UNO!

you muust force the parasites to stand down

Beautifully put Professor.I am from India and I have maintained for a long time that India is following the US with a 6 months lag.This is the very beginning of recalibration of Economy and markets (Indian as well as global). Things will get far worse and the process will be painful. People’s day to day life is going to be impacted; for some, very severely. However a time of great opportunity for the long term investor. A decade from now Indian economy will emerge far far more stronger.Key Drivers : Global Economy—————————–US in recession : the question now is not if so, but, how bad will it be and will the country go into a depression.Credit markets : in US and Europe have absolutely frozen out. Nobody is ready to lend to anybody. There is a deeps sense of mistrust. Banks, corporates and even government bodies are looking at severe cash crunch. If the liquidity situation does not improve in next month or so, US risks a complete economic shutdown, similar to the great depression of 1929.US financial markets: At best there will be complete restructuring and at worst a complete meltdown. More big names will go down underEurope / Japan : Europe and Japan already in recession like states. Japan Q2 GDP contracted 0.6% QoQ. Europe growth estimates for 2008 at 1.7% and falling.China – in slowdown mode, similar to India.Global impact of US and Eurozone meltdown/ recession : Economies across the globe would be impacted significantly though by differing degrees. Global slowdown certain, global recession likely.Key Drivers : Indian Economy————————-GDP Growth : 5% or lower levels over next two yearsSlowdown across all sectors. As is the case in all downturns , the hardest hit would be the cyclical and commodities sector.IT/ BPO : Margins coming down. Outsourcing will become more difficult as US/ Eurpoe jobless claims mount.Steel / Cement / Mining/ Refining /Commodities: Will be worst hit as the price cycle takes a downturn.Banking : Will be badly hit. Credit offtake falling , margins getting squeezed and defaults rising.Telecom / Pharma / Consumer goods : Not so badly hit. Though growth rates will come down with varying degrees.Capital goods : Badly hit. Corporate will hold off capital goods investments.Infrastructure : Growth will slowdown. Government will be short of cash to fund projects till the economy goes on a recovery path.Auto / 2 Wheeler : 4 Wheeler will be badly impacted. 2 Wheelers less so.Labor prices : Salaries, bonuses and increments would be adversely impacted.Labor market : Layoffs will start in H1-09.Land prices : Prices will come down. Distress sales likely by developers as even the big ones will run out of cash in 18 months. Some will go bankrupt.Interest Rates : Will start coming down. In a couple of years we’ll again see housing interest rates at 6% levels.Stock Market outlook (India)—————————-No change in my assessment. Given a 12K breach, there is now more than 70% chance of a 10K breachOn the upside , my estimates suggest that Sensex likely to go up to 40K (min 25K) by Sept 2013 and 80K (min 45K) by 2016

Why can’t the government become the exchange in these difficult markets? This means I actually buy (or sell) from the Exchange which in turn sells to the buyer on the other side. This used to be the way futures worked in Chicago before electronic insanity trading, and there was never a failure since the time it was started back in the 1850s. In other words every trade is guaranteed by somebody with limitless resources. Why not?

Unfortunately, we have reached a point of no-return. Even though the Fed and the treasury department are belatedly making the right decisions (e.g. acquire bank equity, purchase commercial paper), their hesitancy and confusion has resulted in a complete lack of faith by Wall Street. Bernanke and Paulson have displayed such little confidence and proactiveness throughout this crisis. Professor Roubini’s recommendations above are entirely correct and will probably be agreed upon by Paulson/Bernanke at some point in the future, but we can expect the government to implement these changes only half-heartedly and far too late. The panic selling will continue and the crash will inevitably occur.Instead of trying to stave off a crash that is now beyond our control, we really need to start thinking about how to build a new economic world order. It will certainly be more conservative– much stricter loans and credit limits. A new global regulatory framework will need to be developed for derivatives, insurance, hedge funds, credit cards, etc. Let’s start building the future, since trying to maintain the current system is impossible at this point.

@martinWhat is the panic level over there?Is Benny stockpiling canned food and ammo?

Professor, like I said you are expecting the government to do something right that they haven’t done in decades, that’s not realistic. We’re entering a depression, not a 2 year recession.

a cheery title for an article, perhaps the sub title could read (or the potential buying opportunity of a lifetime).

Paulson borrowing a page from BuffetTreasury likely to get preferred shares in return for capitalBy Greg Robb, MarketWatchIsn’t this ridiculous? Yes, it is. I’m laughing, laughing…The secretary of treasury, with the whole US administration standing by to enlighten him, finally is forced to see the light…wahahahahahahaA greek tragedy of hubris and nemesis right before our eyes…

well now ..let’s see..without denigrating the british bankers..how this plan does any more than remove earnings from banks inthe form of an additional tax..i dont know..why not just give a tax holiday? let;s leave aside the complete lack of integrity and rational thought behind the pixies in ireland providing a bail out in the form of guarantees worth $600 billion (as if ireland could generate that much new revenue in 50 years) what would be a realistic solution. Governments used to run fiscal positions as a stabilisation of economic booms and busts. Of course, this has gone out the window because of the corruption of politicians and their collective dismal quality. How many politicians have even completed economics degrees let alone “felt” them workingin practise. Similarly, since central bank officials and regulators are trained..what use has their training been in preventing the build-up of excess. All care and no responsibility for civil servants is the norm here. Assuming the current batch of regulators has any clue about how to fix problems they have been part and parcel of creating is flawed logic. What we need is social engineering of the financial system so that can not run independently of the society it is supposes to serve at societies expense. Making profits by making people poorer simply is not sustainable during a period of diminishing resources and rising populations. Here’s an idea. It seems to me that, globally, around 60-70 trillion us dollars exists in “unnecessary” transactional debt. Assets for this debt dont exist, there is no balance in thebalance sheet. You can make up your own numbers and since the money has no value, the numbers are irrelevant. Why not come up with a banking solution by looking at what we want the solution to look like. That shouldn’t be too hard. The next step is ownership of the “gap” between what we think should be a solution and where we are now. I will leave aside the retributional aspects that should be brough to bear. That is for finger pointers. The “gap” is already owed by the taxpayers within global economies. It can be be dressed up as a lamb, but it is still mutton. It is a sunk cost. There may be a value, but blood/stone stone/blood. These transactional debts where there is no clear asset on the other side of the ledger, need to be removed from the balance sheets of all companies and parked in a recovery vehicle. The recovery vehicle cannot be staffed by bankers since we know that bankers do not have the ability to run banks with assets backed by transactional debt of this sort. Unfortunately, a new agency is required, along the lines of FEMA. Should help with the employment problem also. I think around 100,000 people will be needed to maintain the assets behind the transactional debts. Now, new institutions that are structured and capitalised according to the social good they provide need to be formed. That is, if an existing institution can demonstrate that is can provide valuable services to 500,000 people, then we know what a fair amount of equity and debt that new company should have on its balance sheet. Or we can work it out. We have the brains. In case you think that this is too radical, then develop some of you own themes, but keep in mind, the market is close to halving in six months. That sounds pretty radical to me. Having a government intervene in deleveraging and in markets, simply prevents and prolongs the agony. Socially re-engineering the rules, the faulty system and the faulty regulators is a much better solution.

Holy sh!t is all I can say. Good luck all. I know I need it. Not sure I will have a job next month..

A recent (last 3 days) meeting of high level IBank / Com. Bank /Hedge Fund Executives which took place in NY, had as a central theme, the excitement over how much money is going to be made in this Correction…..positively giddy. So I must disagree with your characterization of “complete lack of faith by Wallt St.”Whats left of Wall St. (the friends of the guys who have gone down) are now privy to a once in a lifetime opportunity, and they are ecstatic!! Its just a repricing of assets for the Banking Cartel. Who happen to be able to do something about this credit crunch, and yet choose not to….how convenient.

where is Cramer ?

Hey everyone, what’s up? I will make this short… Total default here we come, no recession, no bailout or rescue packages anymore (and frankly any foolish government that thinks it can borrow more money to somehow make the problem better is total foolishness!!! The Government got us into this problem by crowding out investment and crowding out borrowing, aka by borrowing too much… so why do they pretend that borrowing more money, e.g. 700 billion dollars will somehow solve their problems?! Borrowing more will worsen the situation, not make it better!)… who will bail out the Federal Reserve and the US Treasury?? The government is negligent! The FBI should make an investigation, and thus far, the FBI has been malfeasant! Everything’s gonna fail! The US Dollar and all Treasuries (conventional and inflation linked) will be declared worthless! Total default here we come! What are your thoughts?? Clearly, this may not materialize, but we could get a severe rapid depreciation of the US Dollar I think— which simulates a total default. We may have to get invaded by Canada and Mexico and the United Nations to keep the peace! Is the dollar a dead-cat bounce? I can’t even believe the US Dollar is rising lately? And rising after what?! After 8 years of US Dollars depreciating rapidly due to reckless, foolishness and malfeasant federal government deficits, who cares if the dollar is strong as of late?! The dollar has already lost 40 to 50 percent of its value on an exchange rate basis over the past eight years! Shitty times ahead here we come! Any thoughts?? ~ Andrew G. Bernhardt, St. Louis, Missouri

my company lost 60% in the last month- eek. i hope it is an outlier, but i fear my company is just ‘up at bat’ sooner….

WHERE WERE OUR PRESIDENTIAL CANDIDATES’ DEBATE ON THE STOCK MELTDOWN?Both of the “that ones” were too busy throwing mud at each other in a lame controlled manner. They should have been horrified and understandably “on edge” and clearly Presidential in their anxiety for this country’s grim future, seemed they were more concerned about their scripted lines and moot innocuous questions from the NBC media.I’m voting Nader. I may not agree with him on all issues, but at least Dr. Nader’s proposed change is real.

American Monetary Institute.http://www.monetary.orgAmerican Monetary Act.

well – it is no coincidence that i took my last paycheck and booked a few ounces of gold on kitco….i don’t trust anything anymore. for those who have read my posts before – they know i have a pellet stove and stash of stuff. i lived through the LA riots and I need to tell you – I am scared of what could possibly happen….and i am probably better positioned than 95% of the country….plus i put the odds of my job loss at 2:1.

China asking Aust to delay shipments of Iron Ore due to Economic Slowdown (6:50amd Oct 10 – HK)CNBC ASIA LIVE FEED

Question: does a direct capitalization by the goverment of a bank implies that its stock price will near cero, as in the case of fanny, Freddy, AIG, etc. even if Gov buy non-voting shares of the bank ? Thank you.

candy – although it’s not funny anymore:This is a knife fight.http://www.youtube.com/watch?v=mZ8miTErh-o&feature=related

no but the concern is dillution — like GE and Goldman when Buffet moved in

Hooligan, your comments would be more readable if you constrained yourself to paragraphs breaking about every 10 lines. A big blob like this is hard to read.

This is my question. Does a systemic financial meltdown mean we go back to men (and women) selling apples on the street? We need a “New Deal” economic package. Let’s invest in our crumbling infrastructure and green energy. Those things will put people to productive work.

I think that the biggest unsung factor in the current stock market fiasco is the role of past government manipulation of the stock market. The stock market is, or at least should be, a symptomatic mirror of the health of the economy–if the economy is good and profits are high, stocks should raise, and it there are problems in the economy and profits fall, stock prices should fall. But the government has been using manipulated stock prices as a propaganda tool. As a result, stocks were very overpriced and had gotten completely out of synch with reality–so much so that they could no longer be manipulated. So the stock market bubble has busted, and stocks are coming home to roost in their nest of reality; the results have been brutal.I think that all stock market manipulation should be universally prohibited by law with severe penalties, and the penalties should be double for government employees or contractors working under goverment supervision.

right. like the majority will capitultate – unless you bastards numb them enough.I suppose it is not that difficult – happy hunting.ugh, I would dresss you down but….spitting in the wind://www.youtube.com/watch?v=n2XmitTrZSc”Juliette”

Professor Roubini’s recommendations, informed by the lessons of the Great Depression and a sense of great urgency, could perhaps save the capitalist world from what increasingly looks as a free fall into economic and political collapse. Yet it is very unlikely that Western political and economic elites are capable of saving their system. The turnabout is just too sudden for them. Just yesterday they were full of hubris and confidence in the invincibility of Western capitalism. The neoliberal, hard-core reactionary capitalist elites that have steered its suicidal course for the last 25-30 years even psychologically cannot make a sharp turn to the left and nationalize the key banking and industrial sectors (not in a phony way they have done this so far, but in a real, popular democratic way). This is the only solution that can save liberal capitalism from a socialist or, what is much more likely, a fascist revolution.

So, if there is not 150bps coordinated rate cut before market opening tomorrow, markets crash 20%?Did NR write this after today’s close?

This sounds like a flipside version of the irrational exuberance witnessed during the dot com era and the recent housing boom. One must view with skepticism “new era” claims that the future is brighter and less certain than in the past. Similarly, claims of fundamental and permanent negative transformation in the very nature of the economy should be taken with a grain of salt. Emerging markets aren’t going to “disappear,” although they are certainly destined to atrophy for a while, as is virtually every other economy around the world.SWK

Its only 7 minutes into Tokyo trading but at this point banks are Ask only.

The dollar is rising because everything is getting sold, and almost everything is denominated in dollars. That is the beauty and the benefit of being the world’s reserve currency. How much longer will that last?The dollar was a carry trade currency second only to the Yen. While massive leverage has been unwound the Dollar and Yen have been on fire.Once the deleveraging ends the dollar will become the dog once again.I expect to see a race to the bottom around the world – competitive currency devaluations and massive soverign defaults. Global evaporflation. Debtor nations are going to realize that is the only way out. What will the creditors do? It will be every nation for itself.If I were China I would recognize this as a golden opportunity (and possibly a last chance) to move decisively out of the dollar before I get left holding the bag. Will they dump out debt before we default?Any of our geopolitical rivals (Iran, N.K., China, etc.) are probably licking their chops, trying to decide when is the best time to pull the rug out from under the American Empire once and for all. The US is incredibly vulnerable right now, and we have nothing to blame but our own ideology, hubris, and greed (to quote Pat Buchanan).This is a moment of extreme danger.

The only way out of this is to actually nationalise all the banks. Then the blood will start to flow though the economies veins and it might be possible to for businesses to function.A definite fact is that the asset bubbles Nouriel comments on have to burst and many people will lose money, but many healthy businesses will then be able continue / function. Even in 2002 we couldn’t believe that asset prices kept rising! I stayed in the sidelines waiting for the crash and began to question myself am I wrong? People were making money on cheap money and by doing NOTHING.All actions so far don’t address the root problem, that the banks are trying to still maximise wealth and those of their shareholders. Wipe out the shareholders completely for the sake of the whole economy. We can then muddle along. If we don’t do this so many people will face hardship and poverty. When you have a rebalance and sensible practices the Govts can then sell stakes back to the investors.

folks,I’m sensing widespread panic about the credit market meltdown.Even the bears have shifted they attention from “will I short the market tomorrow at the open?” to “will there be a market to short tomorrow at the open?”.I feel I’m mostly prepared, but this escalation of the crisis appears to be a lot uglier than expected and much, much faster than expected.

