Euro Could Collapse, Says George Soros

News: Soros warns that German economic policy could destroy eurozone

As the credit outlook of southern European high-deficit countries worsened, Soros said Berlin needed to switch its economic policy from deep austerity measures to a more pro-growth agenda. Chancellor Angela Merkel announced plans this month for €80bn (£66bn) in budget cuts.

Soros said: "German policy is becoming a danger for Europe, it could destroy the European project. Right now the Germans are dragging their neighbours into deflation, which threatens a long phase of stagnation. And that leads to nationalism, social unrest and xenophobia. Democracy itself could be at risk."

Ground Zero for the Next Disaster

Robert Kiyosaki wrote in his latest article "Think the Gulf Spill Is Bad? Wait Until the Next Disaster":

While in London, I decided to go to dinner at London’s Canary Wharf, ground zero for the next BP. Only a few years ago, Canary Wharf was one of the centers of the financial universe. Condo prices were sky high, offices were packed, and high-paid bankers filled Canary Wharf with wealth and excitement. Today Canary Wharf seems to be dying. It has lost its vibrancy. Many restaurants and offices were nearly empty and there were few lights to be seen in those once high-priced condos.

Canary Wharf will be the next BP, and its BP stands for Bomb Production. Canary Wharf is much like AIG, a factory for exotic financial products known as derivatives. The problem is that most people do not know what these murky and mysterious products are -- and that includes the people who make or buy them. It’s why Warren Buffett has called derivatives “weapons of mass financial destruction.” That is how powerful they are.

Back in 1966, when I was a student training to be a ship’s officer, my ship carried bombs from California to Vietnam. During World War II, a ship exploded while loading bombs at Port Chicago, California, the port where the bombs were loaded onto ships. The explosion flattened everything for miles. It is said that the ship’s anchor, which weighed tons, was found more than 60 miles away. Derivatives -- financial bombs -- have the same power if they accidently detonate inside a bank’s balance sheet.

World's Rich Got Richer Amid '09 Recession

Reuters has just reported this:

The rich grew richer last year, even as the world endured the worst recession in decades.

A stock market rebound helped the world's ranks of millionaires climb 17 percent to 10 million, while their collective wealth surged 19 percent to $39 trillion, nearly recouping losses from the financial crisis, according to the latest Merrill Lynch-Capgemini world wealth report.

Stock values rose by half, while hedge funds recovered most of their 2008 losses, in a year marked by government stimulus spending and central bank easing.

Read the full article here.

Goldman Sachs Made Me "Special"

From Gary Sutton, Co-fouder of Teledesic

[Quote 1]: Banks of every flavor are in business to make money for themselves. They are not in business to make money for you. If they worried mostly about making money for you, they'd likely go broke, and you'd lose every penny.

[Quote 2]: So am I mad at Goldman? No. I just understand them better. They're out to make a buck. So am I. And they're better at it than I am.

How NOT to Invest: Four Lessons From the Goldman Case

Read the whole article HERE:

For many big financial institutions on Wall Street, we're simply customers to be sold a product.

The case is also a great example of how not to invest. You could go a long way in this life just by observing the behavior of wealthy and powerful investors in Abacus and then doing the opposite.

Never assume the big money is also the smart money.

What are the lessons?
1 Never put too much faith in a bank.
2 Think twice before buying any complicated financial product.
3 Be wary of investing in something you don't understand.
4 And when in doubt...

Message from the DOW’s 1000 point loss: The “ship has hit the sand”

View article:

Life is tough. We’re better off planning on how to manage through harsh and ugly reality than having it hit us over the head as we smile on believing the economies of the world are recovering.

CNBC is on TV claiming a trader error was responsible for the decline. What about the decline earlier this week? What about all the bourses in Europe. What about the futures for Japan?

You people (the media) are bold faced liars. We cannot believe Anything you say.

Lets dump the talking heads at CNBC. This guy David Faber is ridiculous. Look at the carry trade changes today - the yen moved 4% verses the dollar today alone. Was that an error David? Huh David? You @#$%&!. Everyone can see that Greece cannot live up to any accord. They will default. And so will Spain and Portugal. And some major European banks will fail. And so will some U.S. Banks.

I watched the tapes today and I can tell you, absolutely and positively, that fear, not a trader’s error, took down worldwide markets. Tomorrow, many institutions are nervous and they are going to take money off the table.

Now the @#$%&! says that we in the middle of a recovery and expansion story. Lets watch foreclosures and jobs the next six months and see.

