Potential Economic Seizure Dead Ahead

[teomaxxx]

The locked up credit markets arent a joke, its fucking big thing and people should really start to understand to results from it.

really, really great post from:
http://market-ticker.denninger.net/

BTW. this guy has been almost 99% right with his post over last year.

The Market TickerCommentary On The Capital MarketsThursday, October 9. 2008
** POTENTIAL ECONOMIC SEIZURE DEAD AHEAD **
Ok folks, this is serious stuff.

This is now a national emergency.

Seven trillion dollars of wealth has been vaporized in US Stocks in the last seven days alone, with five of it since the passage of that ill-designed and foolhardy "bailout" bill.

The selloff this afternoon is the "real deal." It was not caused by the stock market getting "mad", it was caused by the short-term credit market along with the Treasury market suddenly dislocating at a few minutes before the bond pit closed at 2:00 PM.

Worse is also the fact that institutional lending has essentially disappeared - both between banks and now it is choking off commercial short-term credit across the board.

It doesn't get any more serious than this. To repeat: short-term commercial credit is threatening to completely disappear from the American scene.

Every action our government has taken thus far, including repealing mark-to-market requirements have made the situation worse by further destroying confidence.

In the overnight market the futures are imploding once again; the Osaka exchange was closed in Japan after hitting its "lock limit" within minutes prior to the Nikkei opening; the Nikkei is now down ANOTHER 10%, for a total loss of nearly 20% in just two days, with Japanese banks trading "offer only" - that is, NO BID. There are rumors of government bond market fails in parts of Europe, and Iceland has essentially been cut off from the rest of the world Interbank marketplace.

Japanese banks are now firewalling themselves from European and US claims; the interbank market is about to explode. Iceland has effectively defaulted on sovereign debt and today there was a rumor that Hungary had a failed bond auction, effectively defaulting as well.

Key: Sovereign debt (that is, Treasuries from various nations) has become infected with trash - unfortunately including ours now that Fannie and Freddie were nationalized and TARP has been passed - and may fail in a cascade-style fashion across the world. If this occurs our ability to fund our government will be cut off as well, leading to a need to reduce government spending by $800 billion a year immediately. This means huge and immediate cuts to Social Security, Medicare and Military budgets - by as much as half.

Over a year ago I warned in my writings that this could happen if we did not take action. If we did not force accountability through Congress and onto our financial system. If we did not force the thieves, liars and thugs on Wall Street to take their medicine.

Instead of taking action we have sat on our collective asses and allowed Congress to pass bailout after bailout - now our stock market is down close to 40% from the top with 20% of that loss coming in just over one week!

We are facing a global DEPRESSION and the cut-off of essential goods and services in this nation if we do not stop this lunacy immediately.

Please understand - the TRUCKER who has a full load of food headed for your grocer REQUIRES commercial credit in order to fill his truck with diesel.

The local GAS STATION owner REQUIRES commercial credit to fill his underground storage tank.

The local CAR DEALER REQUIRES commercial credit to have cars - and parts - in his dealership. No credit, no car - and no car repairs.

IF THESE MARKETS DO NOT IMMEDIATELY UNFREEZE THE CONSEQUENCE WILL BE THAT FOOD AND FUEL MAY NOT FLOW TO YOUR GROCERY STORE AND GAS STATION.

Think about that very carefully and then consider whether YOU can afford to sit on your ass for one more second, or whether you have an absolute NEED to get on the phone, fax, and whatever else RIGHT NOW to your elected and appointed representatives and, if you do not get in response that they will IMMEDIATELY resolve this matter whether you will vow to band together with every one of your associates and friends, form a group consisting of everyone in your local city or town, and call a GENERAL STRIKE, refusing to both work and permit commerce to be conducted UNTIL THE LIARS ARE FORCED INTO THE OPEN, DEALT WITH, AND THE SYSTEM IS ABLE TO CLEAR.

We are quite literally out of time. This freeze in the markets WILL continue around the globe unless something is done NOW.

Every "intervention" and "promise" made by our government thus far - all of them - have been LIES.

Our government has done NOTHING to alleviate the problem and in fact every one of their "solutions" have made the situation worse - going back for more than a year.

We have "pumped liquidity" and even bailed out firms with taxpayer money, and yet the markets have not unfrozen.