In a recent interview, Dr. Roubini remarked [paraphrasing here] that the one thing that took him most by surprise was the speed with which everything has begun to fall apart.SWK

You too new here SWK?(J. Ryskamp was used to post here long ago and returned only recently. His mark is all caps)

Please explain.

Got scotch?

Ok, Ok…enough already! SWK

I have about twenty bottles of different single malts. Should last a couple of months at this rate! SWK

In his blog early this morning, Paul Krugman references Dr. Roubini:”Update: Nouriel Roubini has some of the back story on how the TARP came to include provisions that could be used to recapitalize banks. From early on, there was indeed a feverish push by a number of economists, myself included, to get some channel for public capital injections in return for equity stakes into the plan. I reluctantly called for passage of the final bill because it did include such a channel, although it didn’t require that Paulson use it. There were a lot of accusations against those of us who took that position — claims that we were caving in, or trying to have it both ways. But the equity issue was crucial — and may now be the thing that turns a useless plan into something that really does a lot of good.”SWK

OK, here is it:The two words capitalism and capital letter, although etymologically being derived from the same word, it does not mean they have something in common.Hint: In order to decapitalize, please press the “caps lock” key at the left side of your keyboard. The “A” LED should be off.

The Nikkei is down nearly 11% in the first few minutes of trading! Ahhhhh!SWK

S&P FUTURES JUST HIT AS LOW AS 881…GOLD UP 43.20 PER OUNCE

Hang in there, Yankee. Adaptability will keep you going.Let’s all keep talking. This is so cliche, but none of us is as strong as all of us. There are great minds here and this is an ideal place to put forth ideas and thoughts. We are a community. We can help one another.

This looks like this is the game over.Hope all of you are prepared.Good luck to you all.

Mr. Roubini,YOu say:”The crisis was caused by the largest leveraged asset bubble and credit bubble in the history of humanity were excessive leveraging and bubbles were not limited to housing in the US ………..”Baloney, Mr. Professor — WHAT YOU ARE REFERRING TO IS JUST THE LAST CHERRY ON THE CAKE SYMPTOM OF THE CRISIS, NOT THE CAUSE OF THE CRISIS…..You don’t bake a cake by buyiing a box of cherries, Mr. Roubini — you left out of your aforementioned analysis, the other ingredients… WHY?????Now if you went a little further back to Jekyll Island, and the creation of the Federal Reserve, then you may be making a little bit of a headstart into being what all these zombie sheeple think you are — most eminent economist in the world… ha, ha.YOu haven’t even mentioned Rep. McFadden, or Ron Paul (now that’s one hell of a g8***amn economist that would make one hell of a Secretary of the Treasury!!)And then if you really want to go deeper to the real issues of this crisis, you may wish to address the issues of USURY, GREED, CORRUPTION (a result of 99% of rat sheeple being led by the fiat currency and fractional banking, compound interest slave and cannon fodder breeding Pide Piper’s to the Disaster Capitalism ‘Buy when there is blood in the streets’ Rothschild, New York $lavery Exchange Slaughterhouse…If Osama Bin Laden had any brains, he should be calling on all Muslims to abide by the Quran and return to the Gold Dinar and Silver Dirhan…; to bring these fractional banking and fiat currency Tyrranny Towers crashing down, along with their $lavery Cannon Fodder Slaughterhouse Exchanges..JAGCorpSwan

THE HIGH PRICE OF THE DOLLAR IS THE RESULT OF MASS LIQUIDATION OF $$$ DENOMINATED PAPER. IT WILL VERY SOON COLLAPSE.

Is that what happened to your brain?Just kiddin.

Fed should just print money and give them to people to spend.

I have a solution that I’m sure would work. Its called the reverse interest rate: The Fed pays us to borrow. That’d get the credit flowing right quick.

JAGCorpSwan, while not quite eloquent, really hit the nail on the head. Everyone wants to run around pointing the finger at each other, when really they should ALL be pointing at the Fed.Let’s get real. This isn’t a free market. A truly free market does need some (read: some) regulation, such as the FDIC and SEC. However, a free market does NOT involve a central bank that unconstitutionally sets interest rates! I suggest everyone read up on Article 1, Section 8 of the Constitution, as well as Jefferson’s and Hamilton’s debates about central banks, to gain some real insight into how lousy the concept of the Fed really is.Keep in mind that JP Morgan Jr, along with 11 other banking families, strongarmed (successfully) some unwise Democrats in 1913 to create the Fed. All because of their “panic” in 1907. And, sometime after Woodrow Wilson signed it into law (i.e. the Federal Reserve Act), he commented about how he had “unwittingly” placed our economy at the feet of credit. Not exactly a successful policy, to base an economy on credit more than anything else (~68% of our “growth” is credit, last I checked).I’d suggest everyone — liberal, conservative, Democrat, Republican, Independent — do their own research about who is to blame for starting all this mess. A nice data flow diagram would look something like Bankers -> Government -> Bankers -> Government…and so on and so forth, ad infinitum. The bankers cry for bigger government and socialism when they lose their rears; they scare the Legislative and Executive branches; buy the Legislative and Executive Branches via campaign financing and lobbying; and get bailed out by the very same government when all goes awry.Now naysayers will point to the fact that we have had panics before the Fed. The problem in the Free Banking Era was that we didn’t have good regulation like the FDIC and the SEC. Banks were generally more conservative than now, because they couldn’t rely on the Fed to bail them out, set rates, etc. However, on occasion we did have bank runs and bad lending practices. For instance, there was a panic back in the 1800s where almost 50% of banks went under due to speculation and easy lending. The answer to such problems is GOOD regulation, not over-regulation. The Fed was like dropping a nuke on an anthill that was leaking plutonium. It only exacerbates the problem and lines the pockets of its member banks. Think of it this way: our country is basically in the hands of a few dozen bankers. Now do you want to trust these guys? The same ones that are setting interest rates too low to bail out their own bubbles; lending to people that shouldn’t have the loan in the first place; and buying politicians to allow the process to continue?Even proponents of a central bank, such as Alexander Hamilton, believed that having one provides both efficiency and convenience. Look around you: When is the last time any of these corporate behemoths were convenient for you, the depositor? When have they been efficient? Even poor Hamilton would have shuddered at the notion that the Executive Branch, via appointments to the Treasury and Fed, would have control over the creation AND regulation of our money.Please folks, don’t take my word for it. Look to our Founding Fathers for more insight. Do NOT listen to lawyers and businessmen, who are apologists for their own kind; they have the most to lose in the long run. Also, research the constitutionality of the Fed. If you read the Constitution and our Founding Fathers’ debates, you will reach the same conclusions I have.

but eventually you need to come to a port

safe harbour?

a liquid asset

Clearly so! SWK

Central bankers the government and well all bankers hate gold it threatens thier very existence they will stop at nothing to keep it down.

Uh, I seem to recall that many of the Founding Fathers WERE lawyers and businessmen…The Federal Reserve Act of 1913, duly enacted by Congress and signed by the President, is constitutional. Why, exactly, do you believe it is not so?SWK

Not enough troops. Keep in mind that a battalion is about 800, a brigade is 3-4 battalions, and a division is 2-4 brigades.To really do marshal law throughout the country there needs to be way, way more troops. The US doesn’t have enough troops to adequately handle Iraq and Afghanistan, so any attempt at deploying them in the US can only be in specific locations.

I see Berlusconi has dusted off Mussolini’s 1929 rescue plan.

Communism?

interesting observation

How long can the equity market be sustained?1) DOW: 8500 divided by 500 per day = 17 days2) DOW: 8500 divided by 200 per day = 43 daysThe way it is going now, at most it will take about one month. Mr. Paulson and Mr. Bernanke, would you please do something (just something, not necessarily a right thing) right a way as you have done with $700 billion bailout before presidentiaql election?

I agree with you 100%.SWK

kilgores (2008-10-09 20:57:00)You are certainly entitled to your opinion on the alleged legality of the Fed. Res., signing a bill at 23:45 hrs in the middle of the night, over the Christmast holidays in 1914.. with a few Representatives and a corrupt gutless coward puppet pharisee President.:Should you however wish to make any further enquiries, you could study any of the following, and then consider if your aforementioned conclusion remains the same; and if so, based upon what corrupt conflict of interest, would you prefer to maintain the pharisee system…. you prefer being a hateful procreation slave and cannon fodder cannibal, feasting on death and destruction? That is what you are here for in this life? That is the aim of your purpose as a ‘human being’?THINK ABOUT IT!!Rep. L McFadden’s Formal Charges & Petition: Fed. Reserve Brd. of Gov’s; Compt’ of Currency & Sec. of US Treasury: Conspiracy, Fraud, & TreasonAmerica: Freedom to Fascism, by Aaron RussoPopulation, Arithmetic and Energy 101The Money Masters: How International Bankers Gained Control of the Federal ReserveThe Secrets of the Federal Reserve, by Eustice MullinsThe Gold Dinar and Silver Durham: Islam & The Future of Moneyamong many others…Alternatively, if your pharisee investment banking preference is to send others off to war; may I suggest you put your money where your mouth is, and sign up at your local Marine Corps Military recruitment station; tell them General George Peaches Patton’s ‘Honey’ sent you.

Agreed, nationalization of the banks is needed now. Anyone who doubts your concerns about fascism inthe U.S. needs to re-read It Can’t Happen Here by Sinclair Lewis.SWK

God, I hope you’re not a JAG lawyer…SWK

It may be prudent to close the banks and the markets for an extended period starting now. This is not an elegant choice, but who are we kidding now. It’s not like we can hide the problem under a rock any longer. The reality is that we are not at a low or a bottom. There is much grief to come. Let’s try to keep from throwing the baby out with the bath water.The first thing is to allow something like ATM access to accounts during this period. This would provide limited source of funds for sustenance. Decree that ALL bills will currently due or come due before the end of the year will be granted a 60 day grace period on top of the due date. Take this timeout to render the commercial banks back into a Glass-Stengel arrangement and purge them of the crap. Put the crap into a new entity for the time being. Combine the banks such that each surviving entity is strong in it’s own right and that each entity comprises less than 1% of all the assets in the commercial sector. Set a ceiling of 2% that limits the bank’s future growth. Gradually bring the banks back online in a 1-2 week time frame.Next cull the corporations to those that can function and survive and slowly allow their shares to trade. Limit Corporations to 0.5% of GDP in terms of gross profit with a 1% ceiling for future growth. Allow investors/entrepreneurs to bid on the assets of the culled companies.There are gapping holes in this short layout that would need to be fleshed out, but the end ideal is to separate out the crap and get the real economy back on its feet in a sound manner. The value of the crap can then be worked out by the CRAP Commission at a more leisurely pace.Please be kind this is back of the envelope stuff.

Here! Here! Kilgores!

Let’s invest WHAT? We’re flat broke! Unlike the “Happy Days Are Here Again” past, the US is massively in debt! At that time it also had vast sums of oil (at which time the US was the #1 exporter). The US has no capacity for forward momentum. Figure 25 years of nasty decline until there’s a semblance of stability (which shouldn’t be confused with prosperity or regaining current levels).This “feel good” stuff needs to take a back seat to reality.

The Lehman Settlement is going to crack the market. And if that doesn’t do it, October 23d will. Just a guess.

Yawn…another pathetic resort to the ad hominem argument.The fact is that an act of Congress is presumed constitutional unless a court declares otherwise. If you’re going to argue about the law, you should take time to learn something about it. A little knowledge coupled with a know-it-all attitude makes for a dangerous combination.SWK

Malaysia is down only 2.8% so far.

You are an ignorant idiot. That’s not an ad hominem attack, but a statement of fact.SWK

a little knowledge?? how do you know anon have little knowledge, he might be an attorney like you,ad hominem attack?? cant you just talk in simple english, without jargons..presumed constitutional??why suddenly youre posting a lot at the time when markets are crashing?? good timing??why previously attacked ryskamp??he SIR predicted the outcome of this debacle before you were even here

Don’t be so gready

I find the easiest way to remove an ALL CAPS shouter is to press the PgDn key. I’ve always been under the impression that the all caps user is trying to say “please don’t read this.” Works for me.

Idiot, your the idiot! The record of what occurred surrounding the Deceptive Federal Reserve Act, and the admission of a president Woodrow Wilson on his death bed, requires no other statement of facts.”"I am a most unhappy man. I have unwittingly ruined my country.A great industrial nation is controlled by its system of credit.Our system of credit is concentrated. The growth of the nation,therefore, and all our activities are in the hands of a few men.We have come to be one of the worst ruled, one of the most completelycontrolled and dominated governments in the civilized world.No longer a government by free opinion, no longer a government byconviction and the vote of the majority, but a government bythe opinion and duress of a small group of dominant men.” “

“Protect … Put … raise … increase … Do … Keep … Lay off … Exercise …”Who is exactly the designated Subject for all these action verbs?Don’t get me wrong, some of your suggestions are quite good (some are quite dangerous, and others are totally off (topic, that is) – e.g. Lay off the demoralizing and manipulative peak oil, climate change crap, it affects confidence and therefore decision making)

In fact, I would be sympathetic with your recommendations. They do make some practical sense, provided they would be a base/timeout to implement the real and most drastic solutions (like a public hanging of Paulson in some Manhattan plaza, preferably in front of the national debt clock)

I don’t think you mean neo-con Bible thumping: perhaps you meant conservative Bible thumping? The neocons are Jewish.

Who is exactly the designated SubjectThe State.…totally offEasy to say, hard to prove.

Yes, some people will be quite excited about the future opportunities, but these are certainly not the “IBank / Com. Bank /Hedge Fund Executives” types you mentioned. The entire hedge fund and private equity industry will collapse and the US commercial banks will be fully nationalized.The people who will most be able to prosper are people outside the US who are sitting on mountains of ready cash — in East Asia, the Middle East, Russia– people who will be able to acquire our assets at pennies on the dollar will swoop in when the markets have completely crashed.

I figured you had that kind of intellectual honesty, SWK. Stay safe.

There is an unsubstantiated rumor on the net that the Fed has warned of a coming one week shut down of the financial system. Maybe it’s true and they actually plan to do something worthwhile. Happy talk, keep talking happy talk…

Ole’ Ryskamp seems like he may have some interesting socialist ideas, but he’s awfully repetitive. I am not going to go by a book based on some weirdass interpretation of “COAST HOTEL V. PARRISH (1937)” and “LINDSEY V. NORMET”. Sounds boring as hell.Ryskamp– learn to express your ideas in plain language and you will get a better hearing on this blog.

