Gee whiz! - Another week when a whole load of predictions from my Really Scary Granny's crystal ball came true....the trouble is, so many of them are now crystallising that it's hard to keep up! US investment banks have joined the dodo in extinction, Washington Mutual has become the biggest Chapter Eleven bankruptcy in history, Bradford & Bingley is most definitely bust (but the 70 new jobs in the arrears dept will probably be safe enough), JJB Sports won't be far behind.......oh yes, and Ireland is now "officially" in recession. We need things to be "official" before believing them to be true of course. And Gordon is in the USA, saving the world economy....please - a wee request from IW - when it comes to UK voting time, try to remember the name of the grumpy Scot who was the principal architect of Britain's uniquely vulnerable position during his seemingly superb chancellorship - and try the WICS search engine: type "chancellor" therein for a few references to the incompetence of the Broon one. WICS of 6th January 2008 perhaps is worth a wee look. Then decide whether he deserves your vote.......did I ever mention the price he achieved when he sold a shedload of Britain's gold reserves?

Moving on before being accused of political bias, where next for my Really Scary Granny's predictions then? It doesn't need much of a crystal ball to see that Wachovia and National City Corporation will be the next big American high street banks to fold, nor that the proposed "Paulson bailout" for America Inc will go ahead in some form or other - watered down or not. For sure, when George W appears on telly and tells everyone "don't panic!" then we KNOW it's time to do just that. "Better panic right now folks - you might not get the chance again..." In the UK, it's pretty certain - as mentioned above - that Bradford & Bingley will go the way of Northern Wreck and taxpayers will be landed with another £50bn or so of dodgy loans to pay off. Maybe a white knight will ride to the rescue at the last minute? On a black horse? Or maybe not - the black horse has a few other wee problems to deal with meantime. Indigestion can be a real pest.

Other predictions too are pretty straightforward - things are going to become a great deal worse before the bottom of this bear market arrives - as mentioned before, the so -called "credit crunch" only marked the beginning of the unwinding of the massive - and nobody yet knows how massive (not even Granny!) - spider's web of toxic debt that has infiltrated almost every area of the world economy. The most immediately visible effect can be seen in the contraction of credit availability - banks are not lending, it's that simple. Even McDonalds' has seen its lines of credit trimmed back by anxious lenders. The most obvious effect of course can be seen in rising mortgage rates - and when you think about it, how can lenders possibly loosen their criteria/reduce their rates when they themselves are (most of them) in such desperate trouble? So predicting right now, that a whole lot of "non financial" companies will also find themselves in deep water as the year draws to a close, sure ain't rocket science. For example, the UK's JJB Sports will probably not survive the winter, and many other High Street retailers might find that their particular bear market rally ended a few weeks ago. We already know that Rosebys Textiles has gone and it won't be the last, sadly. As for housebuilders......you decide! Any business needing some extra credit facilities right now will find them mighty hard to obtain, that is certain.

The only "real" Scary Granny prediction for today (ie one that has not yet hit the headlines - perhaps) is that many - maybe all - of the big "Private Equity" groups are almost certainly in deep trouble. (Type "private equity" into the search engine - WICS of 11th March 07 might be a place to revisit.) We'll see - but Permira - to name but one such company - (they're the owners of the AA in Britain as well as many other firms worldwide) could well break some of its banking covenants before the year is out. The thing is that almost all of these predators borrowed up to the hilt and beyond to do their deals - and big borrowings are a really, really bad thing to have at the moment!