They remain frozen because the root cause of the problem is that banks and other financial firms have been lying for more than a year, each quarter claiming to have "kitchen sinked" their losses only to report more the next quarter, and in some cases have gone on national TV to proclaim they're "well-capitalized" only days or weeks before they collapse!

The first question anyone asks when someone wishes to borrow money is whether or not they will get paid back. If the lender does not believe they will be able to be paid back then that loan will not be made, no matter how much money someone has available to them.

It really is that simple folks and yet this fundamental principle has been willfully and intentionally ignored for more than a year.

YOU MUST CHOOSE RIGHT NOW, TONIGHT, AS AN AMERICAN WHETHER YOU ARE GOING TO GO TO WORK TOMORROW AND PRETEND THAT NOTHING IS WRONG, OR WHETHER YOU ARE GOING TO ENGAGE IN PEACEFUL BUT FORCEFUL PROTEST IN DEMANDING THAT THIS CRISIS BE ADDRESSED NOT WITH "MORE OF THE SAME" BUT BY ARRESTING EACH AND EVERY ONE OF THE CROOKS, BY FORCING BALANCE SHEET TRANSPARENCY FOR EACH AND EVERY FIRM IN THE UNITED STATES, AND BY THEN FORCIBLY RECAPITALIZING VIA DEBT-TO-EQUITY "CRAMDOWNS" EACH AND EVERY INSOLVENT BANK AND OTHER FINANCIAL INSTITUTION, WITH TREASURY STEPPING IN WITH TAXPAYER MONEY ONLY AFTER THE TRUTH (OR FALSEHOOD) OF SOLVENCY IS ESTABLISHED IN PUBLIC WHERE WE CAN ALL SEE IT.

YOU LITERALLY MUST CHOOSE NOW, AS THE TIME TO DAWDLE AND THINK ABOUT IT HAS EXPIRED.

[mynameisjim]

He spells it out pretty good.

[papill0n]

Wow that is some real dire predications. If that guy is right, and I suspect he probably he is, we are in for some really tough times ahead.

[Mr. Cool Ice]

Good post.

And I will give you ONE guess what the American people will do about it.

Give up?

They will do NOTHING. They will get nothing in return, which is what they deserve for allowing the current government and state of affairs become what they have become.

[SBJ]

great post! it is scary as hell cause it sounds so right

[fuzzylogic]

i dont understand how having a "work strike" will HELP

[Mr. Cool Ice]

Originally Posted by fuzzylogic

i dont understand how having a "work strike" will HELP

It's the only power we have left. A peaceful manner in which we can stand as one and refuse to take this shit any more. WE can cripple everything if we had the balls to do so.

However I am in Asia now so the best I could do is to fire bomb an embassy or Starbucks. Whichever you guys think would get the point across better.

[grumpy]

Originally Posted by RageCash-Ben

Wow that is some real dire predications. If that guy is right, and I suspect he probably he is, we are in for some really tough times ahead.

you needed to read that to know there is a problem ( nothing personal )
Why are so many people acting like its a glitch. Im involved with one of the biggest
investors in Europe and he predicted 3 years ago ( based on research ) that this would happen.
He has pulled all his money out of the markets.

[teomaxxx]

if credit markets arent unlocked-up, all economies are going down really hard. the sell-off we saw last week wasnt due some irational Joe6pack in panick, but due CREDIT MARKET lock up. SEE THE LIBOR SPREAD. Without Credit you dont have Economy.

The root is mistrust in the whole banking system. Why mistrust? Cause every bank is cooking their book know like their country parties and they know one thing could go wrong and they will be BK.
The goverment entities should take down all those future BK banks last summer when it was clear they will be toasted or in the autumn 07, when it was clear they are cooking their books (yes, I made a lot of money betting on BK of most investment banks). That was a right time to act, now its probably late. Who helped them to surive up until this week? noone other than US treasury, former head of GS.
GS made a shitload of money from their contribution to current mess under his leadership. Now that guy should solve this crises?

I am not talking shit out of my ass, I have been short financials since last summer.

great article about Credit Market seize up.

http://www.nakedcapitalism.com/2008/...up-due-to.html

Friday, October 10, 2008
International Trade Seizing Up Due to Banking Crisis (Updated)


I have been more than a tad concerned about near-paralysis in the money markets and imploding equity prices. But this e-mail, from a well connected international investor not prone to alarm or (normally) the use of capital letters says that the banking crisis is staring to bring international shipping to a halt.