WHAT IF FED INCREASES INTEREST RATES (%10-14) TO KEEP/ENCOURAGE DOLLARS COMING IN? WILL IT COLLAPSE THEN?

Hitch on the crisis. Clever analogy to Tinkerbell’s death.

Am I the only one who finds it distinctly weird to reflect that the last head of the Federal Reserve and the current head of the Treasury, Alan Greenspan and Hank “The Hammer” Paulson, should be respectively the votaries of the cults of Ayn Rand and Mary Baker Eddy, two of the battiest females ever to have infested the American scene? That Paulson should have gone down on one knee to Speaker Nancy Pelosi, as if prayer and beseechment might get the job done, strikes me as further evidence that sheer superstition and incantation have played their part in all this. Remember the scene at the end of Peter Pan, where the children are told that, if they don’t shout out aloud that they all believe in fairies, then Tinker Bell’s gonna fucking die? That’s what the fall of 2008 was like, and quite a fall it was, at that.

You, too, my friend! Goodnight!SWK

LEH settlement on Oct 11 and WaMu on Oct 23 – anyone know who is really exposed on these?

We tried this before … but we couldn’t wean him off the thorazine.PeteCA

What do exactly mean by “Thank you”?This is hellacious (I do not know what this word means).Kidding. I too sometimes do not agree with you, but that is not a reason to make personal. In fact, I cannot live without disagreeing with others and others disagreeing with me. As you said, hell, one has to always question his/her own beliefs instead of eccentrically holding to a position (by position I mean a point of view, not a job). And above all, there is always a way how to, respectfully, introduce one’s ideas; not by shouting and insulting the intelligence of everybody. Between unknown and unfamiliar community, the form of communication matters as much as content.

Does sticking a $3 Billion+ bill to taxpayers qualifies as a terrorist attack and foreigners money laundering buying of new US treasuries can be described as financing terrorism?

Yes, I too have close numbers, using a less technical and more superstitious analysis. Dow for a 7,999 support, then a rally to 10K before crashing down towards 6,666.

there is systemic warts

BRING SOME BONDAGE

And by the way …Jim Willie had some comments today that are worth reflecting on.Yes, I do understand that “gold bugs” like Mr Willie can be difficult to read and digest – at least for the average investor. But guess what … when the system goes crazy – that’s when these folks get their own day in court.Mr. Willie raises are very important point …It is conceivable that the gold futures market could DEFAULT on gold shipments at some point. What this means is that if you are a futures investor in gold, and you try to take delivery of real gold (gold COMEX bars) because you held a LONG position, the market might tell you that they cannot get the actual gold bars. And instead they would offer to pay you in cash instead. Which is OK if you want the money. But really BAD if you want the yellow metal!That, my friends, is a major problem if it happens.The point about commodities markets – is that they’re supposed to deliver a commodity.This would not be a problem for anyone owning gold.It’s only a problem for the powers-that-be who are trying to keep the price down.The gold price would explode upwards if this occurred.We’ll see what happens.PeteCA

REMINDER AGAINUSA. UNDER PRESIDENT OBAMA WILL ENGAGE IN WAR WITHIRAN AROUND FEB OR MARCH 2009. THIS WAR WILL BE THE MOTHER OF THE ALL WARS. WHICH WILL GIVE BIRTH TO ALL THE OTHER WARS AROUND THE GLOBE. EXAMPLES RUSSIAVERSES NATO, INDIA AGAINST PAKISTAN, AND SO AND SO,THE SAME WAY THE FINANCIAL CRISES STARTED IN PAST FEW WEEKS AND ENGULFED THE WHOLE WORLD. SO WILL BETHE IRAN AND USA WAR.HELLO PRESIDENT OBAMAGOODBYE AHMAGINEJAT

If you can’t understand it, it’s not for Ryskamp’s lack of trying. Whether it’s correct or not — if you don’t make the effort, you wouldn’t know.I am not sympathetic to those who complain so much about style, where there is clearly substance to be debated in what he says.

Maybe Ryskamp is schizophrenic,and this is his other half.

This is not an attack…Understood, and thanks for replying.

Low volatility might depend on your personal pont of view. Certainly, a lot of people were selling or going short. Ford and GM got hit really hard today, and my personal gues is that was the hedge funds jumping right on the opportunity to short those companies. But let’s be realistic. No-one shorts a company (professionally) without doing their homework. This process may be accelerating the fate of the auto companies, but it’s going to happen sooner or later anyway. I wouldn’t be surprised if they remove the ban on short selling again very soon. But I don’t see how they can undo the short positions that have already been taken – and that’s probably exactly what was on the mind of the hedge funds.BTW, sorry about the late postings. Take it one step at a time.PeteCA

I feel offended.In fact, after thinking about it for a while, I find this post offending to almost everybody.

Be careful what you wish for…When the yankee dollar goes home, FrWaMu, you’ll get hyperinflation.

Looking back over the history of Fed/Treasury interventions over the past year, I am convinced that they have turned a bad situation into financial armageddon.Credit markets are locked up because there is a complete loss of faith in the system and no one trusts their counterparties.I keep asking myself, if they had handled things differently back in August 2007 things would have taken a much different course.The problem is a lack of transparency. Every action by the Fed and Treasury has been an exercise in obfuscation. The regulatory complex has been actively encouraging the banks to hide their losses. This has led to the loss of confidence which is the core of the current crisis.What would have happened had they brought all of the major players together in August 2007 and forced them to confess their sins, followed by a rapid triage of failing institutions? The sunlight chases away the darkness, but all the Fed and Treasury have done is draw the heavy curtains.This week has proven that they have totally lost control, and for good reason. They are a dangerous mixture of greed, incompetence, and cronyism. With all due respect to the professor, I don’t think the current status quo is worth preserving.The greatest scam in the history of mankind has been rendered naked and exposed for all the world to see.

Which post? The one that says a forthcoming war with Iran will be the “mother of all wars,” or the one that concludes “no war will be necessary?” If the latter, it could mean you don’t understand the meaning behind the metaphors.

From Each His Ability To Each His Need. Arm the Proletariat.

Next try:http://www.sclawreview.org/archive/57/1/57.1.historicizing.php“Historicizing Judicial Scrutiny locates and explains the historical origins of the Supreme Court’s scrutiny levels jurisprudence. The Article first sketches a historical account of the Court’s response to constitutionally challenged decisions of the other branches from Marbury to Carolene Products. It then explores the emergence of the Court’s modern approach to judicial scrutiny. In the process, the Article addresses two related sets of questions. The first set of questions focuses on the antecedents to the Court’s modern scrutiny levels jurisprudence. Particularly, the Article asks how the Court’s pre-Carolene Products approach to the other branches’ decisions should be understood, and why that approach came under strain in the early twentieth century. The second set of questions is connected to the collapse of the Court’s initial approach to the challenged decisions of the other branches’ and its replacement with an approach that established two categories of constitutionally challenged legislation that would invoke two different levels of judicial scrutiny. Among other questions, the Article explores how and why the current scrutiny levels jurisprudence approach emerged. “well, that certainly clears it up….

Academic analysis is of little or no use to anyone at this point ! What is the world going to look like in 24 hours ? 24 days,months or years ? The speed and magnitude of this disaster makes it impossible to grasp. How is the average person going to adjust ?What about the kids graduating from High School or college in the next few months ? How can we helppeople survive and thrive if we cannot even fathom what comes next ?God have mercy !D

Does anyone think that the United States of America will actually make it to election day? Anyone?? … Anyone?? or will we have our default crisis, currency crisis, bank runs, and total chaos sooner rather than later? Anyone? … Anyone??~ Andrew G. Bernhardt

Yes – Cramer and MANY other Wall Street people such as Fuld (the former CEO of Lehman) had the day off today for Yom Kippur.

Amen bro.What a bank sell is confidence.No confidence, no bank. It’s as simple as that.

There should be riots (armed, malacious, and violent riots) in the streets all throughout the USA! People should storm the Capital and get the legislatures, the White House to get the executives, and the Supreme Court to get those nerds too… and trash the FBI headquarters (the J. Edgar Hoover Building) too! I’m not trying to incite riots, but realistically, and logically, there should be some riots in the streets!

Remember… tiolet paper is worth more than US Dollars everyone… two-ply is worth more than one ply! So wipe your hiney with US Dollars! Then pretend your house that you can’t afford (and that you know is worthless, since society is lame as hell and too malacious and pathetic) and don’t make payments on is yours, and make the bank let you keep it!

Like Chris Farley used to say on SNL (Saturday Night Live), everyone should ‘be living in a van down by the river!’

Today’s “terrorism” was primarily spawned (militarized) through the US’s attempts to repel the Soviet Union from Afghanistan (and to cause general disruptions into the Soviet Union itself).The price of oil during these formative years was depressed. Ironically, it was actually low oil prices that started all of this: oil companies needed easier/cheaper access to oil. While one cannot definitively state how this all mapped out, as it’s quite likely what was an initial plan that has morphed several times over, it’s clear that much has been accomplished by high-level political intervention (US).And for those that don’t understand politics, “terrorism” IS a political act. If you want to reduce “terrorism” then reduce the political meddlings and let markets work. The days of cheap oil are gone.

You know, this all is almost comical (if not for the fact that people will go hungry). The value in gold is it’s value in money. If money is worthless then gold is worth a lot of worthless money OK, OK… yes, gold, or anything which is a lot harder to manipulate (such as fiat money/electronic bits) and is REAL has more viability as a trade medium.Anyway, we now return you back to the economic collapse…

Friendship One, I’m finding your posts to be highly xenophobic. Clearly there’s a disconnect from “friendship” and your divisive words…

Zionist wacko from hell -

Now you know why people go crazy- they find out this stuff and then can’t figure out how it can continue! Also says why some leaders appear insane. It takes an extremely strong person to handle this.My own brother is pretty smart and knows that this is all messed up and will eventually crash. BUT… he says, he just doesn’t think that it’ll happen soon. His reasoning? Because he was just retiring and he wants to go play golf!I’ve been the black sheep in my family, enduring near ridicule as I’ve run around claiming that “the end is near.” I lost a wife (of many years) over this (and funny, she now gets IT and is better prepared than I!). I have defied logic, I haven’t jumped!I’m not a follower of (modern) religion, but I’d have to say that the following writings address/speak to this and gives me some sense of comfort (1:32 esp):Proverbs 1:20-33http://www.biblegateway.com/passage/?search=Proverbs+1:20-33

They now have super tasers for crowd controlhttp://www.infowars.com/?p=5171

From fantasy finance to global crashWhen corporations at the heart of American capitalism, Ford and General Motors, find themselves close to bankruptcy, there is no surer sign that financial mayhem is turning into economic disaster for the masses who actually work for a living rather than speculate with other people’s money and lives.As Wall Street crashed (again) yesterday, the car giants found themselves in the eye of the storm, their shares valued at next to nothing. Sales have slumped as lending to consumers dries up. Both Detroit corporations had their credit ratings reduced to “junk”, making it impossible for them to borrow. Bankruptcy looms as the unthinkable becomes reality.In Britain, the trade deficit between imports and exports is the biggest since the end of the 17th century. Paul Dales, UK economist at Capital Economics, said the data supported other evidence suggesting that Britain entered a recession in the past three months. Exports orders have fallen rapidly as the global economy goes into reverse.So as finance ministers from the major economies began to gather for an emergency session in Washington, we had this admission from Alistair Darling yesterday: “The world economy is changing. Sticking with the solutions of the past is not an option. Now, more than ever, we need new ideas.” But this is the man who has been a willing, even fervent promoter of the no-alternative school which holds that global capitalism is the only game in town.So all of their energy, as well as our savings, taxes, pensions, livelihoods, and council services, are devoted to the task of ensuring that the system survives. The “new idea” is that politicians pledge to work together to do “whatever it takes” to restore “stability”. The plan is that the bankers cash in and the rest of us take the pain. In that, all the major bourgeois parties are agreed in an outbreak of “bipartisanship”, which meant the House of Commons devoted an entire 19 minutes to the crisis yesterday. Democracy? It’s a luxury at a time of national crisis.Certainly there can be no effective action to prevent the descent into an unprecedented slump. And the market speculators know it, selling shares not just in banks but in retailers and manufacturers. The souring of relations between Britain and Iceland, with the government using anti-terror laws to freeze accounts, shows how the breakdown of the global financial system turns friends into enemies overnight.We at A World to Win are not alone in pointing out that following the 1929 Crash, it took a decade and a half of the Great Depression and the destruction of surplus productive capacity and tens of millions of human beings in a world war. Only then could the 1944 Bretton Woods agreement establish the basis for restarting the process of profit making and capital accumulation.The post-war period of growth induced by a controlled expansion of the money supply began to suffer a series of worsening setbacks and shocks from the end of the 1960s. Control had given way to uncontrolled inflation and the Bretton Woods arrangements broke down in 1971. This left the world prey to three and a half decades of naked credit-led growth. This produced global corporations and subservient governments which encouraged gross over-consumption.It had to end. More and worse financial shocks reverberated around the world throughout the 1990s. The bursting of the dot com bubble in 2000 was the writing on the wall. When the outpouring of commodities bought on credit overwhelmed the consumers’ ability to service their debts by 2004, the game was already up. (NB Chancellor Darling).Darling says that “All forecasters, including the International Monetary Fund, have been surprised by the profound impact of this shock.” Not us, chum. We wrote about it in 2004 in our book A World to Win. And we continued to study it until, at the end of 2007, we published A House of Cards, with its prophetic sub-title, from fantasy finance to global crash.But Darling is right about one thing, sticking to “solutions of the past” won’t do the trick. A revolutionary break with the past is needed in opposition to international plans for bailing out bankers while ordinary people suffer. We’ll be discussing our solutions in London on Saturday week, October 18, at the Stand Up for Your Rights festival.http://www.aworldtowin.net/about/standup.htmlAnd, we can promise you, we won’t be talking about how to save the present financial and economic system.

Watch Jim Rogers on CNBCfdsdf on CNBC, he like so many of the posts and other comments suggests that right now we are in massive de-leveraging (deflation) that will be followed by significant inflation (money printing that’s going on now) – He is concerned about currency and bond breakdowns – He is in Yen and Swiss F. and agriculture commodities

another option would be to copy the text, paste it to notepad and add a few line breaks to it yourself so that it becomes more readable. Then read it from notepad. But I agree with you that it would be better to have the line breaks there already.

London Banker blog up: Turbulence and Trends

So to save the system we need a strong man, a dictator. Someone who has the authority to make any decisions deemed necessary without needing approval from the Congress or the House.