All you need to do is look at Greece to understand where we are headed. The populace is ticked off in a major way because now they are being told that they need to live within their means. Not only do they need to live within their means, the “forced austerity” will suck growth out of the economy and turn it negative to a greater degree. What I am trying say here is that the “ship has hit the sand” and the years of reflating the system have come to an end globally whether anyone wants to admit it or not. To raise taxes and cut spending during a recession is a Keynesian no no because the economy will spiral downward in a debt implosion.

THIS is exactly what the Austrian economists have said for years upon years while being laughed at and ridiculed. We will now see exactly who has been correct, the “paper pushers” or the “common sensers”. Did Greece go out on its own and invent deficit spending? Of course not. Have they done anything that anyone else (in particular Britain and the U.S.) did not do? No, in fact, just look at what the West has done for the last 18 months as their “cure” for the GFC and you’ll see Greece with twin turbos and NOS! The entire system has become unstable and anything can happen at anytime.

The “mark up” phase will not take very long, of course this also means that the “wipeout” phase will not take much time either. Millionaires who have lived on interest and dividends for years and have not worked in years (or maybe never did) will end up losing their wealth over what I believe could be as short as a 2 week period. Judging by previous currency collapses such as in Argentina, these privileged individuals may very well end up in dumpsters with their feet pointing skyward looking for food. Laugh all you want, this has happened before but NEVER on a global scale as today.

The new “indicator” of how things are financially will be Gold. People will wake up in the morning and look to the price of Gold as to whether it will be a “good day” or bad. Gold is up $32 right now and it seems a few people on CNBC understand what higher Gold means today. I am rubbing my eyes and trying to clear my ears because THIS is unbelievable. As I said before, “my how times have changed”. Stay alert, locked, loaded and fully stocked.

Got Gold?

My Current View on Stock Markets

Stop speculating and investing in the stock markets now before it's too late. The present market behaviour is mostly driven by insider knowledge and outrageous speculation. You'll never understand how and why until it hit you.

If you have recently made yourself a fortune by supporting the markets, it's time to lock in your profits. Donate part of your winnings to charity wholeheartedly and don't think that you can beat the market twice.

If you have lost some fortune in betting against the markets, it's time to cut your losses and never to engage this kind of activity again. Put your time and efforts into other things that can bring true happiness into your life.

And finally to stock market specialists or professionals, it's time to start thinking about a new job career which is not based on profiteering on other's misfortune and lack of knowledge.

The same applies to the currency markets.

Related articles:
Better Late Than Never: Regulators Charge Two Traders for 2008 Oil Spike

Fed Policy to Refuel Risk Trades?

During the last two months, all asset prices have risen sharply. Are we going to see a continuation in this trend or a turn around?

• Lack of inflation prompts US Fed to guarantee long period of low rates
• Dollar correction near end

Prices on Sept 4:

Dow 9441.27

EUR/USD 1.4293

GBP/USD 1.6389

Prices now (2 months later):

Dow 9802.14 (+360 pts)

EUR/USD 1.4875 (+582 pts)

GBP/USD 1.6555 (+166 pts)

Late US Non-Farm Payrolls Trade Setup

Short EUR/USD at 1.4308 (SL @ 1.4408)

Short GBP/USD at 1.6394 (SL @ 1.6494)

I am hoping to fetch 60 - 80 pips each from these two positions. I will carry them till Monday if necessary. If profitable, I will post my chart and analysis for this type of setup.

Update: I shorted EUR/USD and GBP/USD once more at these levels - 1.4348 and 1.6420 on Monday morning. Exited the two GBP/USD shorts at 1.6340 and 1.6330 late afternoon. Targets as envisaged. Plus I wanted to reduce risk exposure at this point since EUR/USD seemed to be well-supported. EUR/USD could move higher Tuesday morning but I am going to hold. Hope my gamble pays off.

Update 2: Oh well, a gamble lost on the EUR/USD positions as the price exploded higher at the London opening.

Back from Two-Month Long Holiday

A warm greeting to all, just a quick update that I had a really long summer vacation as I prepared for the arrival of my newborn baby. And time flew by really quick and I am now a proud father of a two-month baby boy.

Since I'm back to work, I will be running my intraday daytrading systems again next week. I think I really need to diversify my forex income (away from long-term/ drawdown approach). I always want to grow my account via limited risk trades. I have already done all the hard work fine-tuning my systems in the past and all I need now is effort, discipline and patience.