OK I am the first

Great 10/22 video, Dr. R. And it’s easy to pass on to friends, foes. Thanks.

NR, nicely done!I’ve noticed that you have now moved your recessionary time table to 2 years vs. 12 – 18 months. I think many of us who read and post on your site feel even 2 years maybe short sighted.Could you expand on why you now feel the recession is now 2 years vs. 12 – 18 months? Then extrapolate what might have to happen for it to become a depression.I’m sure I speak for many here is saying … thank you for both your insights and ability to read them!

RE: Discussion on previous thread about physical PM prices.Check out 1 oz gold and silver eagles and gold buffalo on EBay.Silver eagles are selling for $18-$20 per ounce – is that 100% over spot??1 oz gold coins are easily $100 over spot.

IMF chief faces staff affair inquiry|The AustralianTHE International Monetary Fund (IMF) has been plunged into a leadership crisis in the middle of the world financial turmoil by allegations that its managing director had an affair with a married employee.The IMF has begun an investigation into whether Dominique Strauss-Kahn, the former French Socialist finance minister, acted improperly by showing favouritism to Piroska Nagy, a Hungarian woman employed in the fund’s Africa department.Investigators are also examining the payout received by Ms Nagy when she resigned in August before taking a position with the European Bank for Reconstruction and Development in London… [The International Bank for Reconstruction and Development is the sister organization for the IMF and is commonly called the World Bank.]The affair is reported to have come to light when Ms Nagy’s husband, Mario Blejer, an Argentine-born economist who once worked at the Bank of England, discovered compromising emails.Strauss-Kahn, 59, who is married to Anne Sinclair, one of France’s popular television presenters, said in a statement on the weekend he was “continuing to co-operate” with the investigation into what he described as an “incident which occurred in my private life”…Once regarded as the prototype “champagne socialist”, Strauss-Kahn had combined a glamorous Parisian lifestyle with a high-flying political career…Strauss-Kahn was also at the centre of a titillating mystery involving Yasmina Reza, France’s celebrated playwright, who published an intimate portrait of Sarkozy last year.Strauss-Kahn took over at the IMF shortly after Paul Wolfowitz…was forced to resign following allegations he had shown favouritism to an employee with whom he had a long-standing relationship…The Wall Street Journal reported that Strauss-Kahn had sent emails to Ms Nagy discussing a possible relationship, which began earlier this year during a conference in Europe…http://www.theaustralian.news.com.au/story/0,25197,24520039-2703,00.htmlIn 1999, Strauss-Kahn was accused of corruption in two financial scandals related to Elf and MNEF, a student mutual health insurance, and resigned as Minister for Economics, Finances, and Industry in Jospin’s Socialist Party Plural left government in France to fight the charges, in agreement with the “Balladur jurisprudence.” He was acquitted in November 2001,and reelected in a by-election in the Val-d’Oise.http://en.wikipedia.org/wiki/Dominique_Strauss-Kahn

Wolfowitz’s ousting was a cover. He’s lucky that he only got thrown out on his butt. I doubt that Strauss-Kahn is responsible for murdering thousands of people like Wolfowitz.

Don’t we need more people in the US (more tax-payers)?How are we going to pay for eveything?

Thats more like it.

perhaps but it depends on what government you work for when you murder folks. You can make decisions that cause the death of thousands if you work for the U.S. government, for example. There is no tribunal that will try to sue you. But make decisions like that when you work for some African country or some slavic regime and it is a different story.US and UK soft control the media, the “soft machine”.

DENIED!!! SOMEBODY WANTS THIS LOWER TODAY!!! BEWARE OF KIDS IN THE SANDBOX

It should be added that Strauss Kahn had many supporters in France, including me, for one reason.He’s the only french politicians with deep insight in economics. It a very pragmatic keynesian politicians. Other politicians and the current Lagarde ministry of economy only have liberalism or anti-liberalism view that reflect their lack in understanding economy.It is unfortunate for the ideas pushed in this blog that he will probably not be available as the IMF director at the time the IMF may be restructered to centeralized an enhanced finance world supervision.He may be blamed for this even if the charges against him happen to be exagereted by the media or his anti regulation opponents.

Welcome Back but too many people in uppercase how about mixing it up a bit with italics or bold or underline by the way I assume an overhead gap is a bullish indicator

A comment from this article:”I’ll tell you what happened…the investing class drove American production overseas in the quest for greater profit margins for shareholders and fatter paychecks and benefits packages for management. As the wealth migrated upward, eventually the poverty that was left in its wake, that destroyed the real source of America’s wealth, the working class, followed it upward into the middle class that had so gleefully helped in the off-shoring of American production. If you truly want a return to prosperity in the US, bring the production facilities that once generated the wealth of our nation back home. When the US economy took this incredible nosedive, did anybody notice that the only thing any of these corporations had to back their wealth was debt that they had been trading back and forth, increasing its hypothetical value every time it changed hands? Debt is the only thing we produce here now, and it is proven to be debt of very poor quality.”

Ok, I am a total neophyte when it comes to financial matters, so please be kind when ripping this apart.Since it seems like so much of this is related to mortgages that people can’t pay, why not do something different with the $700B? How about a national lottery comprised of home owners who only own one home? Pay off as many mortgages as possible with the $700B. The money still goes to the banks for loans that would possibly have been defaulted on, and the homeowners get a large chunk of their income freed up to be able to increase their discretionary spending, which should benefit their local economies, and by extension, the overall economy. The government buying up a bunch of toxic debt and bad home loans does nothing for the common man, struggling to pay all his bills.OK, rip away.

Excluding the two upper-cased paragraphs, this is one of the very few posts of yours that makes sense.Sarcasm off.