Here here, This bog blob of writing hurts your eyes, so im skipping right through!

sounds like an invitation for the anti-chirst.

Here’s where reality sets in:From http://www.bloomberg.com/apps/news?pid=20601109&sid=aXCtv.lATO8I&refer=homeThe 2009 budget deficit could be close to $2 trillion, or 12.5 percent of gross domestic product, more than twice the record of 6 percent set in 1983, according to David Greenlaw, Morgan Stanley’s chief economist. Two weeks ago, budget analysts said the measures might push deficit to as much as $1.5 trillion.—Finally I can see the end of the military-industrial-complex. It’s just too bad that it will take a collapse to realize it.

TED slightly lower at 4.2

Libor has just gone up !!!! we are all doomed

Nothing like humor to help make the point… violate the fundamental principles and, well, you’re “freaking doomed!”From http://www.dailyreckoning.com/Writers/Mogambo/DREssays/MG100908.html (the Great Magambo):Well, the estimate from (as I recall) the International Monetary Fund is that the global total of derivative contracts outstanding is $1.125 quadrillion, whereas global GDP is about $50 trillion, although both numbers are so big that I couldn’t make any sense of them even if I was sober, and being sloshed, I revert to more primitive responses, like screaming in fear and holing up behind the massive blast-proof door of the Mogambo Bunker Of Raging Panic (MBORP).Only here, safe amongst gold, silver, guns, frozen pizzas and stacks of adult literature of the “Hot, Nasty Ladies” variety can I finally relax enough to calculate that to make this $1.125 quadrillion yield even a lowly 1%, it would take $11.25 trillion just to pay the interest! Hahaha! We’re freaking doomed! A quarter of global GDP is needed just to pay a 1% yield!

Fidelity Reserves – My default option for my 401K is Fidelity Cash Reserves (FDRXX) and Fidleity NY Muni Market (FNYXX) for my personal account.I am buying some FDLXX (Fidelity US Treasury MM) just to be safe. Just wondering what everyone else is doing and if anyone has better options. I know I could also buy CDs, but that would lock me up for 3 months.

Financial porn channels suggesting Bush at 10:25 est will actually have something to say e.g. Fed will back all bank transactions – (I wonder if that will apply to banks in Asia and EU)- of interest the premier analyst of General Electric had some serious things to say on GEs just released (in-line) results GE results analysis by Jack De Gan

LOL! SWK

Consumer debt in UK 177% of disposable incomeConsumer debt in US 144% of disposable incomeSuper Bull Richard Branson on CNBC says markets could be down for years a la Japan – US and Europe – entrepreneurs will be the saviours

I respectfully disagree with Prof. Roubini here. A 1.5% drop (to zero in the U.S.) is further pushing on a string. NOT A WORD MENTIONED ABOUT SWAPS, PROFESSOR! The real problem is swaps. From today’s Bloomberg:Lehman Failure May Spark Record Payout for Credit Swap SellersAn auction to be held today will determine the size of the payments buyers of default protection can claim after New York- based Lehman filed for the largest bankruptcy with $618 billion in debt. Lehman’s $128 billion of bonds were trading yesterday at an average of 13 cents on the dollar, indicating credit swap sellers may have to pay 87 cents on the dollar.“That’s a big hit,” said Byron Douglass, a strategist at Credit Derivatives Research LLC in Walnut Creek, California.More than 350 banks and investors signed up to settle credit-default swaps tied to Lehman. No one knows exactly how much is at stake because there’s no central exchange or system for reporting trades. It’s that lack of transparency that has increased the reluctance of financial institutions to do business with each other, exacerbating the global credit crisis and prompting calls for regulation of the market.

I’m betting that we will witness the worst depression in history. There is nothing the West can do without great help from the East and therein lies the problem.This is what Arab and Asian countries have wanted for a long long time. Its all designed to take America and the UK out of the game, not militarily but economically. Run these two countries into the ground. Arab/Asian interests snap up all the knockdown assets/companies as payment for the debts the US/UK have both run up and have no ability to repay.The new dawn will redraw the financial map of the world and the centre of the economic universe will no longer be Wall Street/London.The West will be then tamed/humbled and we will have new Masters whether we like or not.A brilliant strategy. There is nothing the West can do stop this, nothing short of a world war

Talking about a reality check, I believe that the US and the UK et al have done this to themselves from within and it certainly isn’t in the best interests on anyone specifically or in particular, to have brought about a global economic depression of this nature; shall we call it then, er, serendipitous >But, it’s really just incompetence and stupidity of the Western “leadership”, and ‘fatal conceit’ on the behalf of economists who put their faith in assumptions.And, the choice between you having a Master or not having a Master, is entirely yours.Ho hum

The US will just hire all those unemployed folks to make a civilian peace keepers force, or they will bring in UN troops-

SWK you have not understood my comment, a few weeks ago, Germany’s finance minister stood before parliament to proclaim the death of the world financial order.”The US will lose its status as the superpower of the world financial system. This world will become multi-polar with the emergence of stronger, better capitalised centres in Asia and Europe”That’s what Peer Steinbruck said and he was spot on. The global markets right now isnt just a recession…its not even just the biggest recession in decades.What we are witnessing is nothing less than a massive realignment of global economic power. Economic and financial power is shifting eastwards faster than almost anyone could have imagined and its causing huge disruption in the finacial markets. We are about to see the biggest transfer wealth in history. By 2010 the Western economies will be in irreverisble decline. The Oil-rich Arab countries and Asian industrial powerhouses will move to the centre of the global economic universe.By 2010 Oil production by Non-OPEC countries will be in decline and this is terrifying for oil-dependent Western countries. It leaves OPEC in total power and Western leaders know this. Soemthing even more frightening is happening and mainstream media has kept quiet about the coming financial tsunami.On September 18th the Gulf Co-operation Council took the first steps towards setting up a common Gulf currency. They have been talking about this for some time. A few weeks ago GCC finance ministers approved a draft agreement on the general structure of the monetary union. They are now discussing the location of a central bank. Bit like the eurozone. A final agreement is meant to be signed the end of this year. The target date for the new Gulf currency could be around 2010. This will have an enormous impact on the world economy. The reason??You can bet the Gulf countries are going to price their oil in their own common currency. THE NAIL IN THE DOLLAR’S COFFIN. The almighty dollar receives a huge ammount of support from being the standard currency for international trade. Oil is prices in dollars, bought and sold. Consider the impact on the dollar when when those countries say they don’t want to be paid in dollars anymore? It looks like the dollar will have its legs kicked out from under it in the next couple of years.The great money merry go round has broken down. One of the clearest signs of that shift of power are the buy-outs and strategic investments that the Arabs and Asians have been making in Western assets recently. Nomura has snapped up Lehmans for $2.00 (yes just two dollars!) The Gulf state of Qatar is the biggest shareholder in Sainsbury’s and Barclays. Citigroup had to go to the Arabs and Asians to keep operating, the list goes on and on. All that money drains out of the West and undermines the economy. This trend has been gathering speed for a long time. But the smart chaps in Washington, Wall Street, London were able to ignore it for a long time. The reason? because a lot of that money made its way back to Western countries through the all powerful financial industry that has just collapsed.The US & UK governments whine about how the “global credit crunch” is at the heart of the problem but that is a flat lie. There isn’t a global credit crunch, this is just a Western problem. The Gulf is awash with capital. The banks are still lending in Asia. What about HSBC?? Their economies are growing and their profits are rising.When the dust settles and unless the West comes up with an answer… there will be a NEW EASTERN ECONOMIC ORDER.

I just leave the money in equities. I am in my mid 30′s and the market isnt going to 0 – lots of time left. Trying to time the market with a 401k that is trading mutual funds is a waste of time. As long as you continue to contribute you are averaging down weekly anyways. There are numerous studies that quantify the losses and gains with a perfect strategy, the underlying point though is that it is near impossible to find the days you want to be out and get back in.

Welcome to the New World Order, circa 1939 H.G.Wells book.Next no buying or selling without the chip!

Two big differences: 1) In a year or two, the US GDP will be much, much smaller but our debt is increasing. Debt/GDP will reach an all-time high. 2) In 1946, the money was owed primarily to Americans; now it is owed primarily to foreigners (Japan, China, UK, Brazil), whom we depend on to finance our government. Hence, there is less policy freedom as we need to please the foreigners even at our own expense. To default on our debts or start a run on the dollar would bring far greater misery to the US than a depression.

thanks for the link to Jim Rogers

The problem is that this is just the beginning.Credit Suisse’s famous arm reset graph shows that arm resets continue through 2011.On financialarmageddon.com, its pointed out that there are a large number of vacant homes, and that as economic conditions worsen the average occupancy rate will grow larger than the low 2.6 per household. People will move in with relatives, take on boarders, etc. Occupancy can comfortable grow to 5 per household. This will result in a growing number of vacant homes, foreclosures, auctions, and a further reduction in home values. Abandoned homes will be stripped of appliances and copper, used as shelter by the homeless, and burned down by arsonists. The bailouts have the effect of a fart in a hurricane.

who knows…some people would probably say something starting with “W”

From a technical perspective, S&P 7,600 and Dow 7,200 would be the pre-Armageddon support levels.Art Cashin pre market comments “today or Monday, could be a real bottom” “volume 2-3 billion shares” ” if it’s a classic bottom look for a freefall early followed by a mid day massive reversal” He cautions that “this is a credit situation and if credit markets don’t unfreeze, this will no longer be a story of financials but of household names, blue chips and government solvency”It would seem that the consensus hope amongst the pundits is for a G7 intervention and global guarantee of interbank loans this weekend. Personally I am confident that the G7 can indeed accomplish that, once they decide on the desert menu: will that be cake or pie?

TED SPREAD AT 448 and STILL CLIMBING…S&P 870 or so and MELTING DOWN…

In the next millenium explorers will discover buried in the perma-frost something once referred to as the Credit Markets. Friends they are approaching absolute zero.

Fidelity opted in to the insurance program, but the money had to be in the fund on 9/19/08. Anything later than that is not covered – Treasury rules.

Not at all! far from it. I certainly do not have a fear of other countries, but fact are facts. Do your research. I have no problems with Arab/Asian countries after all I’m moving to Dubai.If im getting wrong then please enlighten me

one corrupt government.

Exclusive: Inside Account of U.S. Eavesdropping on AmericansDespite pledges by President George W. Bush and American intelligence officials to the contrary, hundreds of US citizens overseas have been eavesdropped on as they called friends and family back home……Kinne described the contents of the calls as “personal, private things with Americans who are not in any way, shape or form associated with anything to do with terrorism.”…In testimony before Congress, then-NSA director Gen. Michael Hayden, now director of the CIA, said private conversations of Americans are not intercepted.

http://abcnews.go.com/Blotter/Story?id=5987804&page=1

Why should I enlighten someone who implies that I am not doing my research? Sorry, but you cannot piss on my foot and then ask for enlightenment.Enjoy Dubai! hahahaha!

why is the bond market tanking?

they were listening for stock tips

Hmmm! Beware the man who keeps his mount shut

Dow just opened down 919, but now it’s only down ~500. It’s at 8000 exactly now.

Capitulation day

Beware the head fake. All the pundits say early plunge followed by massive reversal will mark the bottom. If you subscribe to that ask the question: what constitutes an early plunge? The risk is that a 600 point drop that goes back to even may be a head fake

THERE IS NO WAY OUT OF THIS MESS NEITHER FINANCIALLY OR GEOPOLITICALLYNOTHING WILL HELP; ANY FORM OF INTERVENTION BY ANY ONE WILL NOT HELP.AT THE END OF ROAD KING MESSIAH WILL COME AND RESOLVE ALL THE PROBLEMS IN ONE SECOND.ALSO AVIAN FLU OR BIRD FLU WILL CAUSE A MAJOR PANIC TOO.

I was following DOW on Google Finance with changes (“refresh”) every few swconds and I saw DOW went RED 1300 points. Now it is RED “only” 191.Can anybody tell me what happened?

Not only that, but we’re out of coffee.

and ive just run out of sugar! lol

google manlfunction

It is a head fake, but elliot wave analysis says third of a third wave down.Third waves are the most fearful sentiment displayed on this blog.But a fourth wave counter trend rally for 8 to 10 days (head fake) before resuming fifth wave primary trend down to approx. DOW 7200.

@Friendship One: “In NR’s interview on 9/25(?) he said that his massive fiscal stimulation of the system would NOT be inflationary in the long run since the govt. could retract the cash infusion just like it injected it. Hence, no hyperinflation. He was not advocating a monetary package which he said would be inflationary.”Sounds like make-up words for how to get taxpayer money. You need to understand just one thing — there’s only one source of the money and that’s from Americans who have the money, not from those who have debts. If you’re going to provide liquidity and/or buy debt you do it with it with Americans’ money. You don’t do it with magic.

Tiny insignificant glitch, makes only a differnce of a few hundred billion dollars market value.

bingo – wait till after W speaks around 10:30 NYT and then (unless he announces something specific) we’ll see some real selling and with that hopefully an opportunity to jump in the deep end – Don’t forget the NYSE Circuit Breakers that kick in

So any guesses on the speech by Big Dubbya today ???”Don’t worry, the US economy is strong …”"Wall Street was drunk …”"If you guys think I’m gonna’ stop the war on terrorism, you’re dreaming!”PeteCA

Points well taken.SWK

Anybody know what the LIBOR and the TED Spread are doing today?PeteCA

Keep talking W – I’m short the market

Silly Italians

.TEDSP:INDTED Spread4.5245 +0.2923 10:05 0.00US0003M:INDBBA LIBOR USD 3 Month4.8188 +0.0688 06:35 0.00 0V2X:INDVSTOXX Index74.859 +16.466 10:19 0.00 0VIX:INDCBOE SPX VOLATILITY INDX65.56 +1.64 10:33 0.00 0 ?VXN:INDCBOE NDX VOLATILITY INDX73.88 +4.22 10:34

He expects the innovative, industrious and resilient Americans to be able to pay back all this debt.We’re also smart enough that we will refuse to do so, unless it’s largely inflated away. Print, Ben!

Alright. You win. I am the messiah. I have come. What? Not better? Shit! I guess you were wrong. What the hell. I had as good a chance as anyone of being “the one”.Like the billions before you, you continue to give into your fears. There is no God who is coming to save us. Look inward – not upward if you want answers.

The Dow has bottomed, at least temporarily. There will be a massive short covering rally in the last 45 minutes of trading today, with the index closing up several hundred points.