By way of background, letters of credit of various sorts are essential for trade. For instance, imagine the difficulty if you are, say, a Chinese manufacturer who wants to sell his wares to buyers overseas. How can he be sure the goods he ships will ever be paid for? Imagine the considerable difficulty and cost of chasing a deadbeat in a foreign country. Letters of credit. issued by banks, assure payment. They can also serve to finance the shipment (ie, fund the inventory while it is in transit).

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.

"We've got a nightmare in front of us and a lot of people are concerned it's going to get a lot worse," said Anthony Temple, a grain marketing expert based in Vancouver....

Access to credit is key to the survival of maritime trade and insiders now say the supply is being severely restricted. More than 90% of the world's trade by volume goes by ship...

"The credit crisis has made banks nervous and the last thing on their minds is making fresh loans," Omar Nokta, an analyst at investment bank Dahlman Rose, said in an interview with Reuters.

While shipping has always been a cyclical industry whose fortunes rise and fall with the global economy, analysts said the current crisis over the drying up of credit is something they have never seen before.

Jason Myers, head of the Canadian Manufacturers and Exporters, said exporters across Canada are getting caught up in the turmoil as customers delay payments, forcing them to shoulder the cost.

"What some companies are saying is we can't pay you until our customer pays us, so it becomes a question of who bears the financial risk and the cost," Mr. Myers said. "We're hearing about it more and more."

What that means is that manufacturers are getting hit as revenue slows and longtime customers disappear from the order book altogether. As profits decline, investment in product development starts to fall, too, he said.

The Canadian Wheat Board, one of the world's biggest grain marketers, has yet to refuse a customer because of poor credit, according to a spokeswoman. "As of this moment we haven't run into that problem," said Maureen Fitzhenry,

[L-Pink]

Good read, thank you.

[EscortBiz]

well lets see the guys sending the food need money too so they will figure out how to work around the credit by extending credit themselves

etc etc

hes wrong in many ways and people love these doom stories

give it 4 weeks and the dow is at 11k

[IllTestYourGirls]

Originally Posted by EscortBiz

well lets see the guys sending the food need money too so they will figure out how to work around the credit by extending credit themselves

etc etc

hes wrong in many ways and people love these doom stories

give it 4 weeks and the dow is at 11k

How strong will the dollar be?

[EscortBiz]

Originally Posted by IllTestYourGirls

How strong will the dollar be?

it was a simple run on the market this is what happens when you have over 10 million Americans sitting at home trading using tdameritrade, scott trade, etrade etc. especially those sitting next to their wife and shes screaming get out of the market now.

Now we will see a reverse fear where people will start putting money in so they dont miss the opportunity boat, within days you will see that

[TheDoc]

The credit markets have been far worse than they are today, far far worse, far far more strict, far far far far far higher interest rates. From housing, to credit, to the inflation, all of it has been worse.

We have SOOOooOOo much more to go before we even catch the 80's, and even more before the 60's...

Thinking this eco can't function without credit is utterly stupid. It should be able to fully function WITHOUT ANY CREDIT, like it has before. It's the free market, and if you can't cut it, you work for someone else that can...

[EscortBiz]

Originally Posted by TheDoc

The credit markets have been far worse than they are today, far far worse, far far more strict, far far far far far higher interest rates. From housing, to credit, to the inflation, all of it has been worse.

We have SOOOooOOo much more to go before we even catch the 80's, and even more before the 60's...

Thinking this eco can't function without credit is utterly stupid. It should be able to fully function WITHOUT ANY CREDIT, like it has before. It's the free market, and if you can't cut it, you work for someone else that can...

VERY WELL SAID!

[teomaxxx]

Originally Posted by EscortBiz

it was a simple run on the market this is what happens when you have over 10 million Americans sitting at home trading using tdameritrade, scott trade, etrade etc. especially those sitting next to their wife and shes screaming get out of the market now.

Now we will see a reverse fear where people will start putting money in so they dont miss the opportunity boat, within days you will see that

thats a fucking bullshit. SEE the TED SPREAD. This is the most precise indicator of panic and untrust in bank sector. J6P is already whipped out of market by Crammer bottoms calls from fall 07.
Credit markets are still locked up and everyone from the prophets of doom, who predicted whole finacials crises, now prays for a recovery of TED spread ASAP, as their are shitting their pants too.
Without CREDIT you dont have ECONOMY. is that really hard to understand?
Everyone of better pros who understand stock markets look on credit markets nowadays too, not your joe6pack.

