Technically, it is not a “dumbbell… it would be a barbell. You know a barbell, in Wall Street lingo, is when you structure your trade on the extremes with two opposing investments weighted equally at opposite ends of the spectrum of possibilities. Well, I listened to President Obama at his weigh-in today on the debt ceiling negotiations and I’m no dumbbell. I know he’s set up a classic barbell trade and at one end is the Lyndon Larouche infrastructure play and at the other end is the answer to every problem in America which is to simply dial 911 and yell EMERGENCY!.
If you read Dave’s recent and rapdly growing in popularity post The Fed Is Dead… Long Live The Fed (http://tradewithdave.com/?p=7173), then you know what Dave knows and that is the plan to essentially reinstate Glass-Steagall as part of the reset switch and the wedding ceremony of Occidental nations to be celebrated by the divorce of our currencies. Dave wasn’t really all that surprised when President Obama weighed in with all those suggestions of heavy infrastructure investments and went all Larouche on the audience. You see, that’s what the banks want more than anything. It’s Fannie Mae all over again, it’s just that this time it’s not your house that’s being securitized, it’s the Brooklyn Bridge with a new paint job.
Infrastructure that can be bought and paid for by the sovereign, then when the bankruptcy reset switch is hit, those valuable assets (take BWI Thurgood Marshall Airport for example) can be sold off by both the States and the Feds. What banker in his right mind would want to try and finance something like the Panama Canal or a replacement for NASA’s space shuttle program? That’s way too risky. It’s much more logical to get the sovereign to take on the risk and spend the money to build it and then simply foreclose on the assets and put up a few toll boths along the way and you’re ready to roll.
Dave has to admit that this plan is slightly different from the Larouche PAC, since their plan would be to empower the nation through the ownership of the infrastructure. That doesn’t really benefit Wall Street. Therefore that won’t garner the necessary campaign contributions if you know what I mean.
Let’s take a look at the other end of the Barbell For Dumbell Dummies trade and see how that one gets the country in shape. As Dave explained here (http://tradewithdave.com/?p=7114) the U.S. Treasury in advance of Secretary Geithner’s departure has switched it’s focus away from the Federal Reserve and QE and towards a more mainline version of financial heroin stimulation through the Exchange Stabilization Fund. This is what we’re witnessing in the Eurozone today as contagion spreads. You see the Fed takes care of its own and the Fed’s own is the international banks. While on the other hand, the U. S. Treasury can get a little bit persnickety when it comes to other countries.
So, it’s a win-win plan for the extremes. On the one hand if there’s no debt limit deal, we simply dial 911 and implement the Exchange Stabilization Fund plan and inject the stimulant directly into the U.S. economy bypassing the Fed entirely. On the other hand, if President Obama is able to structure his “grand soluton” that includes new infrastructure for everyone that can be auctioned off at a later date in conjunction with the grand bankruptcy reset switch flipping Larouche by-pass Glass-Steagall II divorced currency plan, we’re as good to go as Monty Hall on Let’s Make A Deal.
Whatever you do, don’t look behind door # 3 because that would prove that 69% of Americans actually understand how the finances of our country work when they answer a survey question and are not only concerned about where their next six pack is coming from.