Giraf. Yep. I wsouldn’t be surprised to see a massive cover of shorts either at the close of trades. But the real story is that enormous damage has been done to the Dow and S&P 500. Even in the best of circumstances it would take years to recover from that. The critical long-term level on the S&P500 was somewhere around 1,000. We’re over a hundred points below that now. Even if a shyort covering rally brings things back up, the long-term trend has been violated. For older Americans, it is vastly bad news. Peoples’ retirement plans and 401K’s are vaporizing, and anyine close to retirement is probably never going to get it back (if they didn’t protect themselves in the first place).PeteCA

From Naked Capitalism, possible commodity shortages in as little as 2 weeks:Not only are banks now leery of lending to each other for much longer than overnight, they are also starting to refuse to honor letters of credit from other banks. From the above-mentioned reader:At the end of the day, if every counterparty is bad then you don’t have a market and you don’t have an economy. I spoke to another friend of mine this afternoon, whose father has been in the shipping business forever. Pristine credit rating, rock solid balance sheet. He says if he takes his BNP Paribas letter of credit to Citi today for short term funding for his vessels, they won’t give it to him. That means he can’t ship goods, which means that within the next 2 weeks, physical shortages of commodities begins to show up. THE CENTRAL BANKS CAN’T LET THAT HAPPEN OR WE HAVE NO ECONOMY, LET ALONE A CREDIT SYSTEM.We spoke later in the evening and said he had heard of another instance of a trade transaction failing, different parties entirely, this a shipment of coal, again due to the unwillingness of the seller’s bank to accept an LC from the buyer.Update 12:10 AM: Confirmation comes from the Financial Post, “Grain piles up in ports” (hat tip reader Vox Sanus):The credit crisis is spilling over into the grain industry as international buyers find themselves unable to come up with payment, forcing sellers to shoulder often substantial losses.Before cargoes can be loaded at port, buyers typically must produce proof they are good for the money. But more deals are falling through as sellers decide they don’t trust the financial institution named in the buyer’s letter of credit, analysts said.”There’s all kinds of stuff stacked up on docks right now that can’t be shipped because people can’t get letters of credit,” said Bill Gary, president of Commodity Information Systems in Oklahoma City. “The problem is not demand, and it’s not supply because we have plenty of supply. It’s finding anyone who can come up with the credit to buy.”So far the problem is mostly being felt in U. S. and South American ports, but observers say it is only a matter of time before it hits Canada.http://www.nakedcapitalism.com/2008/10/international-trade-seizing-up-due-to.html

Warning to Workers With Money In State Pension FundsJust a quick note of warning … to anyopne here who is expecting to collect money from state pension funds.There are now at least 31 states in the USA that have budget problems. These problems range from mild to severe budget crunches. Some states are caught in a real dilemma because they need to borrow short-term, to bridge the gap before they get another payment from state tax incomes. BUT, some of these states are being refused borrowing – because their debt ratings don’t look so good.One avenue of approach is for the state legislatures to temporarily dip into the money set aside for state pension funds.My warning to you is … watch out! Don’t let them do this!!! It might be practical for those states who only have minor budget shortfalls, and whose legislatures are seriously trying to get the budget under control. But for other states that have enormous shortfalls, who says how long they will take to pay back your pension money – once they’ve got a hold of it???My advice is … DON’T let them get their hands on your retirement money!America is going bankrupt in a credit crisis.Don’t let them get their hands on YOUR money!!!PeteCA

“Italian Prime Minister Silvio Berlusconi said political leaders are discussing the idea of closing the world’s financial markets while they “rewrite the rules of international finance.”“The idea of suspending the markets for the time it takes to rewrite the rules is being discussed,” Berlusconi said today after a Cabinet meeting in Naples, Italy. A solution to the financial crisis “can’t just be for one country, or even just for Europe, but global.”This is from Bloomberg. Any comments

He is nuts. Hopefully other European leaders know better. Not betting on it thou.

I don’t disagree with your comments. Anybody that thinks today, if it is the bottom, is the start of a new bull market is kidding themselves. Far too much damage has been done. All this nonsense that the retail investor is fed about stocks for the long term? The Dow is now back to its 1998 levels. If you didn’t sell (because you shouldn’t, market timing doesn’t work they tell us), you’d have had money at risk for 10 years with no return.Something big is coming from the G’s this weekend and I’m sure the pros don’t want to go into the weekend short.

Actually a lot of the big dogs were getting out yesterday – the burst to even after the intitial plunge this morning can also be attributed to the shorts – don’t hold your breath that they will save the day – the smart ones are out and are burying their gold – Only a resident of Vegas would go into this weekend long

Rich, Miss AmericaA little help please…a few comments on what tipped us over the brink, velocity of the fall, and a likely bottom.Belated thanks for your 2-part analysis. Many bitch; few actually invest in critical thought, fewer still make that investment for the betterment of all.

I honestly still cannot believe that we’re in the middle of a major global financial crisis that was started by the United States – and yet the President and the US Congress are not even holding urgent discussions to balance the US budget. Unbelievable! If it was any other country in the world that had created this mess … what do you think the intl. community and the IMF would be saying at this point?Meanwhile … today Wall St leaders are trying to figure out a way to make the CDS market problem go away. But my interpretation of the CDS issue is simple. These instruments are legal contracts. If you sell CDS insurance … then you’re obligated to pay the other party (in the contract) if there is a bond default. End of story! The lawyers will take these agreements to court. And can you blame anybody – for not wanting to recover their losses that were negotiated in a free and fair agreement? I can’t. Therefore, in spite of all the shucking and jiving at the top of Wall Street, I don’t see how anybody gets off the hook here. A financial contract … is a financial contract. Ultimately the courts will have to decide this one.PeteCA

@PeteCA, always find something interesting in your comments. I can’t understand WHY interest rates have not begun to climb (a la Volcker)? What must happen to force them to?

who can help Morgan Stanley ?

Although neither choice palatable, if I had to choose, I would put my money on the Girl Scouts.

expressed another way they are worth 9 cents on the dollar — quite a haircut

The question that nags at me is: Is the U.S. government big enough to do everything it is claiming it can do? Look at Iceland. Just one bank had debt 100 times Iceland’s GDP. Now think this through. If one investment bank, that is leveraged 30 times, invests in CDO’s issued by another investment bank , itself leveraged 30 times, etc., etc. What is the TOTAL LIABILITY? No one knows. It has always intrigued me that anyone that can create confidence, can create “money” I issue and sell a $100.00 bond, I have created “money”. I have the $100.00 cash and the purchaser has something “worth” $100.00. Hyperinflation coming, folks. Buy gold.

How come the news outlets are reporting a DJI decline of 660 points at the opening and the graphs of CNBC.com and bloomberg.com are only showing a 440 point decline? How come we can’t seem to get the figures on the current rate of mutual fund redemptions? (12:19PM EST)

At least the Girl Scouts know how to run an organization in the black. Amazing markup on those cookies.

Are you A lubavitch Chassid?

Taking The Chopping Block To The Top Of the CompanyI was reading through some data from Contrary Investor this week, and got to thinking a bit. Their charts do a great job of showing the explosion in corporate buy-backs of shares since 2003. Literally, buy-backs of shares by corporate America grew enormously from 2003 to 2008, eventually exceeding $800 billion per year at the peak level. All this, so these companies could boost their share prices.Now think about it. Vast amounts of corporate profits were poured into these buy-back schemes, and guess what just happened this past week? It was all vaporized in the biggest US market crash we’ve seen in decades.Great job, corporate America!!!And we’d have to ask … why on earth did companies engage in such brilliant investment behavior? When US industry needed to re-invest capital in a critical bid to improve its competitiveness, why did they plough all their profits into share buy-backs? Well, I guess it must be because all those CEO’s and CFO’s get those big performance bonuses – whenever the shares of their company go up, right????What we’re seeing here … is a combination of outrageous greed at top levels of companies, a complete disregard for workers and staff at the production level, and ultimately an enormous failure in the way that our management schools have educated their students in America over the last two decades.PeteCA

Ever read J.K. Galbraith’s book on the 1929 crash? It’s a howler – how all these political and broker types kept saying “What a great opportunity to BUY!” and “Everything is just great!”

NO JUST A SIMPLE YID.

Yeah, I forgot, something to do with a mouse…

this is simply amazing stuff you all see silver down 12% ?

What other sort of behavior would you expect from folks whose compensation is 60% pegged to the share price? Look at the consistantly high rate of compensation for Fortune 500 executives. It was, to tell the truth, an aristocracy, wasn’t it? It certainly wasn’t based on performance. Apre’ moi, le deluge…indeed!

first deflation – then inflation

Yeah. Ignore it. You know silver. It drops … and then it skyrockets. Today’s situation is tragic – America is marching towards its own version of economic hell. We’re facing a collapse of the US dollar. It could come through global negotiations, or it could cdome through massive financial turmoil. But it is inevitable.PeteCA

anyone know a company that tracks silver very closely which has options on it that i can perhaps conider a buy write on ? i know SLV but no options

So what I”m wondering is if everyone in the West, China, India, Japan, loses tons of hypothetical money (relatively speaking) in terms of house value and stock market value and banks go under owing tremendous amounts of debt won’t the wealth that’s left be worth relatively what its worth today?I mean, by default if we’re all newly poor won’t the candy bar makers just have to reduce costs of the candy bar in order to have anyone to buy their candy or else be left with tons of candy and no buyers?We all still have to eat, have transportation, educate the kiddies, pay the doc etc…It looks like we’re seeing that now in retail (eg., Ann Taylor’s unprecedented 60% off fall sale and massive sales on autos and or autofinancing). Shouldn’t these companies just go back to their employees and cut wages so they can afford to cut prices?I do understand that without inflated house prices people won’t be able to get equity loans or get into $100,000 worth of credit card debt and that alone might slow the economy everywhere but at some point don’t the banks just have to get a grip expect lower profits, tolerate more risk and do their jobs (lend to business.) Yesterday they had a story about german banks that paid 4% and how there’s a trillion dollars worth of wealth in those little local banks. And of course the Germans export like maniacs and have I think a good standard of living (perhaps fewer uber riche). But isn’t that how you build a safe stable economy and then eventually folks have a bit left over for R&D and expansion?And if the US & Europe is essentially bankrupt isn’t the big loser going to be China for investing in us and the workers in the developing countries who will have to take paycuts on everything from raw materials to labor. The Chinese thought they’d make a big profit on us and we don’t pay so what happens? Doesn’t that mean they are out alot of $ that they might have used to send the kids to college and buy ipods but now they’ll still send them to college only the professors will make less but that should be ok because prices will drop too? And Steve Jobs will make less because Ipods will cost less but he’ll still make them and he or someone like him will make the next best thing too because that’s just what companies full of intellectually curious peole like that like to do?If the tax base every where shrinks I’m not sure why the solution ought to be to lay people off when you could instead cut every state employees’ salary so that services can keep plugging along. If salaries shrink won’t prices for stuff (even oil) have to fall? I say everything just needs to go on a massive sale-College tuition, physician salaries, executive salaries across the board.Or am I just horribly niave and there’s a HUGE pocket of wealth out there somewhere and we’re all going to be screwed and working for “them” in the future. Is there someplace else the Chinese can go to get returns? Essentially what I want to know is it a zero sum game or is it musical chairs with way fewer chairs and alot more people needing seats all of a sudden.And if it is a muscical chairs scenario why can’t we at least confiscate all the stuff bought by the bankrupt and sell it on ebay for something as a way to at least get a few more chairs…

You miss the point. The govenment is currntly printing money and issuing Treasury securities as fast as it can and literally throwing them into the market (it almost ran out the other day). The issuers of the CDS DON’T HAVE THE MONEY to pay. Losses will then be required to be declared on balance sheets, etc. Their goal right now is to keep the music playing (however slowly) and not stop. There are a hundred peple walzing around in this game of musical chairs and only one chair. If the music stops, everything comes crashing down, and a lot of people know it.

As an American of ethnic Jewish descent, I am beginning to be scared for the safety of myself, my family, and the overall Jewish community.History shows that in times of economic crisis Jews nearly always get blamed for the financial problems, and I feel like it is only a matter of time before large, organized anti-Jewish movements start to pop up in America and elsewhere, groups of very vocal (and possibly violent) anti-Semites who blame this economic turmoil on Jews in New York City or London or wherever.While it is true that Jews are involved in finance and economics in large numbers despite their small population, most Jews are not and yet still too many people fall for the stereotype of ‘Jewish economic parasites and market manipulators.’The ADL has already posted about the upsurge of anti-Semitism because of the financial crisis on their website: http://www.adl.org/PresRele/Internet_75/5366_75.htmGulp...

Options on precious metals are notoriously expensive. They are way over-priced. I would never tell anyone to waste their money on the market makers who dream up those option prices. If you’re looking for low-cost investment, what some people do is to invest in selected stocks of silver miners. I really couldn’t recommend any stock. But I do suggest that if you go this way, then choose a solid producer who has a good production history and good in-ground resources.PeteCA

That had never occurred to me- but sadly makes sense in a perverse way. A silver lining may be that the blame for this may in fact be placed at the feet of “Americans” and some of their co-conspirators in the UK and a few other countries. An increase Anti-Americanism seems to me to be a greater risk.

Melissa Francis for President, she seems like a smart young lady lol

Perhaps “priorities” vary according to one’s goals.Keynesian economics, declared long ago a failed system, promotes greater and greater inflation. It causes the depreciation of money. It results in great suffering in the lives of people. It ends in economic malaise, maladjustment and collapse. It diverts attention from the agents of inflation who work through government economic interventions, particularly central planners at the Fed and in the US Treasury.In brief, it is the system that gives the Fed and the Redistributive State power to expropriate money from Peter in order to lavish it on Paul. A bailout en masse of corrupt and powerful Wall Street international bankers in whose hands America has fallen, will cause — already is causing — great impoverishment admist plenty. It will seal America’s demise into serfdom.

While I won’t suggest you are over-reacting as there is truth in all you say, I will urge scepticism toward voices in your own community with their own agenda. For a time in the 1930s the zionists cooperated with Nazis to promote emigration to Israel from Germany. Similarly, the likes of Netanyahu and US supporters of his agenda will use the current crisis to stoke fear to promote emigration now.I’ve had enough of fear-mongering, hate-mongering and divisive politicians of all ethnicities, religions and nationalities.I urge you to hope, to speak truth, to remain objective, to reach across divisions, to build a better nation for your children and for all Americans.

1:24 p.m.U.S. exchanges considering temporary circuit breaker: WSJ

You missed the point. They did exactly what they were “incentivized” to do. Walk away with as much cash as possible. There was no reason to ever expect them to do differently. Remember, most Fortune 500 executives own a very small piece of their businesses. It’s the shareholders that took the risk and sheepishly agreed to everything. Of course, they were primarily represented by mutual funds, so it was a bit cirular.

