Twist Flops, Copper Crashes, China to Crumble, Hello Dip!
The Fed, meeting everyone's expectations, announced Operation Twist today. The market went "wait, that's it?" and prompty turned south. In addition to that, the House voted down Obama's latest Porkulus project, leaving the gov't yet again without funding if politicos don't agree to turn the printing presses back on before the 30th.
Gold and silver turned south, and with the inflation faucet stopped up with political indigestion on all fronts, expect 2008 all over again. Copper, incidentally, went with the PMs and the market.
This is important for a very Chinese reason. A lot of Chinese businesses have been using bulk phyzz copper as collateral for short term loans and the like. In fact, they've saved up quite a bit of the stuff. If copper were to say, plummet in value all of a sudden, then all of those Chinese businesses using copper as collateral would be sitting on undercollateralized loans, unable to borrow more, and even after they pay back their currents they won't be able to maintain their operations with the devalued collateral they have left.
Copper just began a steep crash. China is going into the garbage can. Along with the US and Europe. I expect when things tighten up in the next few days we'll probably see Euro-Lehman over the weekend, if not sooner. Prepare accordingly, things are about to get ugly.