For those forces of the world who are interested in establishing the international merging of banks and political systems into a single world currency and cooperative political control, they need a specific kind of political official. From each nation, these international enthusiasts need politicians who will deliver their political system to the “greater good.” For an African nation, this may mean an authorative dictator, for a socialist nation, a socialist with Marxist inclinations.IMO, Strauss-Kahn was attractive to the IMF movers for this reason, primarily to deliver France, and for his support of Keynes’ Fabian ideals of bringing socialism to the world. John Maynard Keynes co-founded the IMF/World Bank. The Fabians scorned the Communists, not because they disliked their goals, but because they disagreed with their methods.It can be noted that Strauss-Kahn prepared France’s entrance in the euro zone; he co-founded the think tank “A gauche en Europe” (To the Left in Europe) and “Socialisme et judaisme” (“Socialism and Judaism”); he presided jointly over the “Socialisme et democratie” current in the Socialist Party (PS); and he campaigned for the “Yes” at the referendum on the Project for a Treaty establishing a Constitution in Europe, refused by more than 54% of the French citizens. Further, in 1993 he was appointed chairman of the groupe des experts du PS (“Group of Experts of the Socialist Party”).Interestingly, in 1994, Raymond Levy, then director of Renault, invited Strauss-Kahn to join the Cercle de l’Industrie, a French industry lobby in Brussels, where he met the billionaire businessman Vincent Bollare and top manager Louis Schweitzer; Strauss-Kahn served as secretary-general and later as vice president. This lobbyist activity earned him criticism from his alter-globalization left support that opposes the unregulated political power of large, multi-national corporations.Is is fair to say that France’s alter-globalization activists generally call for forms of global integration, but based on better provide democratic representation, human rights, and more egalitarian states? But does it ever work this way?

do we get the 2:30 bounce today?

I would have said/added that the problem is one of a subprime lending/financial system, and that residential mortgage is just a small part of it.Somehow, some people still think that stopping housing evictions is the ONLY solution. In all cases, this and Mark’s comments are as well relevant to the post above.

You obviously don’t get it. No one will fund American suburbia any more without an individually enforceable right to housing. When American suburbia collapses, the world collapses.If this doesn’t “make sense,” ask for clarification from American suburbia.

MAWould you say that Schiff is not considering dept forgiveness? http://www.merkfund.com/money/authors/schiff/2009-09-12.htmlDid you see my response to you in previous thread?hlowe

I concur. Much better John. Now, a couple of questions:1. Please define and explain your terms “west coast hotel scrutiny regime” and “maintenance regime”2. Why do you believe that no foreign investment will come to the US without housing rights? What if lending standards were simply returned to reasonable guidelines (eg: 20% or more down on all home loans)?You are getting clearer. Now just stop shouting. Just because you have a message, and perhaps an important message, you must be able to communicate it or it will never be heard and or acted upon.

if all global governments are trashing their currencies by printing more money, lowering interest rates, etc…this means more and more liquidity chasing the same amount of commodities – so commodity prices to go through the roof!

As I recall, John McCain came out in one of the debates with this idea. He said Hillary Clinton had proposed a similar plan. If I’m not mistaken, It was shot down because it was expensive, it wouldn’t really deal with the underlying problem and because people didn’t like the idea of bailing out real estate speculators and the banks that provided them easy, risky money. I’m not sure if McCain is still touting this idea.There is the HOPE plan, but it is very expensive for homebuyers. It gives the government 1/2 of all future appreciation in home value for all time. Plus, you have to pay 1/2 of the initial equity write down anyway (The mortgage gets written down to 90% of current value).

StocksGoinRed-GOOD ONE, YOU MADE ME FORGET TO SIGN MY NAME AHAHAHAHAHAH!

Wrong. Other things leap out from the shadows to sabotage the supposed “safe havens” of commodities, gold and silver. A big one now is people having to sell their commodity investments to meet other financial commitments.That has to be washed out of the system, and that will bring prices REAL low. Then demand will collapse.You suffer under the illusion that there is some “floor” demand at which prices “must” stabilize. That being the case, there is a guaranteed market which will stimulate investment cash.But watch out. That investment cash will itself dry up. Then you start to have supply problems. As the economy collapses, will the wheat production infrastructure (both financial and otherwise), and the gold production infrastructure, hold? No.Look at Baltic Dry to see what is going on. To be sure there is some overproduction in shipping, but as shipping declines, the shipping INFRASTRUCTURE itself starts to decline.So you don’t want to invest in a commodity–even assuming you have the money–if you are not sure of being able to lay hands on the commodity itself.Then there are other factors which sabotage commodity investment. One is restrictions on currencies and commodity hoarding by governments.I don’t think you have studied sufficiently what governments do when things REALLY get bad.Reason? It never got REALLY that bad during the Depression in the United States. 50% unemployment is the tipping point. Plug that into your models and see what happens to commodity prices.In the end, it is a fantasy to think that investors go to gold or commodities as safe havens. The concept of a safe haven ITSELF degenerates.In the end, it turns out to be about what it has always been about: social conditions.No one is addressing that directly, but me. All the technotwits like Roubini put that as an EFFECT of their changes. That allows them to parade as humanists and idealists, while at the same time “concluding” that individually enforceable rights are ideals. Thus, they sell the concept of THEMSELVES as redeemers. Which only means that THEY get the power to decide, not YOU.Don’t be fooled. We are putting in at every stop down the river toward the collapse of social conditions.The problem is a lack of individually enforceable rights, and when this catastrophe ends, it will be written that it was about a world which stood in need of new individually enforceable rights–and didn’t get them in time.

S&P 900 IS THE NO-GO LINE FOR TODAY!!!

does anyone know if the rate of central bank monetary inflation in the last 8 weeks or so is greater than the rate of market value destruction of toxic waste assets? this could the big question of our day – if yes, then we should get hyperinflation…if no, then we are getting deflation as now…

Does you book list a “New Global Bill of Rights”? If not, do you want to start one? How about that each person has the right to resist parasitical invasion of their individual liberties and freedoms by the oppression of perpetual debt creation by a fiat-based, fractional-reserve, privately-owned, central banking system. Just saying.

Cashin afternoon comments “something’s out there

YEAH, I HEAR THE ACRONYM “USSR” IS NOW AVAILABLE!!!