I gotta’ go for a little while.Dow is still steadily selling off.It’s nice to see John Ryskamp calling us all neanderthals again.I really miss that from the good old days on this blog.Where’s a tissue? I think I’m gonna’ cry. People might want to take a look at this chart – it just popped up on Chart of the Day.http://www.chartoftheday.com:80/20081010.htm?TThe losses for the first-year of the current bear market for the Dow are now greater than ever before – even in 1929! That’s a pretty strong warning that something very big is going on here. Be careful about getting caught up in the fervor of short-covering and buy-backs.http://www.chartoftheday.com:80/20081010.htm?TPeteCAP.S. By the way John Ryskamp. I’m willing to put up with all your normal cr**, because a long time ago you called it right. You voiced a concern about the Insolvency Issue long before anyone else pinpointed it. And you also said it would sink Wall Street. And it has.

History says you are correct to worry. Two opposing factors exist. One is that we have a presidential candidate who is eblematic of America’s tolerance. Let’s see how he does. Second – where you gonna go? Peru? LOL Best of luck.

Well, then please use your skills to educate the world on what really happened here with the investment bankers and private equity LBO deal thieves who believe they are entitled to game the system, cash out and then walk away when it blows up! The only problem is if you educate the masses on the real truth, you will certainly have a complete riot against all of wall street and the financial spinsters of whatever particular ethnic descent they may be.

The American Anti-Defamation League (ADL) under Abe Foxman has made it a practice for decades to tail all Congressman – liberal or conservative — as brought out in allegations in the San Francisco trial of its head operative Bullock on charges of buying blackmail information from members of the San Francisco Police Department and reported by the San Francisco Examiner.There were no comments on this blog that would have necessitated a pre-emptive charge to innocent people that “American Jew” has leveled. But to use the ADL as some sort of authority on what may or may not happen is quite ridiculous.

I am ok with not tolerating anti-semitism, but then anti-Muslim sentiments should not be tolerated either. It is not acceptable that some warmongering Israeli politician distorts what some Iranian politicians say, for example.I am not a practicing member of any religion and certainly not a muslim, by the way. Just annoyed about how some “anti defamation” people always want to bring up this issue about anti-semitims, while ignoring that there are a lot of anti-[something] sentiments on this planet. Anti-semitism should not be in some privileged position.

Lehman auction done. Price is $8.625.

Reuters10-October-2008(Reuters) – NEW YORK, Oct 10 (Reuters) – A measure of future economic growth in the United States fell to a five-year low and its annualized growth rate fell to a 33-year low, hitting severe recession levels, a research group said on Friday.The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index fell to 120.6 in the week to Oct. 3, down from 122.2 in the previous period. That’s the lowest level since April 18, 2003, when it stood at 120.3.Its annualized growth rate slid from minus 13.3 percent to negative 14.7 percent, its lowest since Feb. 14, 1975, when it was minus 15.8 percent, according to ECRI data.”With weekly leading index growth plummeting to a new 33-year low, the U.S. recession is set to rapidly worsen,” said Lakshman Achuthan, managing director at ECRI.The index level ticked lower due to higher interest rates weaker stock prices and money supply growth, partly offset by lower jobless claims.Privacy Policy Terms of Service

Stock exchanges in Iceland, Indonesia and Russia remained closed Friday, while steep declines forced the halt of trading in Thailand, Austria, Romania and Brazil.

Ho-ho, this Berlusconi is a laugh a minute:Everybody ENEL shares now!Nobody sell any shares, now!Everybody by ENI shares, now!I don’t have to talk to the opposition, I’m right!Politics don’t matter!Banks are going to cut off their local branches!Let’s capitalize a few banks, now!Suspend the markets, now!No, don’t suspend the markets, now!

Canadian markets closed Monday. They will have all day to be bystanders to the biggest rally or most serious decline in modern times.

I wanna know who in their right mind keeps stepping in at Dow 8000 and buying this market?

Will deflation mean lower bond yields and gold going lower in your opinion?TIA

2:33 p.m. Gold falls nearly $30 in electronic trading2:31 p.m.Futures Movers: Oil tumbles below $78 to one-year low, set for 16% weekly loss

Deflation brings everything downthere is no escaping deflationJapan can tell you that

Rallying off that damn level of 8000 again! SO whats the call, rally to close green or tank 1000 points????

Guest, you make me sick.

About the outlook for dollar:there is a flight-to-safety drive that is keeping the cost to fund US deficit low. In addition, EU banks are buying dollar to reduce their leverage. These factors seem to argue a strong dollar.However, the US deficit is bound to increase.In this environment, what will happen to EURUSD? Does it mean USD will appreciate in the near term but will drop precipitately long term? Would the turning point coincide with the return of risk appetite?

Dear DOW going green Guest,hope you didn’t feel too frustrated lately.Understand that stocks don’t count now. PPT is out working on the real thing, the credit market. The kids are free to play how they want.

WOW!! it is like their is a wall of money sitting at or around Dow 8,000. That level seems to remind me of my first girl friends jeans…impenitrable!!!

Ahhh yes…the witching hour is upon us! Which way do we run folks?????? After another test, we are once again ONLY down 390 LOLOL BUCKLE UP!

Dear Professor,as you proposed, the state should guarantee all the deposits and banks to undergo so called triage to separate illuquid from insolvent. What hapen if they find that all the banks are of the latter state?

Giraf, I’m pretty sure that the contracts specifically allow presentation of “cash equivalents” in lieu of bonds. In other words there are many more CDS’s than bonds and they are all valid. I don’t know in the case of Lehman how many bonds there are. It also should be assumed that there are lots of off-setting positions within the $400b. Since there is no central clearing house nobody knows the net position outstanding.Bob is right though. There is little possibility that all the underwriters will be able to cover their obligations. So, nobody knows if their off-sets will work either. Does that help?

HERE COME DA BUYERS-TAKES A BRASS PAIR TO BE LONG OVER THIS WEEKEND!!!

Down less than 300 points…

UNBELEIVABLE!!

here are the Lehman final auction results… and they represent just a fraction of the Toxic paper out therehttp://www.creditfixings.com/information/affiliations/fixings/auctions/current/lehbro-res.shtml

Is that the “good news” driving today’s rally???

Chance of what? buying gold?It could fall more, couldn’t it? especially with a 1000 point rally on the DOW next week.

7 million share citi sell order at the closing bell… lol

.TEDSP:INDTED Spread4.6362 +0.4039 15:00 0.00 0 ? 10/08/2008 0.00 0.00 0.00 0.00US0003M:INDBBA LIBOR USD 3 Month4.8188 +0.0688 06:35 0.00 0 ? 10/08/2008 0.00 0.00 0.00 0.00V2X:INDVSTOXX Index81.034 +22.642 11:30 0.00 0 ? Multiple 0.00 0.00 0.00 0.0010/08/20080.00 @ 0.00.. .. .. 0.00 0 0.00 10/08/2008 0.00 0.00 0.00 0.0010/08/20080.00 @ 0.00.. .. .. 0.00 0 0.00 10/08/2008 0.00 0.00 0.00 0.00VIX:INDCBOE SPX VOLATILITY INDX72.89 +8.97 15:24 0.00 0 ? Multiple 0.00 0.00 0.00 0.0010/08/20080.00 @ 0.00.. .. .. 0.00 0 0.00 10/08/2008 0.00 0.00 0.00 0.0010/08/20080.00 @ 0.00.. .. .. 0.00 0 0.00 10/08/2008 0.00 0.00 0.00 0.00VXN:INDCBOE NDX VOLATILITY INDX78.85 +9.19 15:24

No one wants to be short over the weekend either with the government capable of anything and $700 billion at Hank’s discretion. Shorts are covering to get clear before the weekend, spurring the rally.

I can just see the headlines to night…” Dow rallies over 1000 points from the abyss to close up 200 points”

LOLOL DOW UP 300 POINTS !!!! THIS IS THE BOTTOM! CRISIS AVERTED!!!

BULLETIN DOW INDUSTRIALS TURN POSITIVE, REBOUNDING FROM NEARLY 700-POINT DIVE

agreed but it was a pretty good call just the same – of course anything can happen in the next 20 minutes — i was so looking forward to a real crash today (so I could buy) — there’s still Monday I guess

100% long today and brass is hitting the floor.It’s fun to buck the herd and be right once in a while.Fear is not an option,faith is what is required.Although this counter trend is going to be short lived;not for investing just trading.So be careful.

i think i am going to be sick… are we convulsing prior to 2,000 up or convulsing before 2,000 down ?

@ AlessandroLet me tell you how badly the credit markets are frozen up. Yves Smith had a post up this morning about how Letters of Credit were not forthcoming. How grain was sitting at port waiting for “financing” before it could be delivered. “Financing” is not exactly the right word. A L/C is not “finance” in the sense that a bank has to but its money at risk as some sort of bridge between buyer & seller. A L/C is a guarantee made by a bank as an intermediary. In effect, “this buyer has a credit at my bank and I guarantee his payment subject to the following terms.” He does this for a fee. A tiny one. Maybe $50. A bank doesn’t make that guarantee without having his own guarantee from the buyer.Anyway, it’s 99 – 44/100 % safe. There are only 2 ways anybody ever got hurt on one of these things. One is to not pay attention to the terms of the L/C because the bank is not going to release your money unless you dot every i. The other is to be accepting L/C’s on Nigerian banks. And there is a process of “confirmation” that can get you around that one.The point is that what’s broken is not the “finance”. What’s broken is the relationship that one bank has to another. To paraphrase somebody, “we are all Nigerians today.”

look at the after close decline… throw out the rules these days…

Welcome to the Hemalaya mountain chain. That view is so magnificently breathtaking … at least for someone like me who is just watching.Of course, I am talking about the DOW.People, I told you, I was out of the markets about 3 weeks ago. Although I missed on big profits (20%), I am happy I am out.This kind of bear markets destroys everyone and everything in its way, bears and bulls alike. And I am a financial chicken.Buffett said to never invest in what you do not understand. I just feel I do not understand even the equity markets. And for some “moral” reasons, if I stayed in the markets I would have been a speculator. From an “opportunistic” point of view, I am a vegetative person; I prefer to wait until all wounded bodies are dissected by bottom feeders and vultures, and that the remaining flesh and bones are consumed by worms and bacteria, before transforming them into new life form (vegetation). The thing is to have appropriate and enough seeds and marble soil when that time comes.Just a philosophy for few to consider.

Don’t sweat it. It’s just funds selling to get cash. If gold stays above 840-860, it’s still running in a long-term bull.PeteCA

What happens next week?

Based on the punditry it is all up to the G7 coming out with an announcment of unity. If the US Congress took two weeks to finally respond to the Paulson/Bernanke request (for a problem created in the US), what are the odds that the G7 can accomplish anything beyond an announcment for another meeting and some mild platitudes.Reuters G7Bloomberg G7

I was watching the TV, they even predicted it about a half hour or so before. I don’t think they have any shame whatsoever…

Just heard Lou Dobbs on the radio; interesting quote: “ ‘A $150 billion sweetener’! I want Henry Paulson out of there. ‘Sweetener,’ they’re even starting to talk like the Mafia.”

a wise policy

Oh my … you were doing so well.If you had only stopped yourself from writing that last sentence filled with insult and vitriol we might all be understanding your point of view clearly.Seriously, I want to understand what you do, but you always stop short of getting there and resort to throwing the adversarial insult tantrum.So, please continue with your reasoning and point the rest of us to all of the enlightening sources that have led you to your view.I am still waiting for your explanation from a previous thread of how the CFR & NWO are part and parcel. Please tell us how you got there (without judging others who post here as you do)!

Haiku? Right?

Three current video interviews; Barton Biggs Jim Rogers Nouriel Roubini

i’m down…

shameful post

The final results are in from the auction held today to calculate those payments, Bloomberg News reports:Sellers of credit-default protection on Lehman will have to pay holders 91.375 cents on the dollar, setting up the biggest-ever payout in the $55-trillion market.An auction to determine the size of the settlement on Lehman credit-default swaps set a value of 8.625 cents on the dollar for the debt, according to Creditfixings.com, a website run by auction administrators Creditex Group Inc. and Markit Group Ltd.Based on the results, sellers of protection may need to make cash payments of more than $270 billion to the buyers, BNP Paribas strategist Andrea Cicione in London said. The potential payout is higher than the 90.25 cents indicated by initial results from the auction earlier today. Lehman bonds traded Thursday at 13 cents on the dollar, suggesting a payout of about 87 cents was expected.But most estimates I’ve seen suggest that the final cash payments will be modest — in the billions of dollars, not tens of billions.http://latimesblogs.latimes.com/money_co/2008/10/wall-street-has.html

QUESTION: How could there be a G7 summit to solve the problem if most of those countries are debtor countries? And how could any solutions from there be successful or implementable without China, Russia, India and some ME representatives to, at least, approve the final recommendations.If you hear the G7 ministers talking about a road map and camp David, you should be sure our leaders will be as successful as in resolving the Israeli-Palestinian conflict.—————————————————————–#..Country….External Debt……GDP…….D/GDP…D&GDP as % of world—————————————————————–0..World……..$ 54,310……..54,311……100%1..U.S……….$ 13,773……..13,843…….99%2..U.K……….$ 11,502………2,772……415%3..Germany……$ 4,489………3,322……135%4..France…….$ 4,396………2,560……172%5..Italy……..$ 2,345………2,104……111%——————————————————————G5.Group 5……$ 36,505……..24,601……148%…..67%…..45%——————————————————————9..Japan……..$ 1,492………4,383…….34%12.Canada…….$ 791………1,432…….55%——————————————————————22.China……..$ 363………3,250…….11%——————————————————————The G5 countries sucks 67% of world debt to create 45% of world wealth.The G4′s debt represents, virtually, the rest of the world’s GDP (i.e. 60%). In other words, it takes 60% of world GDP to produce 40% of it.World-wide Disclosed Fees: 15.401 (6,890) (Q4 2004 report)World-wide Equity and Equity-related: 505 (3,628) (Q4 2004 report)World-wide Debt: 5,187 (16,439) (Q4 2004 report)US. Credit market debt: $49.6 trillion (349% of GDP)US. Domestic Financial sectors: $15.9 trillion (112% of GDP)http://en.wikipedia.org/wiki/Image:Debt_to_GDP_Forecast_Chart.png

That is not a breaking news.This is a breaking news:Breaking news: some breaking news may be announced.

One of the best comments Ive read on here (apart from mine of course) The markets always acts rationally ALWAYS.

