The Bern Problem: Feeling the Bern & Shorting the Bern, by Al Martin

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by Al Martin

The Bern Problem: Feeling the Bern & Shorting the Bern

(4-13-16) Market trader and art impresario Asher Edelman, when asked why he supports Bernie Sanders, said “I would also support Bernie because I think that he understands the plight of the middle classes on down to the poor and understands certain things are solvable. We've dropped, I believe the last time I looked, to about 17th in the world in education, and a similar number in medicine and our life expectancy. I think Sanders understands those issues and would address them. I think when he addresses them, because essentially they are part of what you call 'infrastructure,' the solutions would stimulate the economy. They would bring jobs and gains to the middle class on down to the poor. I think it's pretty clear.”

If it appears that Sanders is going to be the next president, you’d want to be short the equities, short the bonds, both Treasuries and corporates, and artificial shorts in real estate which are easily done. That’s how a lot of wealth was created in the 2008-2009 break. In other words you use derivatives – housing market derivatives – that trade on the Chicago Exchange, which are substitutes for being short real estate.

You would want to be short virtually every asset class except for Gold. You’d want to be short Dollars as well.

Why? Because you know what Sanders’ platform is since he has spelled out enough of his platform, i.e. he wants to re-impose Glass-Steagall which would take all the Big Banks out of the money management trading business. And that would kill the Big Banks because all of their profits now come either from wealth management, brokerage services, or banking fees like credit card and other fees. Therefore if you re-impose Glass-Steagall, you would take away half of the Big Banks’ revenues.

Conventional banking – lending -- isn’t profitable anymore and banks can’t make any money at it because interest rates are below zero. So if you re-impose Glass-Steagall, it would create another banking crisis. If you take away half of the banks’ revenues and the banks can’t sell equities -- more stocks in themselves-- i.e. dilute themselves any further which they really can’t – they’d be knocking on the Fed’s door for bailouts.

And that’s why Glass-Steagall can’t be re-imposed.

That’s one of Bernie’s central themes -- the re-imposition of Glass-Steagall. He would have to get Democratic support in Congress and he’d get it. Just the idea of the re-imposition of Glass-Stiegel is popular with the Unwashed – particularly the young. It was a mistake to lift it, but it was Bill Clinton who started it in 1999.

In fact Clinton said – "Today I am pleased to sign into law S. 900, the Gramm-Leach-Biley Act. This historic legislation will modernize our financial services laws stimulating greater innovation and competition in the financial services industry... the most important legislative changes to the structure of the U.S. financial system since the 1930's. Financial services firms will be authorized to conduct a wide range of financial activities... The act repeals provisions of the Glass-Steagall Act... It grants banks significant new authority to conduct most newly authorized activities..." -- William Clinton, November 12, 2020

Then the Bushonian Regime finished the job since Glass-Steagall wasn’t completely lifted until Bush II A/K/A George Bush Jr. The law separated commercial banking which lent money from investment banking, which allowed banks to trade on its own or, in essence, speculate and game the market.

In 1996 there was a movement by Republicans when Republicans regained control of the Senate to repeal Glass-Steagall and a watered down version was passed. However the full revocation of Glass-Steagall didn’t happen until George Bush II.

So what other policies of Bernie would harm the 82%? The increase he wants in corporate tax is such that it would absolutely kill the oil business. It would kill medicine i.e. Big Pharma and it would kill retail.

Then despite corporations using off-shore tax-havens, as evidenced by the so-called “Panama Papers,” if Bernie were president, he would force corporate repatriation of monies -- which is something the president has the power to do.

The reason there weren’t many American names in the Panamanian documents is because of changes that occurred under Bush II which allowed some of the individual US states like Delaware, Nevada, Wyoming and South Dakota to use disguised LLC’s (Limited Liability Corporations) wherein the names of the corporate officers don’t have to appear. That alone turned the United States into a tax haven. This went even further for LLC protection.

Even the Rothschilds opened a wealth management office in Reno, Nevada, acting as an Edge Act bank. Virtually all foreign banks have an Edge Act banking certificate from the United States. The Edge Act was passed in the early 1980’s during the Reagan Bush Regime. At that time a lot of foreign banks opened up offices in the United States. The whole concept of Edge Act banking is that they can’t accept US deposits because they’re not insured by anybody and they’re not governed by anyone.

And the consequences of the Edge Act? That’s what created the notorious Bank of Credit and Commerce International (BCCI) in the 1980s. BCCI was a complete fraud and was used almost exclusively to launder money. That’s what Edge Act banking is all about – the ability to launder and hide money. It also makes it easier for the government itself to do business covertly. If you remember, all of the CIA offshore operational money suddenly wound up at BCCI. Banks like BCCI and the equally notorious Nugan Hand Bank don’t do any banking at all. They were only facilitators.

To get back to what a Bernie Sanders presidency would do… He would create a capital outflow and a problem that hasn’t been created yet, namely a “dollar scare.” And in a dollar scare, money would flow out of the United States because it’s not people seeking discretion anymore or using LLC’s to hide themselves.

So if you create a liquidity scare in US Dollars and US Treasury Bonds -- all of which he would do -- the very fact that he was elected would create the scare – even before he proposed anything at all.

It would create a liquidity scare because of what Bernie’s platform is. His platform is very anti-business and anti-banking -- as you can get. This guy is after all an admitted socialist. In fact this guy is further to the left than any of the Western European leaders.

In fact Bernie Sanders doesn’t even have to do anything or propose anything. The damage would be done the minute he was elected – just by virtue of who he is and what he represents. This guy would represent a direct threat to “American Capitalism” and “Free Enterprise.”

There are two ways to look at it. If you understand markets, economics and politics, you want to vote for Bernie. You want to se Bernie in -- so you can get short.

Remember the old adage – the Big Money is made on the short side of markets. That’s always been true…

To support Bernie then is a self-serving proposition. You’re already in an environment where the S&P; equities are over-valued. Treasury Bonds continue to rise in value. Gold continues to move higher.

You’re in the right period of time, where the markets are cruisin’ for a bruisin’…

So as they used to say in Chicago --

Vote early - and vote often...

* AL MARTIN is an independent economic-political analyst with 25 years of experience as a trader on NYMEX, CME, CBOT and CFTC. As a former contributor to the Presidential Council of Economic Advisors, Al Martin is considered to be a source of independent analysis for financially sophisticated and market savvy investors.

After working as a broker on Wall Street, Al Martin was involved in the so-called "Iran Contra" Affair as a fundraiser for the Bush Cabal from the covert side of government aka the US Shadow Government.

His memoir, "The Conspirators: Secrets of an Iran Contra Insider," (http://www.almartinraw.com) provides an unprecedented look at the frauds of the Bush Cabal during the Iran Contra era. His weekly column, "Behind the Scenes in the Beltway," is published weekly on Al Martin Raw.com, which also publishes a bimonthly newsletter called "Whistleblower Gazette."

Al Martin's new website "Insider Intelligence" (http://www.insiderintelligence.com) will provide a long term macro-view of world markets and how they are affected by backroom realpolitik.

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