LLOK AT THE PPT LINE AT S&P 900!!!!!! LOLOL THEY KNOW IT IS THE KEY ROUND NUMBER AS DO I!!!!!! HEREEEESSSS JOHNNY!

Very interesting article. I think though, Scheer means ‘Greenspan’s anti-regulatory crusade’. Otherwise, it doesn’t make sense. Not only Greenspan, Rubin and Summers were anti-regulation, but SEC Chairman Christopher Cox’s claim to fame before he was appointed by Bush was that he was anti-regulation. And he was put in as chief regulator! People need to realize that that’s WHY he was put in charge of the SEC, and they need to realize the effect it has had.

Dow down almost 700 pts.!!!!!!!!!!!!!!!!

It’s a slow process. It takes 8-16 months to see increases in the money supply and subsequent inflation. If hyper-inflation is in our future it is a year or so down the road unless: A)TROTW begins to trade oil in a gold-backed currency or B)TROTW dumps the dollar. But since TROTW has so much USD reserve currency, they would find it difficult to dump trillions of dollars quickly.With gold tanking at $720, oil tanking at $67/barrel ($2.01/gal), and the dollar index @ 85%, it’s looking, walking, and quacking like deflation. Deflation, of course, scares the bejesus out of Bernanke; so soon they will be cooking up another discount window or stimulus package for another $500 billion. That’s the basic tension. The system tendency is towards deflation and loss of control by the Federal Reserve. The Federal Reserve will continue to create money to stop deflation, but in doing so will they be able to stop inflation?

TPTB has 10 minutes to save a third of that loss

I have a question:A friend of mine had a bank account in kaupthing edge, german branch (cuz he was geting a higher rate of interest). The bank filed for bankrupcy 2-3 weeks back, now under Iceland govt. control. Now his account has been frozen for the past three weeks………….what shud he do? Since its not a german bank, germany’s gov. is not responsible. He actually has 80% of his family’s life savings in that account.Does any one has some lead or suggestion for him? Thanks!

*sigh* Ah well, it was just a thought.I think I’ll stick to programming. This financial stuff is far too complicated, lol.Thanks for the replies.

Have him call Ryskamp, his ego can solve any problem…

BULLETIN AMAZON SHARES SLIDE 13% IN LATE TRADING AFTER FORECAST DISAPPOINTS

This is the funniest thread ever. Ryskamp brings out the angry humor in everyone.I love you , Ryskamp. Welcome back, you douchbag

Man did I just laugh reading that!!!

The Price of Sanity in a Time of MadnessPeter SchiffOct 21 2008In the last few months, many of the investment portfolios recommended by Euro Pacific Capital have experienced the most adverse conditions that I have seen in ten years. At present, the troubles are continuing. Driving the declines has been weakness in foreign currencies that are important to our investors. Some have fallen nearly 20% against the U.S. dollar, pushing down the dollar value of stocks in those markets. Simultaneously oil and gold have seen significant declines from their highs in the early part of 2008, which has punished the share prices of commodity-related stocks. The resulting paper declines in our portfolios have been painful to watch. As I’m sure many of you are aware, all of my own investments adhere strictly to our philosophy, so my concern is not academic.In such an environment it is natural that some of you may be questioning the basic beliefs that originally led you to Euro Pacific. If economic conditions were unfolding differently than what we had expected, then I would share your concerns. Fortunately for our investors, the scenario that I laid out earlier in the decade, which saw an ugly end to America’s bubble economy, is playing out almost exactly as I had predicted.The problem as I see it is that the vast majority of global investors are still chasing phantoms and clinging to false hopes. I believe the markets have now diverged from reality. This is not the first time in recent history that this has happened. But in the end reality can be defied only so long, and I am absolutely confident that those who refuse to succumb to the madness will be redeemed. Fortunately for virtually all of our clients, by avoiding margin and other investment gimmicks, they are not forced to sell, and are in position to ride out the tempest.The latest “catalyst” noted for pushing up the dollar is the government’s recent bailout of Freddie Mac and Fannie Mae. If the market were functioning rationally, the resulting transference of staggering new liabilities to the U.S. Treasury would have been immediately seen as a catastrophe for the dollar. Instead the dollar has rallied.I believe this counter intuitive reaction results from two forces. First, by transforming trillions of dollars of suspect mortgage backed securities into seemingly bullet-proof Treasury bonds, the move has sparked a relief rally in the dollar as foreign investors no longer have to worry about defaults or markdowns. In fact, to holders of Fannie and Freddie debt, it no longer matters what happens to the housing market. Home prices can drop another 50%, every single homeowner can default on their mortgage, and bond holders will not lose one dime. This has emboldened foreign investors, and temporarily increased demand for both dollars and Freddie and Fannie debt.The second force is related to leveraged players, particularly hedge funds, around the globe unwinding their trades. Those who have been short the dollar are now buying those dollars back. Those who have been long gold, oil, and other commodities, are liquidating their positions. This massive, though in my view misguided, rush to the exits is causing sharp counter-trend price movements. However once speculators have been flushed from the market, I expect the primary trends to return stronger than ever.Had the government done the right thing and not guaranteed Freddie and Fannie debt, I believe we would now be experiencing outright financial crisis. The dollar would be falling sharply along with real estate prices, gold would be soaring and the recession would be deepening. However, by nationalizing Freddie and Fannie, the government has merely delayed the crisis. The borrowed time will cost us dearly, as the day of reckoning will now likely involve much steeper losses for our currency.$5.5 trillion dollars of formerly privately held mortgage backed securities are now, in effect, Treasury bonds. In addition, over the next year or two, my guess is that several trillion dollars of existing mortgages, not currently insured by Freddie or Fannie, will be transferred to the pile. Going forward the vast majority of new mortgages made to Americans will be bought by Fannie or Freddie, and will also become the equivalent of U.S. Treasury bonds. Therefore in a few short years there will be in excess of $10 trillion of new obligations for the U.S. Treasury.The defenders of the bailout claim that Fannie and Freddie debt does not represent true obligations because they are collateralized by homes. But anyone with a casual interest in the current real estate market knows that homes are now only worth a fraction of outstanding mortgage debt. And that fraction gets smaller every day. My guess is that $10 trillion of Federally insured mortgages will result in $2 trillion or more of losses. That amounts to more than $25,000 per American family.I do not see how the government could possibly cover these losses through legitimate means (taxation or borrowing). To make good, they must rely on the printing press to create money out of thin air. As a result, even though bond holders will get their dollars back, they will lose purchasing power.The Freddie and Fannie takeover does nothing to address the underlying problems that forced the companies into bankruptcy. All the bad mortgage debt still exists. In fact, based on this bailout, there will be trillions more in bad mortgages insured over the next few years. The only thing that has changed is how the losses will be distributed. Instead of falling solely on bond holders, who had chosen to invest in mortgage debt, they will now be dispersed among U.S. taxpayers and all holders of U.S. dollars, who made no such choices.It is my guess that annual Federal budget deficit will soon approach, and then exceed, $1 trillion, and that the national debt, including actual bonds and guaranteed mortgages, will soon exceed $20 trillion. When these untenable obligations force investors to shift focus from default risk to inflation risk, a mass exodus from both Treasuries and mortgage backed securities (now Treasuries in disguise) will ensue.Right now every asset on the planet is being sold except the U.S. dollar. To me this rally looks like the last gasp of a dying currency. Just like a toy rocket ship, once the dollar runs out of fuel it will crash back down to earth. In the mean time, I realize that it is difficult for Euro Pacific clients to watch the dollar value of their accounts fall every day.If you see the world as I do, we have no choice but to grin and bear it. The alternative is to sell our foreign stocks and get back into the dollar. However, I am confident that such a course of action will lead to total disaster. I feel sure that any current paper losses in our accounts will be temporary. However, the real losses that will befall holders of U.S. dollars will be permanent.For those of you on my mailing list who do not have accounts with me, or who have not already moved out of the dollar through other channels, recent events are a blessing in disguise. On the eve of what I see as a pending economic collapse of historic proportions, you have an unexpected ability to protect yourself. Right now the window of opportunity is wide open, –please climb though it before it is slammed shut.——————————————————————————–Mr. Schiff began his investment career as a financial consultant with Shearson Lehman Brothers, after having earned a degree in finance and accounting from U.C. Berkeley in 1987. A financial professional for nineteen years he joined Euro Pacific in 1996 and has served as its President since January 2000. Schiff is often quoted in major publications such as the Wall Street Journal, Barron’s, the Financial Times, the New York Times, and the Christian Science Monitor.