G7 says current situation calls for urgent, exceptional action; agrees to take all necessary steps to unfreeze credit, money markets 6:09pm EDTyet another way to get at the American taxpayer, IMO

This thread really needs to be expanded. I hope the professor does take this on and expand on the possible (reality) outcomes.I think at some point the true value of the dollar would have to drop to a fraction of what it is today.

same communique on the US Treasury Sitehttp://www.treas.gov/press/releases/hp1195.htm

so what is new here?

or a genius. the system is dead. lets make it better and lets make it for everyone.

well lets just make it a really big chair that we all sit in. the music stops, we all sit in it, game over, and a new system of global financial harmony wins. there is just one side to the trade and everyone wins. the new game starts at zero for everyone.i love you guys.but listen, i may be kind of serious here.

Talking about reality and matters of real concern:”In reality, the situation is serious enough that federal investigators have been called in. “We’re not talking about hackers playing games or messing up our website,” insists a senior member of the bank’s IT department at its Washington headquarters. “It’s about the FBI coming last summer and saying, ‘You should take a look at your systems because we think something weird is going on.’ It’s about the intruders knowing what information they wanted — and getting to it whenever they wanted to. They took our existing data stores and organized them in a way that they could be easily accessed at will.”In plainspeak: “They had access to everything,” says the source. “They had the keys to every room at the bank. And we can’t say whether they still do or don’t until we fully and openly address what’s happening here.”The data raids are not a matter of stealing inconsequential bits and bytes. The World Bank’s data center is literally a treasure trove of vital financial information from around the globe. As a clearinghouse for financial data from both governments and companies, the bank’s computers could provide intruders with both a financial and intelligence gold mine — from inside information on bids and contracts to the minutes of confidential board meetings.”http://www.foxnews.com/story/0%2C2933%2C435681%2C00.htmlI have been observing 2 years and more of what is appearing as a methodical collection of privately held computer based data by persons and organization unknown and if I believe in conspiracies, which I don’t, I would tend to treat this report above rather seriously.But, then is probably just about the basic criminal elements er, “leadership”.Ho hum

Hey Guys and Gals, with all humility from a Latin reader, welcome to a third world banking and financial system!!! Face the fact that this a secular trend of wealth shift toward the east, that the world is not going to pay for your Social Security and Welfare, that you will have to pay 100% for your guns by taking the savings from your children futures and not from the surplus of China,Japan,Russia and the Middle East. So Food, Housing, Savings and Progress or War, Poverty, and Despair? Where are you going to put what is left? And finally but not least, Crisis=Opportunity.

But will it thaw the credit markets and lower LIBOR and TED? The market was expecting this so it is reasonable to think it had already been discounted. What the market really wanted was global a deal and that is not in the cards.

OkI’m a little new to this site and I need a little clarification. What does PPT stand for? I can’t figure it out. Thanks!

Here’s an intro: http://en.wikipedia.org/wiki/Plunge_Protection_Team

NopeWhat you have done is rather Crisis = Unmitigated Risk & outright uncertainty.Well, but then if you can handle it, then good luck to you.

Prepare for robbery.

The following is an excellent article that offers some interesting scenarios including a comparison to the depression of 1870 and some postive outcomes as well. It’s on seekingalpha.com which used to be a pretty good site but has become tainted with US partisan politics – so I ignore the comments and am very selective about the authors – as alot of stuff is crap. But this one is first class Where We Go from Here: Best and Worst Cases, by Cam Hui

Mmmyah…That, or grab as much cash as you can and run as fast as you can, without even turning back to look. [run away and out from USD that is, I find it is a nice exit point right now].See you the other side, and … best luck to all, sincerely.

Watch out for the conspiracy geeks that lurk around, they’ll have you digging a bunker in your back yard and wearing a tin-foil hat.

Finally, someone with a balanced approach.Here Here! My exact sentiments.Cheers!

The oil dividend.Just did a little basic math and by my calcs the U.S. may have just received a potential dividend in our oil costs. How does $300 billion per year savings sound?The formula: The U.S. imports about 5 billion barrels per year. The price just dropped $60 from this summer’s price. $60 x 5 bil. and it’s reasonable to assume we may have that extra money we would otherwise be spending. But the benefits don’t stop there. The U.S. only imports 25% of the world’s oil, so the other 75% of this windfall savings goes to the rest of the world. That means the cost for food, fertilzer, factory operations, and everything else the less developed world uses oil for, will be 43% cheaper (as of today.)There’s another major benefit that I mentioned in some earlier posts. Many, if not most, of those oil exporters are not frieds of democracy and have been using their oil revenue as steroids to pump up their muscle-bound war machines. If we didn’t have to worry about those oil mafias trying to dominate the Persian Gulf, for instance, we wouldn’t need to be there. Centcom is there for one reason only, and it’s not to fight terrorists or insurgents in Iraq.The way things are going we could be heading back towards $40 oil – at least till the growth engines kick in again, but it will give us a breather. Of course, cheap oil has a lot of negative aspects in the short run, such as hitting Mexico’s income very hard.

I sure hope they don’t do that. We’ll see how extreme the choices get as the Govt debts pile up in this credit crisis. Pension funds and 401K’s are the easiest target for the Wall St players.PeteCA

Dow Average May Be Poised to Fall to 7,000: Chart of the DayOct. 10 (Bloomberg) — The Dow Jones Industrial Average would have to fall about 18 percent more to reach its “trend line” since August 1982, when the 1980s bull market started, according to Peter Boockvar, an equity strategist at Miller Tabak & Co. in New York.As the CHART OF THE DAY shows, the average is closer to the reading indicated by the trend line than it was in October 2002, when the last bear market hit bottom.Yesterday’s close of 8,579.19 was about 23 percent higher than the level indicated by its past performance — about 7,000, Boockvar wrote in an e-mail today. The Dow average’s earlier low was about 35 percent above the trend line.The Nasdaq Composite Index fell to its post-August 1982 line “almost to the penny” after the 1990s Internet bubble burst, he wrote. The index plummeted 78 percent between March 2000 and October 2002, when it reached a six-year low.Since Sept. 29, the Dow industrials have fallen 23 percent. The retreat started with a 777.68-point plunge, the biggest one- day drop in history.The Standard & Poor’s 500 Index would have to lose only about 6.5 percent more to hit its trend line, according to Boockvar. The reading suggested by the index’s swings in the last 26 years is 850. Yesterday’s close was 909.92.Stocks may hit bottom before the benchmarks drop to these levels, Boockvar wrote. “We certainly don’t need to get there in order to create a bottom,” the e-mail said.http://www.bloomberg.com/apps/news?pid=20601109&sid=amX076XhpyXk&refer=home

This is not so much a “dividend” as it is a removal of a tax.We are still above levels from just 13 months ago. So, in effect, over the last year, the world got hit with a punishing new expense. That expense has been relieved.I wouldn’t go so far as to say there is any real stimulus from this. Doing math from the very brief “peak” price, which lasted less than a day, is certainly not reasonable.

I remember you posting in this blog months back. Welcome back and thanks for your valuable comments.

Mostly true. But if you’re a believer of “peak oil” theory, then you’re aware that the projections were for $200 oil not far into the future. Had the global economy not been on a downsloap, the price might easily still be creeping up. China alone was adding to most of the annual oil consumption in the world.Add to that the potential war with Iran, Venezuela’s oil threats, Mexico’s production falls (25%), Nigeria’s insurgents, OPEC cutbacks, and Russian threats, and there were plenty of opportunities for more radical spikes, maybe even new plateaus.

So many phallicisms today . . . me thinks Dr. Slamdunk needs some special attention.

Perhaps Seneca has read “The Shock Doctrine: The Rise of Disaster Capitalism.”Anyone who has not read that book should pick it up this weekend. (Disclaimer: I am not Naomi Klein, nor do I own stock in her publisher). The best book I’ve read in a while, with profound implications for this very moment in time.The implication in this reference is: Crisis = Opportunity (for the select few). Some animals are more equal than others

That’s cause I just bought some. i have a habit of standing under pianos. I just got done with school, and, got a job at a non profit. I don;t make a lot of money but I have extra each Month. So I bought some 90% silver coins. I can’t figure out where to save, so I thought it would be smart. We are talking only a few hundred dollars every two weeks.

Certain market astrologers and numerologists*–I mean, “technical analysts”–claim that the DOW from 1929 to 1937 andthe NASDAQ from 2000 to 2008 are “identical” (up to vertical scaling). Here is such a chart, as of Sept 15 2008 (you have to pay for the latest, of course).I believe the gyrations of Oct 10 ruin the numerological progression.*It takes one to know one.

I’ll try again.

Ok, since the government is getting involved anyway, and giving away$700 billion of our tax dollars in the process, but banks still willnot lend, why don’t they just make it a law that they have to lend orelse the overpaid managers will go to jail. Mandated market confidence,lend or go to jail.The government would have no problem sending any of us to jail if werefuse to pay for their $700 billion failout. That’s one thing youcould be confident about.

You forgot alcohol and antidepressants.

In fact I think US and UK in particular did not “create wealth”. They created debt. As can be seen from how much debt is around in those two countries.Debt is not true wealth.

Via Don Fishback’s blog – LB’s Survivor Bias in action:

What REALLY HappenedI hope my good friend Larry McMillan doesn’t mind me doing this. He has a terrific advisory service — The Options Strategist. In this morning’s hotline, He had this to say about the goings on yesterday:The selling has reached historic proportions. There literally is a “run on the market,” as investors worldwide are dumping stocks. It seems that the major catalyst for this selling is the fact that the newest large banks primarily J. P. Morgan, Goldman Sachs, and possibly Morgan Stanley as well — have issued massive margin calls to hedge funds and other professional traders who use these banks as prime brokers. These calls were not issued because of market losses, but more because the banks arbitrarily decided that they wanted their customers to use less leverage. Margin rates as low as 15% for broker dealers were raised to 35%; hedge funds who had been used to operating on high leverage were told that they had to bring accounts up to a much larger percentage of equity. In this illiquid environment, where all manor of exotic securities literally have no bids, the only place to raise the cash to meet margin calls was to sell stock. That is what really setthis market over the edge — as the first notice of these calls were issued on October 2nd and 3rd. There was something of a grace period to meet the calls, but funds realized they weren’t going to be able to meet themother than by selling stock. There are rumors that the most massive of the calls are due Monday (October 13th). If so, this market could continue to decline through then.There doesn’t seem to be any reason for this increase in margin. The most benign one is that the banks became overly worried that their prime brokerage customers could cause problems with leverage. A more sinister reason revolves around the fact that the banks issuing the calls will likely wind up the owners of some excellent inventory (relatively illiquid preferreds, bonds, etc., which are being sold at prices well below theoretical value). They are in effect confiscating from their prime brokerage customers.

The real disappointment is that Obama will likely have to deal with all of this sh*t created by the Bush and Clinton Administrations. Obama won’t have a chance to do much of anything except try to clean up their mess.

“The reason for the sharp decline is massive selling from hedge funds — not because they want to, but because they have to reduce their leverage,” says Kenneth Heebner, manager of CGM Mutual. “It’s the biggest margin call since 1929.”

I like the solutions mr Roubini are suggesting but I think I am on something better. It will for sure be the utlimate solution to this mess and it is failproof. It is based on the same ideas as Mr Roubinis but my solution is simpler and more effectiv it is called “The FED Lending Machine 2.0″.The Fed Lending Machine 2.0 will look like an ATM and many ways it is. The differenses between The Fed Lending Machine 2.0 and an ATM is that from an ATM you redraw money from your own account but as with the FED Lendng MAchine 2.0 you will lend money from The FED and you will be able to lend as much as you want with a zero or below interestrate.I prefer the “below” rate since it realy boost lending. Of course you have to apply for a FED Lendng MAchine 2.0 card but nobody is going to be rejected.This will not be a a costly undertake. The machine is easy to build and instead of money it will contain a fairly simple printer. All cost fo producing the machine will be covered by the machine itself. It will borrow money from itself.With The Fed Lending Machine 2.0 there will be no more foreclosures, no more autoloan failures. The shoppingmalls will once again be filled with the proud and fierce US shopper.Eternal shop-happines will flow with the boost of liquidity that The Fed Lending Machine 2.0 will give us.

They all are now keynesians!!!

Roubin your solution seems ok butwhere are you going to get the money?Are you going to print or lend?

Talking about USURY:”In addition to collateral in the form of illiquid AIG assets for the $85 billion two-year bridge loan, which carries a **usurious** interest rate of 8.5 percentage points above LIBOR ” Emphasis minehttp://henryckliu.com/page169.htmlSounds like Australian Home Mortgage rates…. Oh, Usury, well, after the government has pumped up house prices through squeezing land releases… and can we add, etc., etc?Ho hum

Ken Heebner Is Bullish on Bank Stocks September 24, 2008

Fundemental problem is too little too late.Recapitalization required – just underwayAsset prices reversion to the mean – underway e.g. housing too much consumer debtDeleveraging – underwayRecognition of losses – stealth but not officially underwayThe delay has resulted in a cascade of secondary and now tertiary problems some of which will be as serious, in their own way, as the above. Moreover as each of those issues are addressed expected consequences will result e.g. housing and reduction of personal credit = reduced consumer spending. Printing money = higher interest rates = reduced consumer spending. Unexpected or unintended consequences will also result, which we will soon find out about.Recognition of losses is underway in a stealth fashion e.g. Libor and Ted are telling the tale. It many be that open recognition will have a pleasant outcome but more likely have the effect of a cluster bomb. Take a drive through Cape Coral Florida to see the effect of recognition of losses. No offense to residents of that lovely community but it has become a wasteland that would make TS Eliot blush.etc etc

Did you ever wonder what the message in the upper right hand of this comment box meant allowed html tags: a, b, i, u, blockquote?It means that when you post a link to another website you can make it an active link that you just have to click on. How do you do that? It is simple. Lets say you want to make the URL http://www.bloomberg.com an active link.First but quotation marks on the URL “http://www.bloomberg.com”Next put this tag in front of the URL Next put this tag at the end of the URL “http://www.bloomberg.com”> This is the description of the URLFinally put it all together with the tag in front and the tag at the end and you have just created an active link that will increase the probablity that your reader will visit This is the description of the URL

military spending = bye bye Iraq = hello Iran = oil @ $300

I’m @Guest on 2008-10-10 14:36:17 – and didn’t buy what you were saying – to my loss – hopefully you keep posting – I have just discovered this site and find the tone and content superior to many. Having said that I will be interested to see what happens next week (my not so reliable instinct still sees a very difficult Monday)Thanks again Giraft

Great post! You are so right. This country has needed a good dope slap from the reality fairy for a long time. Time for everybody to put down the clicker, get up off the couch and do some REAL work.

Could be difficult on Monday if the post at 02:14:43 below has credibility. If the sharp selloff last Friday were the margin clerks at work, rather than the capitulation of panicked retail investors, it presents a very different picture. Those forcibly taken out of the game won’t be back in a hurry. However, we are down six thousand points on the Dow and there are some that want to put their money back to work and I think that’s what we saw on Friday.While some co-ordinated activity will evolve over the next few days/weeks from the G7, many may be disappointed about the lack of any concrete plans. Guess it just means that we’ll have continued huge volatility in prices.