Anyway, onward to another rebuttal of the populist words of talking heads and politicians (it's not politicians' HEADS that do THEIR talking of course..) The "words" to which I refer, are that all the blame for the current financial mayhem can be laid at the feet of short sellers and greedy City types in general. The latter have been just SO greedy, and the former of course are simply the scum of the earth. Now I have already suggested in WICS and video updates that short sellers are most certainly NOT to blame - indeed to suggest that they are, is to demonstrate (in true "politician" fashion of course) a total ignorance of just about everything connected with markets. And I simply cannot be bothered saying any more than has already been mentioned here about that topic. But "greed" is another matter and bears discussing just a wee bit now, because this fella is getting more than a little tired of listening to the monumentally guilty blaming the slightly less guilty for all the current mess. Whom do I mean by "monumentally guilty"? We'll come to that in a moment - but first, a word about "greed." Greed is bad. Now that truly is a statement of the glaringly obvious. But then, murder is bad. Shouting at people is bad. Lust (allegedly) is bad. Telling lies is bad. Theft is bad. Believing politicians is bad. And so on. In other words, "greed" is pretty much part and parcel of being a human being. And in life generally, greed is fairly well "self regulated", in the same way as are most other human characteristics. But for all that, greed is a perfectly normal condition, and there are always going to be those who suffer (profit?) from it to a greater than "normal" extent. Generally, society sets certain rules of behaviour - "don't steal things or you'll go to prison" etc etc. "Society" understands - through millennia of experience - that rules are needed to control behavioural excesses - otherwise things would simply collapse into anarchy. But guess what? Over the past twenty or so years, especially in the USA and Britain, "rules" to control greed were simply thrown out of the window. And the professionally greedy certainly took full advantage of that fact! It was like saying to a professional car thief "Don't worry, you can nick any motor you want and we'll just turn a blind eye - why, we might even buy it from you!" As mentioned somewhere previously in one of these ramblings, bankers in particular have had centuries of practice in refining ways to rip off their customers. Bankers are probably born, not made, and greed is hard - wired into the very essence of their being - so if there are no rules to control their natural instincts, what is going to happen?

So it's all the fault of greedy bankers then, is it?

On one level, absolutely yes - but knowing what bankers/financiers are like, to blame them now for having indulged in massive excess is like leaving all your stash of Cadbury's Dairy Milk where the kids can get at it with total impunity and then shouting at them when they're sick all over the Chinese rug.....

So, Williams - what the heck are you driving at here? Simple! Blame rests 100% with the regulators for not having regulated......oops - maybe that is also inaccurate. Blame in fact rests with politicians, for their refusal to allow regulators to regulate properly. Hence all the "stable door locking" so frequently referred to in these mutterings. The massive ramping up of unsustainable debt has suited politicians very well indeed - until recently of course. And it is truly sickening to see them now trying to take credit for "solving" the crisis - a crisis caused entirely by THEIR greed (for popularity/re - election/fancy City job in due course etc.) Politicians turned a blind eye (and I'm not just talking about the Broon one) to the credit bubble as it inflated - and indeed they actively encouraged that process by promoting artificially low interest rates. Furthermore, they permitted banks to sit above the law, in allowing them to file accounts that no sane auditor would touch with a sterilised bargepole were the regulators' teeth not filed flat by government interference. Think about it - in the USA, the FBI has opened corporate fraud cases against Freddie Mac, Fannie Mae, Lehman and AIG. It has NOT opened a fraud case against the SEC. (US equivalent of the UK's FSA.) Yet it was the SEC that permitted banks to get into "securitising" mortgage debt (type "toxic waste" into the search engine). It was the SEC that permitted banks to borrow up to FORTY times their "assets" (and allowed all sorts of dodgy stuff to be classed as "assets" in the first place). And it was the SEC that allowed banks to price "assets" themselves, at any "valuation" the banks chose, and then to place said "assets" on the "capital" side of the balance sheet even though there was no known market for such things! Was that a licence to the greedy, to do what the heck they wanted? No answer required! And the real point (it applies equally in the UK) is that government knew perfectly well what was the score. Do you seriously believe that Greenspan, Bernanke, Paulson et al DON'T know? Why is Paulson meantime resisting a $400000 per annum "cap" on bankers' earnings if this bailout thing goes ahead? How much did he earn at Goldman in 2005? ($38m if you didn't know already.) Where might he find a job after he's booted out of the Treasury? But it's the taxpayer who will end up paying - your children's children will STILL be paying while the fat cats' kids grin at them from their state - guaranteed, inflation - proofed $400k a year jobs they inherited.

In a nutshell then, the greedy were allowed totally free rein, in cahoots with politicians who couldn't (and still cannot) see beyond the next favourable sound bite. I guess it was ever thus - it's just that this time it's worse than ever before! And the "slightly less guilty" mentioned somewhere above? They of course are those of the borrowers who knew deep down, that they couldn't actually afford what was being thrown at them - but again, human nature being as it is, they didn't want to "miss out" either. There is nothing wrong with "sensible" borrowing - but there is everything wrong with "nonsensical" borrowing! But Gordon and all his mates had too many people believe that ANY kind of borrowing was just fine. Baa baa...but who is REALLY guilty when you get right down to basics? Surely it is the voters themselves, in permitting the current bunch of total incompetents to get away with it? Somebody once remarked that people get the government they deserve. Let's hope that "next time it will all be different" - but if you really think it WILL be, you may find you're just the merest smidgen divorced from reality....