Dispatches from the Apocalypse II1. Good friend’s family deeply involved in PHX RE—brother-in-law a builder, sister a broker. Very, very profitable. Tiffany boxes at Christmas for everyone, and not their entry-level silver stuff. They never even saw the bubble. They’re just fine, but the builder shut down his business (don’t know how many employees, multiplier effects), and the sister mortgage broker says she spends all her time with attorneys and in court trying to recoup money from people on the other side of the deals.2. Economics blog technical analysts: October 16: many “double bottom” calls. October 22: yet more “double bottom” calls.

John,I fully understand what you’re saying (always have). But what I can’t figure out is what happens AFTER. By giving everyone a house where is the economic activity? I know that we’ll never again see the housing-generated economic activity that we did, but how will any of this really contribute to a stable economic system? NOTE: I’d be the last one to try and define some “new” economic system, as I don’t really like systems to begin with, but there’s enough historical momentum out there to say that odd are in the favor of some new system being foisted upon us.Food, shelter, water… You’ve addressed shelter. Food and water is another matter, requiring a lot more turnover (housing could stabilize, but not sure about food and water).

I think most traders are starring at it right now. Just about any news can trigger it.On the bright side: 6300 would be a hell of a capitulation point and (local) bottom.

Schiff just screwed alot of people, his recommendations were WRONG, with the amount of debt that was waiting to implode there could only have been one outcome. DEFLATION. The only right call was to short the market and it remains so. You may say that hindsight is a millionaire but not for us deflationistas who had to deal with the hyper inflation, goldbug, and commodities rallying to the sun crowd. There will be a time for gold but not now. Schiff was WRONG and hes paying the price I just feel sorry for those who followed him off the cliff. Mish was right and has called it spot on.

the feds balance sheet became that way because of the failure of the i-banks business model. the solution was for the fed to start using the i-banks business mode. guess what? That is failing, so they have asked the government to use the i-banks business model to help them out.well the buck stops with uncle sam. and guess what? the US will be bankrupt soon. all because of myopic vision by the financial industry- using the same methods that worked for awhile and subsequently failed miserably.i think that they have made a huge mistake. i think that the governments of the world need to void all cds contracts, and let the corporations that are insolvent fail and pay out nothing to the the cds holders on the money side of the trades. screw them. the cds system is in essence a way for a trader to gain full leverage and place all the risk on the system. it is riskless (for them). because everyone has risk, no one has risk. because everyone is protected, no one is protected. because everyone pays, no one pays.that should include governments. they cant even do it. its over. try anyone and everyone that has ever traded a cds contract for treason in whatever country they are from. do not attempt to regulate the cds market, just kill it and kill it now. it is a virus that essentially rewards those who trade them at the expense of the financial system. it is a movement whose end game is riskless money for the traders, but pure risk for the system and the people of the world. they have gamed the world financial system. punish them appropriately.dont let them take down world governments and their taxpayers. let JP morgan fail to save the “non JP morgan people” who they have sucked dry.don’t let them think they are patriots upholding the american ideal- they are – guilty of treason.