Are Hedge Fund Margin Calls Leading to Stock Rout?

BW2 is collapsing. That’s a big part of what you’re seeing right now. That’s just one reason why this recent statement by the G7 doesn’t address the fundamental issues. And as other people said here … if there’s a new global agreement then it needs to include China, Russia and other important players.PeteCA

Also my issue with Prof Roubini’s solutions. A lot of solutions to this problem all seem to assume that the USA has a magic piggy bank where we can just get a lot of money. What if we don’t? What if interest rates soar in America and no-one will lend to us?PeteCA

A few rambling long-term thoughts on the U.S. …IMO a GM/Chrysler merger is a bad idea. It smacks of nationalization. And where does it leave Ford?As much as bailouts reek it does make sense to me to protect what’s left of the U.S. manufacturing base. The production and sale of real goods adds real value to the economy, unlike, say playing clever games with capital and contracts.It is difficult for me to imagine any way out of the U.S. deficit black hole outside of direct or indirect default. Medicare alone is a monstrous pit awaiting us. IIRC the new prescription benefit alone will cost more than ALL of Social Security.If the U.S. is going broke anyway shouldn’t a default be used as an opportunity to salvage what we can?Many of our remaining U.S. owned (whatever that means now) manufacturers are saddled with legacy costs in the form of medical insurance and pensions for retirees which makes it difficult for them to compete regardless of how “affordable” or efficient their current workers may be. Instead of nationalizing the companies, and/or throwing more money at them directly, wouldn’t a widespread lifting of this burden give everyone a second wind?It may seem far afield in the current crisis, however I believe that when the dust settles, moving to single payer/Medicare for all health care system could be a crucial step in healing the U.S. economy as a whole. Medicare D is a piece of crap and should be junked or massively revised.That said, lifting the burden of current and legacy health insurance from U.S. companies should certainly give their bottom lines a boost without favoring any one company. And, also IIRC, the largest number of consumer bankruptcies are related directly to illness and medical expenses.The second and third large U.S. government investments should be in infrastructure and new technology/manufacturing to deal with global climate change and declining petroleum production. These investments will improve things in the U.S. and potentially abroad.A further devalued U.S. dollar should provide an additional boost to manufacturing and agriculture as it would simultaneously increase domestic consumption by making imports less affordable for U.S. consumers, while making U.S. exports more competitive globally. A debased dollar should work almost as a type of tariff without all the political fall out. Hence why China and other countries worked for so long to keep their currencies cheap in relation to the dollar.The obvious rebuttal is “where will the U.S. get the money?” I guess the answer is what will serve our creditors better, a complete default, or a partial default where the U.S. has a chance at repayment of some kind through the balancing of global trade.

U.S. BUYING INTO FINANCIAL INSTITUTIONSThis move, announced today, is absolute confirmation for me that this is an intentioned shut down of the economy. Each bank or financial institution that the Treasury buys into will give it (and Goldman Sachs) the power to shut each bank down and to decide when it shuts down. It couldn’t be more transparent. They’re going to turn out the lights in an orderly fashion and it’s obviously an attempt at a controlled fast crash. They’ve only got three months left in office. That would essentially make Barack Obama an economic janitor employed by the same firm. I can just hear Bush and Cheney cracking a joke about it.MCRc. 5 P.M. ESTUNDERSTANDING FRIDAY, Oct. 10th, 2008 — NO CAPITULATION AND WORRIES ABOUT THE ELECTION[DISCLAIMER:From here on out I will write under the assumption that those who read me are familiar with Rubicon, the FTW site and its archives, and my videotapes. I'll assume that you already know what GATA is and that you understand all of my/our previous work on gold, intelligence agencies and economics. The reason for that is that I am, and will always be, most loyal and responsive to the thousands --perhaps tens of thousands -- who have been with me and the FTW gang for years. I cannot and will not go back and rewrite what I spent years writing and waste the time or focus of those who just need/want to hear what my inisghts are today. We just don't have time to waste. For those willing to do a little homework, the FTW acrhives are there and available. The easiest thing to do is to go to the FTW search engine (not a great one) and, under Search Options select "Find exact phrase". Then enter whatever terms or subjects that we use here andyou will find a quick-study course to help bring you up to speed. --MCR]Bear in mind that everything that happened today happened in absolute silence about Citigroup. The latest there is that there is supposed to be a court hearing next week about a suit Citi may bring against Wells and Wachovia. Meantime, Citigroup has waived all claims to acquiring any of Wachovia’s assets (cash deposits). My suspicion is that out of fear Citi is hanging back for any kind of discussion about its stability. Then again, they just might be waiting for the right moment to break the bad news to achieve the worst effect: capitulation. Citigroup is in a worse position than it was two weeks ago. It is still heavily weighed by bad mortgage debt and “bailout options” are becoming an endangered species, especially when Citigroup would be the biggest bailout ever — by a wide margin. The seemingly blessed AIGwas/is nowhere near as big, especially in terms of impact.VOLATILITY –I have never seen such a volatile market as I saw today. I saw (maybe there were more) no less than eight swings back and forth between positive and negative in the Dow. Five of them were in the last hour of trading. Up by a hundred then down 800. Then back up to even. Then back down again to -600. And then back and forth by 200-300 pts five times. A key moment, when the Dow was down by 600+ was a sudden drop in the price of gold by around $50 an ounce — out of nowehere. When that happened, the 600 point loss evaporated to 128 or so points. The continuing blatant manipulation in gold prices is so obvious as to be ludicrous. It is sucking the last bits of cash out there into the markets. GATA has been right all along and I have said so consistently for many years. The panicked sheep who have been”looking at” gold (late, but not too late) will hesitate and leave their money in stocks, blindly believing we have hit the bottom on Wall Street.There is no bottom until there is CAPITULATION. Today’s volatility was anything but CAPITULATION. It looks to me like the violent, last-gasp throes before death which I have seen before in real life.Capitulation is when the market hits a bottom and just stays there…for days and weeks. When there are no signs of struggle or life. No heartbeat. No thrashing.When the Citigoup bomb is going to drop is anybody’s guess but I just don’t see how we can go through next week without major media starting to ask questions on the air and in print.I repeat that the U.S. government is doing everything it can to step on the economy like a cockroach. Every move by the Executive or the Fed has not helped, but hurt share prices. This is deliberate.MCR

Was Sub-Prime good for America?This speech (below) by Bush almost exactly six years ago might help explain why the sub-prime mess has happened. And I realize that most Americans will see Bush as one of our worst presidents because of the meltdown – hindsight always being 20-20. But I’ll stick my neck out and say that had I listened to this speech at the time, especially knowing we were in the midst of a war that was about to get much larger, I’d probably have considered him an American hero. This speech is full of common sense and could have only been made by someone with guts and a vision for a better future. The fact that greed and optimism is part of our human nature is not really his fault.Bush’s Home ownership speech(excerpt)

All of us here in America should believe, and I think we do, that we should be, as I mentioned, a nation of owners. Owning something is freedom, as far as I’m concerned. It’s part of a free society. And ownership of a home helps bring stability to neighborhoods. You own your home in a neighborhood, you have more interest in how your neighborhood feels, looks, whether it’s safe or not. It brings pride to people, it’s a part of an asset-based to society. It helps people build up their own individual portfolio, provides an opportunity, if need be, for a mom or a dad to leave something to their child. It’s a part of — it’s of being a — it’s a part of — an important part of America.Homeownership is also an important part of our economic vitality. If — when we meet this project, this goal, according to our Secretary of Housing and Urban Development, we will have added an additional $256 billion to the economy by encouraging 5.5 million new home owners in America; the activity — the economic activity stimulated with the additional purchasers, the additional buyers, the additional demand will be upwards of $256 billion. And that’s important because it will help people find work.Low interest rates, low inflation are very important foundations for economic growth. The idea of encouraging new homeownership and the money that will be circulated as a result of people purchasing homes will mean people are more likely to find a job in America. This project not only is good for the soul of the country, it’s good for the pocketbook of the country, as well.To open up the doors of homeownership there are some barriers, and I want to talk about four that need to be overcome. First, down payments. A lot of folks can’t make a down payment. They may be qualified. They may desire to buy a home, but they don’t have the money to make a down payment. I think if you were to talk to a lot of families that are desirous to have a home, they would tell you that the down payment is the hurdle that they can’t cross. And one way to address that is to have the federal government participate.

I was thinking this past week about Sec. Trea. Paulson and Chairman Bernanke. They want “me” and the general public to trust them. On what basis have they earned that trust?I called up a picture on the Internet of Paulson speaking before the US Congress this past week. I said to myself, if I had $10,000(US)in cash on a table between us and Paulson requested that trust him with putting that money under his control with a promise that it would be returned — DO I TRUST HIM? or DO I NOT? with my funds.I looked at his photograph and determined — “NO” I don’t trust Paulson. I did the same with Bernanke.What basis have they given for the public to trust them?

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In Australia our banking system is well regulated because greed, optimism and cleverness are part of human nature.Fortunately our two political parties are fighting for the middle ground, sound economic management and compotent social program (free/cheap health/presciptions, affordable childcare, properly funded schools, free college but with some debt to govt paid when you earn, compulsory 4 weeks pa leave, compulsory sick leave, safety net conditions) and fortunately we have a china driven mining boom.Our conservative (and now) opposition party have recently been decrying the unlivable aged pension, for an increase!Our last govt, conservative, was voted out for removing the exisitng employment conditions, that were arguably working fine.Conservatives govt failed to invest in university/training places, hence we sufferred a (probably inflationary) skills shortage – seems a false economy when skilled labour now drives the economy.We had a housing boom but without a big increase in supply, seems more of an increase in house size, so values have not plummeted once the bubble stopped.There is no defaulting on home loans, you owe the bank, you repay the bank. The banks make obscene profits as they do everywhere, ie many new home owners bought big when rates were low and now are working for the bank as rates go up.As you age you realise truth is relative rather than absolute – its not whether we go left or right, but trade offs between each that make a healthy balance.Ie healthy workers repay loans. Tax cuts for the rich are probably invested in china, and the bill for the rich mans war is going unpaid and the ordinary guys are the ones being shot at. A wealthy middle class spends and drives business. Profit motive in health insurance can have positive and negative results. Govt run health care is better than none. Private health insurance is a tax, but they are constantly looking for ways not to pay the most frequent ailments. An underpriveldged class causes crime for which everyone pays anyway. Handguns are stolen.

Obama is facing a failed incumbent party and is playing a small target strategy, ie less is more.

How about govt bys the foreclosures, rents them to current tennants and, if there had been adequate regulation, fines the bank for breach of due diligence in making dubious loans.

In Aus we had a first home buyers grant, which simply pushed prices up, but you still had to save to start. No we have a saving home loan deposit assistance program. No deposit loans are problematic, no?

(except for the _q, that _ was an oversight.)Like “Nationalization” spelt with a zee

Lend or lose your banking license, if the US had a banking license.

interestign post found elsewhere:

zenwols Author Profile Page:Letting Lehman go bankrupt was the FIRST sign that Hank Paulson didn’t understand the extent of destructive power in CDSs. As an example, iflife insurance were constructed the same way, I could buy any number of life insurance policies on my neighbor, or anyone for that matter,limited only by my ability to pay the premium until they died! And in the CDS world there are no laws against me killing my neighbor and collecting onthe policy!Hedge funds short publicly traded companies after they buy massive volumes of CDS policies against their bonds. Downgrades by the rating agencies force the company to raise and retain more cash which forces bond defaults and bankruptcy which triggers CDS payment by institutions around the world!And it’s legal!BANKS KNOW THIS! BUT WHAT THEY DON’T KNOW IS WHO THE NEXT TARGET WILL BE AND WON’T LEND TO ANYONE UNTIL THEYARE SURE THEY WILL GET THEIR MONEY BACK!!!!!!!Everyone said Goldman Sachs and Morgan Stanley were too big and powerful to fail. Even Warren Buffett of Berkshire Hathaway didn’t know what he was getting into when he agreed to provide a publicly traded company Gldman Sachs $5 billiondollars and received preferred stock at a $10 discount and a 10% dividend in an attempt tosupport a stock his company had in their portfolio. He paid $115 a share for GS two weeks ago when it was publicly trading for $125 and he has options to buy $5 billion more at $115. That won’t happen since GS was trading as low as $80 Friday and, unless Paulson wakes up, headed forbankruptcy!The Paulson proposal Friday evening is the same thing Buffett did. Guarantee survival through the sovereign “wealth” of the U.S. government.Didn’t work for Buffett and won’t work for Paulson.Unless Paulson takes these companies private or makes the CDS/SHORT maneuver illegal and suspends “MARK-TO-MARKET” accounting he can’t print enough money to solve this problem. Part of a solution is to force CDSs out of business by regulating them and forcing ownership proof of the related debt instrument before insurance can be purchased or paid. CDS instantlydisappears. Only legitimate hedging activities would then occur.Oil had the same problem. Speculators who were never involved in producing oil or oil products were driving the price higher every week until this financial crisis forced them to sell their oil positions to raise capital to cover exposure to CDS contracts they had written.A small sliver of justice in an ironic twist of financial fortunes! And that brought a smile to my face this morning as I actually filled my cars’ tank with gas at $3.22 a gallonfor the first time in months!

I just listened to Bud Burrell interviewed on financial sense today. This is the same thing he is saying. http://www.thesanitycheck.com. I really think we are screwed. This whole shooting match, government and all is a criminal conspiracy. I hate to say it, but, it seems to be so. I don’t have any confidence in Paulson. I think he got blind sided. He didn’t know WTF was happening. He has no idea of how to “fix” it. Remember when it was FRE and FNM he had his “bazooka.” Didn’t seem to work. I think we are corned and I think the little guy will lose. Municipalities, States, pensioners, and people that put their cash in these 401Ks and let someone else make the decisions for them. I’ve been telling people I know to get their money out, but, the look at me like I am nuts. Maybe the are right and I am. I am not an economy person, or even an investor really, but, I read. A child could have seen this coming. I don’t know. I am buying more silver. I can afford it. I don’t have debt, and, i want a safe store of value. I don’t even have a bank account. I just cash the damn check, and get money orders.

The Professor has said deflation will be the worry rather than inflation, which seems counterintuitive given all the money that will need to be printed to cover the bailout. While in the relative short term deflation due to asset oversupply, manufacturing overcapacity, and slackening demand makes sense. In the long term, it would seem that hyperinflation would have to rule the day. I hope the Professor will write about the inflationary/deflationary aspects of the financial crisis. It seems there are opposing forces here.

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