This is why US, EU and JAP goverments will hopefully gurantee interbanking landing. They fucking know that better, what will happen to them with locked credit markets. But what happen for loses in guaranted interbanking landing? They are going to be paid by you and me.

After state guaranted interbanking landing you could put money in the stocks again.

[teomaxxx]

Originally Posted by TheDoc

The credit markets have been far worse than they are today, far far worse, far far more strict, far far far far far higher interest rates. From housing, to credit, to the inflation, all of it has been worse.

We have SOOOooOOo much more to go before we even catch the 80's, and even more before the 60's...

Thinking this eco can't function without credit is utterly stupid. It should be able to fully function WITHOUT ANY CREDIT, like it has before. It's the free market, and if you can't cut it, you work for someone else that can...

the real question is how much CREDIT was in the system and how much CREDIT and LEVERAGE in the system is now. Look on it. Current markets cant work without CREDIT. Thats why you have FED doing Comercial paper lending now as they realized that without CP rollovers, many companies would go bust.

[TheDoc]

Originally Posted by teomaxxx

the real question is how much CREDIT was in the system and how much CREDIT and LEVERAGE in the system is now. Look on it. Current markets cant work without CREDIT. Thats why you have FED doing Comercial paper lending now as they realized that without CP rollovers, many companies would go bust.

Today, tons of credit, tons of leverage, tons of everything.. And it should go bust. We live in a fake market, with tons of crap we don't need, imported on trade credit, rather than just trade.

If you have to run your business on credit, you should be out of business, downsize, sell your company, whatever it is - but it shouldn't ever be ran on credit.

Does this mean we will have less stuff, damn straight. Instead of 80 different kinds of cereal, you will prob only have 20. Does this mean we prob won't have another fast food shit hole around the corner or a wallgreens, or starbucks down the road? Prob so and thank god.

We are an eco that has blown way up above the standard 'because of credit'... It created a fake life style. For Companies, the people and the Gov. It needs to stop.

Poorer or poor, working class, broke, 2 new cars people should never be able to buy a house, they shouldn't be able to own 2 new cars. For sure at todays standard, the credit they have is far to much.

New Company owners should have to wait 5-10 years (or prove business) before they get loans. This is how it used to be, and really over the last 20ish years has slowly stopped.

Let all the markets die, all at once.. then what? We are still going to over charge by 1000000% for everything? No... the market will balance out, which is needed.

[Defiance Inc]

Originally Posted by TheDoc

The credit markets have been far worse than they are today, far far worse, far far more strict, far far far far far higher interest rates. From housing, to credit, to the inflation, all of it has been worse.

We have SOOOooOOo much more to go before we even catch the 80's, and even more before the 60's...

Thinking this eco can't function without credit is utterly stupid. It should be able to fully function WITHOUT ANY CREDIT, like it has before. It's the free market, and if you can't cut it, you work for someone else that can...

This economy is based on credit. Just look at the core of the system. Our government borrows money from the reserve. Our government pays interest on that loan. That IS credit. That money is then dispersed and fractional reserve kicks in. Where each succession of a loan generates more credit/money. Think about it... this all started with sub prime loans, which make up a very small percentage of all loans. So how can such a small percentage of loans tank an entire global economy? CREDIT/fiat currency.
The first part of this movie give an overview of the current situation, the last part gets more into theology type stuff with society if you interested in that type of stuff...

http://video.google.com/videoplay?do...05277695921912


Yes, there have been worse times. But this is just the beginning.

[Defiance Inc]

And we were warned. Our founding father saw this coming...

"The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered. "

If we run into such debts as that we must be taxed in our meat and in our drink, in our necessaries and our comforts, in our labors and our amusements, for our callings and our creeds, as the people of England are, our people, like them, must come to labor sixteen hours in the twenty-four, and give the earnings of fifteen of these to the government for their debts and daily expenses; And the sixteen being insufficient to afford us bread, we must live, as they do now, on oatmeal and potatoes, have no time to think, no means of calling the mismanagers to account; But be glad to obtain subsistence by hiring ourselves to rivet their chains around the necks of our fellow sufferers; And this is the tendency of all human governments. A departure from principle in one instance becomes a precedent for a second, that second for a third, and so on 'til the bulk of society is reduced to mere automatons of misery, to have no sensibilities left but for sinning and suffering...and the forehorse of this frightful team is public debt. Taxation follows that, and in its train wretchedness and oppression.