When are we going to see Stephen Roach invited to this forum?

ka plunk… – this is all because you were banished yesterday isn’t it

Via Across the Curve:

Feeling the Pain at WalmartLOS ANGELES (Reuters) – Wal-Mart Stores Inc’s U.S. customers, increasingly worried about their own financial security, are waiting until they get their paychecks to buy even the most basic necessities, the retailer’s U.S. division head said on Tuesday.He said credit used as a form of payment at Wal-Mart is falling and that the decline is expected to reach into the double digits this year.

WOW, deflation!

I’ve recently heard that Roubini uses astrological methods (financial astrology) when making economic predictions, similar to famed trader and market guru William Delbert Gann [ http://en.wikipedia.org/wiki/William_Delbert_Gann ] — does anyone know if there is any truth to this?

Kill the rich and share their stuff out. No point killing the poor even though we want to they have nothing to take.

I agree with medic. John you have some good points but your style of writing leaves me flecked with spit and wanting to move along hurridly.In particular the references seem obscure.

Lehman ‘swaps’ close-out a success, derivatives group says3:45 PM, October 21, 2008Sellers and buyers of credit default swaps on Lehman Bros. Holdings Inc. debt settled up today, and the financial system seemed no more worse for the wear and tear.There has been an undercurrent of fear in markets in recent weeks that some sellers of swaps (a form of insurance) on debt of bankrupt Lehman would be unable to make good on their commitments to the swap buyers, triggering a new cascade of financial trouble. An estimated $6 billion to $8 billion was supposed to change hands at settlement.In a statement, the International Swaps and Derivatives Assn. declared the settlement a “success,” and said Lehman’s default and the workout of related swap transactions “have not created the financial disruption that critics of the credit default swap business have claimed.”That’s what we’d expect the ISDA to say, of course. They’re looking out for their livelihood, amid a deepened public mistrust of derivative securities and the potential threat they pose to the financial system.It’s still not clear to me that we won’t hear about some hedge fund or other market player being unable to make good on a Lehman swap payment. But if a huge calamity was brewing, you’d figure we’d know by now.In the meantime, read Reuters’ take on the settlement here, and a piece by MarketWatch.com here. The ISDA statement, which does include some helpful explanation, is here (click on the entry “ISDA CEO Notes Success of Lehman … “).

I actually gave some thought to taking you up on your challenge to evaluate your list an its relationships.Then I noted your qualification: Objectively.After reading your comments, responses to others, attempting to read your book, and finding a lack of correlation with other authors and scholars, I conclued that even if I should take up your challenge, I would assuredly be accused of some measure of partiality should my findings in any way diverge from yours.

He’s not wrong the more desperate the system gets the more money will be printed Schiff will be right like you can’t imagine.

I’m not so sure. If the house prices went up, lots of those CDOs would be worth something, their owners would be creditworthy, the CDS would no longer have to pay off, and everything would be hunky dory. Or at least better.But if you reduce people’s mortgages, the people are saved but the banks not.Actually that’s OK, let the banks evaporate and start new ones. If all the factories and houses are still here, a disappearance of the debts would be a good thing overall.

when people cannot afford to shop on credit even at mall-wart, the economy must be really bad

shut up Hugo

Lets Party! I have over 1.2 Mil in T bills waiting to pick up the bargains at the bottom.. those who have saved and planned ahead will prosper..Might even sail to Iceland I hear their women ar lovely.

NR not only spoke of a 2-year time frame for the recession, he used ‘weasel’ words thereby suggesting that the recession could be longer like Japan in the 1990′s if the right policies and stimulus are not applied correctly. While Nouriel explicitly describes a U-shaped rather than V-shaped recession, he definitely left possibility for an L-shaped recession.

sorry here is the link and I think we know now given the state of the markets…http://www.rgemonitor.com/economonitor-monitor/254052/lehman_cds_payout_on_october_21_360bn_or_6bn

No he was wrong. He lost money therefore he was wrong. He would certainly agree, in fact he did agree in what he wrote.He may be right in the future. He may even be right soon. But he was wrong.

If people have houses, they can probably generate enough economic activity to feed themselves and heat them. That’s easier than generating enough to feed themselves, heat the houses and pay for the houses. Sure there could be counterintuitive feedback effects, but this is the simplest and most likely result.Sure there would be less economic activity as people are not forced to work 18 hours a day to survive. That would be a GOOD thing.

“We are dying of hunger.” That is sad. How can the Dick Fulds of the world stand themselves.

The governments now have skin in the game (what seems to be pretty much the only skin of value (the future earning of taxpayers) – they should be involved.

I hereby invite him fwiw. But since he’s stopped being Chief Economist and become Chairman of the Asia Region for Morgan Stanley, he’s writing for the public a bit less and no doubt schmoozing a whole lot more.

when the world mkts are racing to the bottom and people on this blog starting to talk about Ryskamp, sex, getting luckyi know there is something wrong..Maybe Ben Maschiah have put a spell on all of us!!

Get rid of the garbage CDS! These instruments are destroying global markets and are the PRIMARY reason lending is frozen. Firms won’t lend because of the systemic risks and is no less than having a death warrant out against you. A race to zero is clearly foreseeable and unless some rapid action is taken expect to be poor and hungry soon. Every corner of the globe is affected and there is no escaping this horrific wrath as greed will persevere rather than common sense. Prepare yourselves as once the unraveling begins it makes no difference what country you live in or what currency you hold. We have passed the point of no return and a barter system is all that will remain. Fiat currency is dead.

it can all be traced back to yesterday afternoon when StocksGoinGreen was given an eviction notice from the board – or perhaps it`s just a coincidence -but you are correct this is a surreal and there is something wrong – a slow motion fall to earth – the Nikkei flirting with a seven handle and the first glimmers of the depth of depravity on Wall Street -but when the historians look back (hopefully there will be irrefutable eye witness accounts since no would believe it possible) the most surreal thing they will discover was that the architect responsible for trying to fix this crisis was also one of its authors, who as then CEO of Goldman Sachs testified in February 2000 before the Senate Banking Committee for less regulation and higher leverage.Not even a ‘cow’ could structure a plot like that.

The 50 trillion dollar question is how to get rid of the toxic stuff? If this unwinds there will be no market at all.

