America slips

Things are hotting up in America.

A class action suit has just been filed against a clutch of the biggest American banks and the entire MERS system I mentioned yesterday and the best part – the suit uses the Federal racketeering law RICO.  That is the anti  Mafia law.  There is such a delicious justice in that isn’t there?  The banks accused of organized and deliberate fraud and racketeering.  Of knowingly lying to courts about mortgages they were trying to foreclose while knowing they did not have any legal right to do so.  Wonderful.

At the same time, in Manhattan, Germany’s largest solvent state owned bank, Landesbank Baden-Wuerttemberg has filed suit against Goldman Sachs. Claiming fraud in how Goldman represented and sold to the landesbank CDO deal called Davis Square VI. America versus Germany.

The markets took a tumble today in part because Alcoa is rumoured to be about to reveal disappointing earnings.  The worry is that Alcoa is supposed to be one of the mining companies that is ‘can’t help but do well’ because China’s growth will never slow.  But if earnings are low, what does this mean?  Could it be China isn’t going to keep importing endless and ever increasing amounts of everything?

At the same time personal bankruptcies in America, jumped 11% higher from a year ago, despite, it would seem, their recession having officially having ended some months ago.  The rate of personal bankruptcies is accelerating as well, up 4.4% in the last month.  So far this year 1 046 499 Americans have filled for bankruptcy. At this rate 1.6 million Americans will have gone to court to file for bankruptcy.  This doesn’t of course include the ordinary destitute who never get as far as court.

This is the firm basis upon which America’s recovery and growth is being built.

But none of this will matter tomorrow because tomorrow the Fed will open its POMO (Permanent Open Market Operation) for the week.  This is when the Fed buys assets and thereby injects new money into the market.  For a long while now the Fed has been pumping between 10 and 20 billion dollars into the market each week!  Making all talk about QEI or II slightly silly.  The FED has never stopped a massive stimulus programme of printing and pumping. In fact the POMO, plus the froth of expectation of another ‘massive QEII’ is the entire reason for and fuel powering the entire market rise since August. 9% since QEII was first talked about at Jackson Hole. It’s a FED fake. Empty promises and printed green backs full of nothing but debt piled upon debt, inflating a market devoid of consumers and anything of real lasting value.

While market watchers are mesmerized by the  tick, tick tick of electronic numbers going up, I believe America is slipping into a very bad place indeed.  None of these are catastrophe’s. None more than paper cuts on a giant.  But you can bleed to death from enough small cuts. America’s fall will come from within. Too many assaults on its faith in itself.