Thomas Jefferson

[GotGauge]

Originally Posted by TheDoc

The credit markets have been far worse than they are today, far far worse, far far more strict, far far far far far higher interest rates. From housing, to credit, to the inflation, all of it has been worse.

We have SOOOooOOo much more to go before we even catch the 80's, and even more before the 60's...

Thinking this eco can't function without credit is utterly stupid. It should be able to fully function WITHOUT ANY CREDIT, like it has before. It's the free market, and if you can't cut it, you work for someone else that can...

Yep

Originally Posted by TheDoc

Today, tons of credit, tons of leverage, tons of everything.. And it should go bust. We live in a fake market, with tons of crap we don't need, imported on trade credit, rather than just trade.

If you have to run your business on credit, you should be out of business, downsize, sell your company, whatever it is - but it shouldn't ever be ran on credit.

Does this mean we will have less stuff, damn straight. Instead of 80 different kinds of cereal, you will prob only have 20. Does this mean we prob won't have another fast food shit hole around the corner or a wallgreens, or starbucks down the road? Prob so and thank god.

We are an eco that has blown way up above the standard 'because of credit'... It created a fake life style. For Companies, the people and the Gov. It needs to stop.

Poorer or poor, working class, broke, 2 new cars people should never be able to buy a house, they shouldn't be able to own 2 new cars. For sure at todays standard, the credit they have is far to much.

New Company owners should have to wait 5-10 years (or prove business) before they get loans. This is how it used to be, and really over the last 20ish years has slowly stopped.

Let all the markets die, all at once.. then what? We are still going to over charge by 1000000% for everything? No... the market will balance out, which is needed.

Exactly!!!!!
I am not sure about the credit between companies, but the "credit Freeze" is Not a Freeze, it is just higher standards, as they should be.

[TheDoc]

Originally Posted by Defiance Inc

This economy is based on credit. Just look at the core of the system. Our government borrows money from the reserve. Our government pays interest on that loan. That IS credit. That money is then dispersed and fractional reserve kicks in. Where each succession of a loan generates more credit/money. Think about it... this all started with sub prime loans, which make up a very small percentage of all loans. So how can such a small percentage of loans tank an entire global economy? CREDIT/fiat currency.
The first part of this movie give an overview of the current situation, the last part gets more into theology type stuff with society if you interested in that type of stuff...

http://video.google.com/videoplay?do...05277695921912


Yes, there have been worse times. But this is just the beginning.

I understand what our money system is and why it's f'ed up.. However our fake money system didn't do this, our personal/business credit markets (which are a mirror of our money system) did this.

It all works as long as every loan chain, pretty much 100% of the time, pays up. But as soon as massive amounts of people/companies can't pay up, banks can't pay, govs can't pay, one chain breaks the entire thing fails and/or your trade debt increases.

It can be corrected by not letting the mass majority of 'people and companies' have credit to 'run' on. More people dealing in cash only, puts the market back to what it's really worth before the fake credit market created more demand.

Allowing hundreds of millions of people and companies, to live on, survive on, expand without need, ect on credit.. created massive demand on millions of un-needed things, which tosses off trade agreements, and all types of bs.

And when we the people or companies can't pay, banks can't pay, companies fail, less tax is collected, more trade debts go up.... at the mass level of hundreds of millions around the world, you end up the situation we have today.

[mmcfadden]

simple solution... work harder!

[EscortBiz]

you guys ready for a 700 point gain?

[Defiance Inc]

TheDoc "I understand what our money system is and why it's f'ed up.. However our fake money system didn't do this, our personal/business credit markets (which are a mirror of our money system) did this."

It all works as long as every loan chain, pretty much 100% of the time, pays up. But as soon as massive amounts of people/companies can't pay up, banks can't pay, govs can't pay, one chain breaks the entire thing fails and/or your trade debt increases.

It can be corrected by not letting the mass majority of 'people and companies' have credit to 'run' on. More people dealing in cash only, puts the market back to what it's really worth before the fake credit market created more demand.