“Not even a ‘cow’ could structure a plot like that.”Maybe, but some S&P official said: “It could be structured by cows and we would rate it.”How fit! It’s like a kid given a scissor. Next time you hear US Treasuries are AAA-rated, picture a cow.

And as their government does things like this to them, there is nothing the people can do about it.Maybe they will find something they can do about it. And I don’t mean voting for the self-described “Change” candidate who received the most donations from Wall Street.

Shouldn’t be like this. I never bought nor sold CDS.But I am net short dollars because I owe a mortgage. I don’t mind if the debt is inflated away and we start over with something fresh. Or if CDS are cancelled. Or whatever else doesn’t involve me, because I have no fault in this.

This advice was a loser for many years as the mortgage business went from one absurd year to the next one even more absurd. And most of those people are still employed doing … mortgages! I don’t know what they do, but the business still exists and presumably trading still exists.

Bernanke’s next assignment, due next week:1-Design a new facility to guarantee/bailout pensions and retirement systems. (1 point)2-Hire JPMorgan as manager. (3 points)3-Find a new acronym for the new program (6 points)NB: this assignment is part of the PowerPoint Team (PPT) project of your choice: “Print hard or die for free”; or “Get inflated or die trying”.Additional readings: Calpers Loses More than 20% Since June; Calculated Risk

If you and I have a contract for widgits and you send me widgits for 3 months and I never pay you, then I defaulted! I didn’t file bankruptcy and I didn’t modify the contract. It’s now up to you to decide whether it’s worth your while to pursue me!Think about it!

Guest, it is not always that default=bankruptcy. A loan may default for example, but not the institution. In my opinion, Debt deflation is a consequence of Default on Debt. When a homeowner cannot pay his/her mortgage and defaults, the corresponding value is written off by the bank, thus debt is reduced/deflated. I argued before that any debt created through leverage is a momentary money supply (or better liquidity supply?) … oops I misread your comment.Yes you are right. But we can still argue that the event horizon is not when a bank acknowledges a debt has defaulted but rather the time when the debtor is enable to pay it back. A little bit like the difference between the time when MBIA (and UST) was downgraded by the market and the time S&P and Moody’s downgraded.

In the event that the market drops steeply again over the next two days, what actions do you think the fed will take?So far, all the actions have really been to deal with the “Credit Crisis,” which crisis was very real, but also very separate from the other, underlying crisis, which is that the consumer is over-burdened with debt, and there is no demand for credit at the consumer level (at least, no demand from consumers who could actually qualify).If the market drops again for two more days, we all know that the Fed will want to pull a bunny out of their hat to stop a runaway crash on Monday. But this time, they would have to take action other than cutting rates or bailing out symptomatic institutions.I can only think that some action that would help consumers rapidly and substantially could stem a market selloff that is based on bad earnings and realistic forecasts of doom.I don’t think the Fed has any bullets of this caliber that they can fire. I don’t think a weekend-bunny will materialize this time. I think this week and next, assuming a substantial market drop Thursday and Friday, will see a market collapse.I’m wondering if anyone has any thoughts on what the Fed might do that I haven’t thought of.

Hey, quit picking on cows! You know, they’re going to rise up and kick back at us don’t ya know?http://www.youtube.com/watch?v=-IJBbtkBMMs

TomorrowYou forgot to say tomorrow; “what if the US goes bankrupt – tomorrow”. Otherwise, there is no need for the “IF”.

If that was your only concern, we can always flip it some way to benefit the said parties (I never been to one, have you?). Do you know that pensions are among the biggest “investors” in Private Equities? or for those with a taste for some Illuminati conspiracy BS – CalPERS’s logo is a pyramid and half eye.

I’m not sure he was referring to people who did all the celebrating. My husband and I truly have no fault in all of this. We were one of the first round of sub-prime mortgages back in 2001, and we KNEW we were sub prime. So after we were approved we tightened our belts and worked our butts off for the next five years until we could honestly have afforded our own house. This past summer we refinanced into a shorter term at a lower rate and were looking forward to actually being able to take our first family vacation. That’s been canceled and now we’re tightening our belts again so we have some cushion if things really go south. I agree that you can’t have it both ways, but I reserve the right to a little righteous indignation from those of us who have acted responsibly and are still going to get screwed.

An overdue one then, because, although I was not there 50 years ago, I don’t think it was celebrated last time. Question though, does the manumitting of slaves applies to non-jews?IMO, you are correct about the word, but not the meaning. I would guess the Administration is applying the Jubilee concept, but in its Roman Catholic version; “the name is applied to a holy year when special privileges are given for the pilgrimage to [the FRBNY]“.

welcome to hyper-inflationary stagdeflation HELLimagine that!! keep cash you lose, keep gold you loseif one were to disregard the USD index and take into consideration M3, the dollar is cooked “well done”and as for gold, they can suppress the actual value of it infinitely, whats the purpose in storing them then?? they can keep this go on and on and on as long the military/police/political establishment is with them..so if one is betting on gold that would mean they expect whole establishment collapses, if it comes to that i think canned foods is a better investmenthttp://www.bloomberg.com/apps/news?pid=20601068&sid=acUVeF0.Sm68&refer=economyBernanke May Seek New Ways to Ease Credit as Fed Rate Nears 1%By Craig TorresOct. 23 (Bloomberg) — Federal Reserve officials are likely to bring interest rates down so aggressively over the next few months that they will have to search for fresh tactics to continue easing credit.The Fed’s Open Market Committee will probably reduce the benchmark federal funds rate by half a point next week to 1 percent, the lowest since May 2004, according to futures trading. The official rate has never been lower since the Fed made it an explicit target in the late 1980s.Further cuts below 1 percent could turn Fed Chairman Ben S. Bernanke’s focus away from the main rate and toward more use of alternative tools. Those might include increasing its holdings of mortgage bonds to lower costs for homebuyers and purchasing securities directly from the Treasury in order to pump more cash into the economy, Fed watchers said.