OK - rant over - whew! On to some even sillier stuff.

From the Olympics Delivery Committee: "We are struggling to secure private funding...." Gosh. Code for "More cost to the taxpayer." Have you seen the pictures of the "Village"? In Glasgow they demolished the tenements years ago.....aaggh.

There are "calls from politicians" for an "International College of Regulators". Words would be inadequate, unless sweary ones, so moving rapidly along, "The Bank of England's folly (in not cutting interest rates) will send us into recession." (Blanchflower - some kind of alleged economist, just a tad behind the curve.)

The FSA last week: "Bradford & Bingley is well capitalised and in no immediate danger...."

The Broon one last week: "Many people failed to price risk properly."

Warren Buffet puts $5bn into Goldman - you decide on his motivation for that one.

An investment arm of Barclays has a major short position in a fund owned 59% by HBOS. And the Lloyds'/HBOS deal ain't completed yet.....

Jet Republic puts in the biggest ever order for Learjets - seemingly the very rich are cutting back and not buying their own planes, but taking fancy taxis instead....it's either brilliant timing or a monumental mistake - there will be no middle ground.

The Council for Mortgage Lenders in the UK gets real and says it would be "futile" to make any more house price predictions. Honesty beginning to creep in then? And talking of honesty (or at least relative honesty given his earlier excesses) the former head of AIG has refused his entitlement to a $22m payoff. Surely not conscience - stricken?

Songbird Estates aren't singing a happy tune any more - another bankruptcy looming?

And the average life of a mobile phone is seemingly less than a year. That is just appalling. People get at IW for liking fast-ish cars - but I'll bet that worldwide, mobile phones contribute a heck of a lot more to the planet's woes than do decent motors! (I bought my mobile only because the family insisted it be carried when on remote skiing/ fishing jaunts. It was purchased as a "pay as you go" thingie in 1999, with €100 of credits. The last time it was checked - back in July or so I think, there was €43 left...)

Finally, the UK's Land Registry is talking about "negative price growth". I love that! How about just admitting to "falling house prices", guys?

Anyway, that's your lot for this weekend - and indeed for good, if you haven't had the good taste to resubscribe! (The access password changes on Wednesday and all those affected have had an email inviting you to resubscribe. Those of you whose entitlement is still current, by now should have received the next password.)

Moving on to today's charts - only two, but there are more in the video updates as well so you're hardly being short - changed! - first we'll take a look at Next Plc, anent comments above about bear market rallies. There's some pretty clear dynamic support and if that is broken....? Then we'll examine a channel breakout and retrace on the Wolseley chart. As regards looking for potential "buy" trades, it is very much a case of waiting and watching for now. The Sort Everything Fairy is almost bound to be fluttering around again as regards the Paulson attempt to put a bailout together for the least deserving of the planet, and "on the sidelines" would not be the worst place to sit at the moment. What a great time to be learning about how markets really operate, eh?

Oh yes, before I forget - well done to all who contacted me re the video clip of McAlpines last week - it was indeed a deliberate thing, just to try to find out who was actually watching! Underhand....moi?

Anyway, all the best until next weekend then - and to anyone not wishing to continue to suffer these ramblings - I understand totally! (And you will be welcome to "come back" any time you wish of course.)

Ian.

PS - here's the content of an email received from "Ernie" - it could well be the way forward.....

If you had purchased £1000 of Northern Rock shares one year ago it would now be worth £4.95.
With HBOS, earlier this week your £1000 would have been worth £16.50.
£1000 invested in XL Leisure would now be worth less than £5.
But if you bought £1000 worth of beer one year ago, drank it all, then took the empty cans to an aluminium re-cycling plant, you would get £214.
So based on the above statistics the best current investment advice is to drink heavily and re-cycle

'IMPORTANT NOTICE: These WICS charts are for EDUCATIONAL PURPOSES ONLY. They represent only MY understanding of what is happening in the market for any particular share, stock, commodity or index. In NO circumstances should they be construed as recommendations to trade. If I choose to trade what I see, that is MY decision. YOU must, in turn, come to YOUR OWN conclusions about what action, if any, YOU might choose to take'.