bankers they have paid for dearly will not prevent the disaster that looming on the horizon.

The bail-in contagion is spreading. Canada is adopting it. Australia is now studying the problem and it too recognizes that this will become the default posture for all other governments will move in that direction and if Australia tried to use taxpayer’s money it would be sucked up overseas.
So welcome the bail-in. It is here to stay. Just more DEFLATION and yet another reason to buy equities.

The Second Murder by Police St Louis


 Man Murdered on Video by St Louis Police

This video shows a call about a man who stole a couple donuts. He stays there waiting for the police to show up. They get there are tell him to drop a knife and just kill him with multiple shots. There is no attempt to disarm him and he is not even lunging at the police. They seem to think they have the right kill people outright. This is the attitude of police in Russia and Eastern Europe where people fear the police. They seem to be adopting the same attitude in the United States. Do as they command or they have a right to kill you on the spot.

A 22-year-old man was shot and killed last week in an Ohio Wal-Mart after failing to obey police officers’ orders to put down a bb/pellet rifle he was holding that he was buying. Beavercreek police say officers followed proper protocol when they shot John Crawford III in the store. This is the entire problem. There is no law against these police for firing multiple times and just killing people. There is NEVER an attempt to simply disarm an individual. Someone holding a toy gun in a Wal-Mart just might not understand that the police are too stupid to realize it is a toy.

Police should be disarmed. If they see someone with a gun, call a special swat team. These are police qualified to hand out tickets, that is the extent of their capabilities anymore. They seriously lack good judgment.

The United States is being exposed worldwide for its out-of-control police force and the corruption in the prosecutorial branches that boast of conviction rates that are better than 98%. The presumption of innocence is just a myth. There is no such thing.


SP500 Short-Term v Long-Term

Original Research-F

The primary reason we run our model on everything at each time level is to distinguish short-term moves from long-term. For those who may be relatively new, our models are highly fractal. They were originally developed on intraday trading. It was then observed that the very same patterns which appeared intraday would migrate upward through time.



Short-term we may be at a risk of a correction. However, longer-term, this is not a change in trend. It would be short-lived at best. The definition we have developed to distinguish between a bear market and a bull market is when we start to elect the Monthly Reversals. Daily Reversals are good immediately. Weekly denote a more sustained trend for a few weeks or monthly. But unless you get through the Monthly Level, you have not changed the broader trend.

GCREV-M 8-21-2014

Opinion means absolutely nothing. The numbers are the numbers and the markets will reveal the trend. That is always the key. Here is Monthly Gold. We elected the first two Monthly Bearish but not the next two. We fell and supported on the third reversal. Nevertheless, this confirmed that the 13 year bull market would make a major correction on time no matter how loud the gold promoters claimed I was wrong.

CSPREV-M 8-21-2014

Now here is the Cash S&P500. We have NOT elected a single Monthly Bearish Reversal since the low in 2009. The advantage of our model is clear – it ain’t my OPINION. The numbers are the numbers. This is not a contest to beat my chest that I am smarter than someone else. ABSOLUTELY nobody can forecast the future perfectly every day. It is just not humanly possible. So you do NOT want to bet the house on that one forecast that might be wrong.


This is WHY we need definitive time-tested quantitative models that live and breathe with the markets. Because the majority of people will not accept that principle and will cling to their old fundamental theories like those who refused to believe the world was round rather than flat, there will always be a reservoir of people to trade against. They have to pay their dues before they can graduate to the next level.

SP500 Still on Track to Test 3000 Level

CSP500-M 8-21-2014

We still see the US share market rising sharply. The cash SP500 should reach the 3000 level. We have an important Monthly Bullish Reversal standing at 212342. Only an August closing below 193000 would be short-term bearish.

There remains no other game in town. With the lethal combination of the Sovereign Debt Crisis and the Cycle of War, the only place to park big money will be the private sector and that the smart money will choose equity while the so-called “conservative” will buy corporate debt, especially with corporate cash at record highs.

ECB To Flood Southern Europe with Trillion Euros


The ECB will lend to banks in the next two years up to a trillion euros to revive the real economy in the periphery of the Eurozone all to save the Euro and retain the power in Brussels that is crumbling at the edges. This, massive volume of long-term loans is even far greater than previously known. Europe is in very serious economic trouble. There is still no intent upon consolidating the debt and instead they continue to use band-aids when stitches are serious required.