http://www.globalresearch.ca/index.php?context=va&aid=10648Sen. Warner Supports Domestic Use of MilitarySenator Warner Responds to Concern Over Posse Comitatus Violation by Proposing to Change the LawA citizen of Virginia named Moya Atkinson wrote to Senator John Warner to express concern over the recent violation of the Posse Comitatus Act created by the assigning of U.S. soldiers to duty within the United States, reported by the Army Times as intended for “crowd control” among other duties. This, like other changes imposed by President Bush, of course violates the Posse Comitatus Act. It also served to strengthen the threats of martial law that Congressman Brad Sherman reported the White House making to Congress members in order to win their support for the $780 billion give-away to Wall Street.Warner sent back the following note, proposing that, rather than changing the president’s behavior to comply with the law, we should — as with warrantless spying, habeas corpus, etc. — change the law to comply with the president’s behavior:Thank you for contacting me regarding your opposition to Northern Command dedicating a combat infantry team to work within the United States. I appreciate your thoughtful inquiry on this important matter.As you may know, the Northern Command has assigned the 1st Brigade Combat Team of the 3rd Infantry to deal with catastrophes in the United States. While the unit would not take over as the lead, the Army reports that this unit would be deployed to help local, state, or federal agencies deal with matters such as chemical, biological, radiological, nuclear, and high-yield explosive (CBRNE) incidents. The unit will be based in Fort Stewart, Georgia, and will focus primarily on logistics and support for local police and rescue personnel.Looking back, the Hurricane Katrina relief efforts highlighted the important role our military plays during domestic crises. From providing security in destroyed neighborhoods, to treating patients aboard naval vessels, to rebuilding damaged levees and unwatering New Orleans, the military has performed vital work that no other federal or state entity has the capacity to undertake.Not withstanding these tremendous achievements, I am deeply concerned that the Department of Defense and the President may not have authority to use active duty personnel in the most effective manner. In our federal system, we normally, and rightly, depend upon state and local authorities to maintain order and protect the public. The National Guard, operating under Title 32 of the U.S. Code, is the primary military organization authorized to employ police powers in times of crisis. However, in a situation of the magnitude of Hurricane Katrina, the level of destruction, coupled with the difficulty in maintaining order, brings into question the prohibition on using federal active duty military personnel, operating under Title 10 of the U.S. Code, to perform law enforcement duties.I believe we must review the 1878 Posse Comitatus Act and similar provisions that limit the role of the active duty military to ensure that every available asset is properly employed in any type of future emergency situation. Title 18, Section 1385 of the U.S. Code, commonly referred to as the Posse Comitatus Act, prevents the armed forces from becoming involved in law enforcement activities for which, in most cases, they are not specifically trained or equipped. Posse Comitatus is largely rooted in historical tradition that prohibits military involvement in civilian affairs.To be clear, I do not believe that U.S. law pertaining to this matter needs to be entirely rewritten. I do, however, think it is necessary that we review the regulations governing use of military personnel in domestic operations in order to better understand how all of our military assets can best assist during emergency situations.Once again, thank you for contacting me on this issue.With kind regards, I amSincerely,John WarnerUnited States Senator

At this point nothing makes sense so try astrology – lunar signs point to market crash Oct 24th or Oct 27th. Happened 9 out of the last 11 depresssions/panics (exceptions were Asian coinciding with Tianamen Sq). Get ready.

The market is correcting due to the fair value accounting principles……..fight in tier 1 vs. tier 2 vs. tier 3 capital to mark up the capital adequacy ratio. these tiers have big assumptions behind them and when some of the underlying parameters change, they bring a big negative effect to the balance sheets.

FED is next to irrelevant, right now. They will cut 50bps or more and the market will most probably sell the news.The Treasury and Congress have still a couple of bullets. If we look at what they did in Pakistan, clearly the financial model for TPTB we can come up with the following wild guesses:* “temporary” all around ban on short sales* “temporary” closing down the derivative market (options and future contracts)* “temporary” closing down the stock market* “temporary” ban on trades that are more than 5% below a government set price for every stock (insane? but if they did in Pakistan, it must work!)/sarcasm off

Actually it is the 130 Trillion dollar question

or a fart in a hurricane

After one week of daily declines, 3 month LIBOR remained unchanged from Tuesday and his holding at 3.54, which is 300 bps above a healthy level. LIBOR Apparently yesterdays equity sell-off was encouraged by two hedgies that imploded… two down three hundred to go

JR … you’re pissed. I get it.Thanks for hanging in. I’m pissed too.I’d be interested in hearing SWK/kilgores’ thoughts on the legal aspects of your interpretation of this financial crisis.Thanks in advance for any input.London Banker … thoughts?

Most people believe markets are data dependent and reason for the daily gyrations.But markets seem to be more socially connected like a herd.Why else would all our supposed intellectuals all come to the same conclusion every time,because fear has gripped them and they want to feel the security of the herd.Markets and our economic saviors are more touchy/feely and emotional based than they let on.Look how many times Bush and Paulson came on the air waves to calm us down,NO! They came on to calm themselves and their economic saviors of the world down.

I think you will have similar findings if you compare the charts of DOW and S&P500.

But no US markets are open at these times.Is one market leading, are they all watching each other, or are there major players playing all markets simultaneously?

I would think that “market movers” are doing their trades on a continual basis. They are trading in the “name” companies which usually are part of these two indexes. If you accept that a “long term” investor (rarity these days) will absolutely have no effects on daily market moves, then synchronization comes from the same group of people conducting computer controlled trading which covers number of companies from both indexes.

Alright, looks like StocksGoingGreen is still asleep, so I take the chance to inform you thatSTOCKS WILL CLOSE AT 8800 TODAY!!! WOOOSH!

Since people like to use letters (or keyboard characters) as a metaphore for the stock market trajectory, has anyone considered the possibility of a backslash shaped recession? Japan’s stock market is beginning to resemble the backslash more than an L.

Wow! The situation is really as bad or even worse than what I saw coming as early as late 97.Those of you that follow my posts, read that, despite my bearish assessment of the situation, I went 15% long WW equities on Monday,; what can I tell you? The result so far have been 1.5% down in 2 days! Despite my modest long position I fully expect the market to, at the very least, test the 2003 lows (does anyone recall Gross’ 5000 call sometime in 2002? IMO, that is not out of the realm of possibility)I don’t regret my early move into equities, but it is worthwhile to point out some erroneous patterns in my investing behavior that repeat themselves and that hopefully will help you in your investing.I must start by confessing that I am an EXTREME risk taker (this may not come across in my posts), and that I only keep myself in check thanks to my learnings from past painful experiences and my modest knowledge of markets and investing derived from my training.My biggest learning in investing has been that risk control should be the number one consideration; but this does not come natural. As my shrink (back in Boston I don’t have one here) taught me, there is an emotional side and a rational side in each one of us. My emotional side is the risk taking side which I try to control via my rational side. To draw an analogy, I feel like a reformed alcoholic (do I smell an oxymoron?:-) trying to give advice at an AA meeting.So why did I go 15% in to equities Monday despite my telling you that stocks were AT BEST fairly valued, and that I didn’t think we had reached a bottom?1. Greed, and fear of being/looking like a fool. Since “buy the dips” has worked so well in the past, and with people like Buffet and Hussman saying this is the time to buy equities, I was afraid I was kiin the brink of becoming a perma-bear – I still remember this guy I met on a flight to Argenitna in the early 90s who was already 100% into cash! I guess I was afraid of becoming him – one of those characters that only hold cash and precious metals their whole life while history drives by proving equities are the best returning asset class.I guess that just like Buffet and Rogers, who try to look really smart by telling you that they are terrible short term traders; that they cannot pick a bottom (implying that market timing, even at the verge of a recession is for fools), I didn’t want to be left behind.2. Impatience. At the very least I could have used dollar cost averaging by jumping in at 1%/day the next 15 working days since the investments I chose had no cost associated with order size. My impatience is just additional evidence of greed, fear of missing the upside. Talking about being patient, brings me to 3.3. Ignoring the state of the art in economic cycle forecasting. Common wisdom is in line with Buffet’s and Roger’s views: The belief that it is impossible to forecast the economic cycle and thus market bottoms/tops. As you have read in my posts and elsewhere, the state of the art in economic forecasting (the folks at ECRI) have put up a very impressive record of forecasting economic cycles in the last 60 years and how this are related to stock market tops and bottoms. Even though their tools are far from infallible, as I have told you before, it is foolish to enter this market before the LLI/WLI turn around.Once again, I violated my own advice above yesterday by going 7% long commodities and 10% long TIPS which will probably keep nosediving given ECRI’s very negative FIG (future inflation gage) reading (At the very least I should have dollar cost averaged in as I believe equities, commodities, and TIPS have not reached a bottom yet.

It seems like we have two more areas to unwind:1. about $15 Trillion in Credit Default Swaps (of NET EXPOSURE; much less than the 64 Trillion in notional exposure)2. several hundred hedge fundsThis should bring the S&P 500 down to say 500 maybe?

Art C says 8750 today before the end of the world comes on Monday, where we could get a six handle — I hope he is correct I put a small portion in IVV that has so far cost me more than a year’s worth of Starbucks.

Thank you Octavio for sharing both the rational and irrational part of your investing. I highly treasure your suggestions and will help me became a serious investor.

thanks so much for this CNBC info for Art C, no TV here love to hear what they are talking about…

Medic: brave individualist that you think that you are — please listen before you speak.Ryskamp means you no harm.Grumpy curmudgeons ensure your continued existence and always will.My thoughts are always open to interpretation.

sp500 contracting triangle almost to point E @ approx. 940 of wave 4.Than wave 5 down to below 800 to complete this leg down with a counter trend rally for a month or two.

I got the gist of what you are saying but just a bit more info would be great for the non-technical types – thanks

@ OuterBeltway,Yes things are different today, and yes the technology definitely increases the pace up or down, but I think the basic analysis is correct at the super macro level.Your attack using your point “a” is valid and may come to pass, but it will require an admission by the PTB that they have lost control and physical restraint is the only saving “grace”.As for your attack point “b”, I think the PTB are most concerned about the size and timeframe constraints that they see. Quite simply, the crisis may not be something that the world can actually “handle” with available resources. In other words conserve resources and only use them when absolutely necessary. Thus, it becomes critical that the PTB can read the decelerometer correctly!

@ AfA,You seem to have a penchant for finding the angle and doin the spin! You might consider getting a new day job in the US Congress. They live on spin.All in jest Afa! I appreciate your posts here, sending you to Congress would be wasting your talents!

BOOOMMMM!!!! UP 200 POINTS IN 6 SECONDS!!! WHAT JUST HAPPENED????

Can someone explain if CDS is such a huge shoe waiting to drop, why Lehman’s $.5 trillion in CDS settled for a mere few billion?

PPT BABY!!! LOOK AT ‘ER GO!!! TO DA MOOM! RETAKE OF DOW 9000 ON THE WAY. PPT READS CHARTS TOO AND SAID “NO DOW 6300″ BOOMMMM!

It depends on your perspective how this played out. It is interesting that two hedgies blew yesterday – maybe a coincidence…Do you believe the ISDA:ISDA press release on Lehman settlementOr do you believe Capone of RGEmonitor:Lehman CDS Payout On October 21: $360bn or $6bn?- by Elisa Parisi-Capone]

Ah…the serenity of fatalism. Nothing to do but watch the show.

The President already has the power to federalize the national guard. I agree, however, that it would be quite dangerous to expand that power to include the use of the entire U.S. military.SWK

In essence, given all its historic foibles and distractions, ultimately, the collective human spirit dictates law and policy.Thank-you for your eloquent response SWK. It restores my faith.

Good question. Good proposal. Good debate. Coulnt’t be better than that.