Allowing hundreds of millions of people and companies, to live on, survive on, expand without need, ect on credit.. created massive demand on millions of un-needed things, which tosses off trade agreements, and all types of bs.

And when we the people or companies can't pay, banks can't pay, companies fail, less tax is collected, more trade debts go up.... at the mass level of hundreds of millions around the world, you end up the situation we have today."


The personal/business credit markets is not a mirror, it is our system. Money is debt, it is created from a loan. The chain of loans starts at the very top, the federal reserve and our government. It does not pay up, it will never pay up. Because if it did pay up there would be no "money", because money is created from loans/debt. To let that fail, is to essentially let the entire system go down... What are the consequences of that?
But I agree, let it go down now, if it doesn't now it will eventually, because all societies whom based their system on fiat currency has failed, except ours, yet.
So ya, I agree, let it go.

The rally is only temporary, the U.S. still has 5 year arm resets coming, coupled with high unemployment foreclosures, foreclosures due to inflation... which will cause more defaults (e.g. car loans, credit cards...).
Its gonna be a slow bleed!
Enjoy

[EscortBiz]

Originally Posted by EscortBiz

you guys ready for a 700 point gain?

yall gotta start listening to yours truly

[Vendot]

Originally Posted by EscortBiz

yall gotta start listening to yours truly

You were out by 236 pts...... closed at +936

HARDLY ACCURATE AND ALSO SOMEONE WHO IS ATTACKING WIFES WHO TELL HUSBANDS TO GET OUT OF THE MARKET THATS A SEXIST ACTIVITY!!!!!!!

What am I talking about? Your in the escort biz, hardly a feminist lol

[EscortBiz]

Originally Posted by Vendot

You were out by 236 pts...... closed at +936

HARDLY ACCURATE AND ALSO SOMEONE WHO IS ATTACKING WIFES WHO TELL HUSBANDS TO GET OUT OF THE MARKET THATS A SEXIST ACTIVITY!!!!!!!

What am I talking about? Your in the escort biz, hardly a feminist lol

lol yeah very sexy

[DatingGold]

the sky is falling

[teomaxxx]

Originally Posted by EscortBiz

yall gotta start listening to yours truly

and this was why, exactly as I said yesterday:

Originally Posted by teomaxxx

This is why US, EU and JAP goverments will hopefully gurantee interbanking landing. They fucking know that better, what will happen to them with locked credit markets. But what happen for loses in guaranted interbanking landing? They are going to be paid by you and me.

After state guaranted interbanking landing you could put money in the stocks again.

Thats what exactly happened today.
But I would only say, look on share prices of institutions who guaranted and insured all that crap.
Hopefully the goverments will resort all that mess ASAP, otherwise they are going to be several defaults of goverments entities and bond market dislocations like it happened to Iceland due overleveraged banking industry.

[Vendot]

Libor is coming down now........ so shouldnt we be coming back from the brink?

[teomaxxx]

Originally Posted by Vendot

Libor is coming down now........ so shouldnt we be coming back from the brink?

yeah, thats definately best sign we could get. second one, watch Lehman CDS auction on tuesday, if things will go well - only 6 bilion loses as head of regulating agency suggested against 200 bilions as some bank analysts suggested, the Libor should come down significantly and it could be a good time to buy recession-proof stocks.

[pigman]

Its scary out there, but we will survive.

[DWB]

OK... I didn't go to work like this guy said and I got fucking fired. Everyone else showed up.

I guess they didn't get the memo.

[teomaxxx]

another excellent post from him:
Congress: Anna Schwartz Says You're Wrong
Nearly a year ago, on October 30th, 2007, I first began petitioning Congress with the following message (among others):

"Congress MUST NOT bail out – under any circumstances – mortgage companies and investors who voluntarily entered into risky mortgage and derivative contracts during these last several years due to lax lending standards, poor due diligence or as a matter of business policy. Failure must be allowed irrespective of the damage done to these firms, because only financial failure serves as an effective check and balance against excessively risky behavior and greed. The practice of intentionally making problems “really big” in the smug knowledge that you can take ill-gotten profits and lay off the risk on society has led to a series of economic disasters that have been “charged off” on the American Taxpayer, going back to the S&L Crisis.

Congress must act to ban all off-balance-sheet “conduits”, SIVs and similar schemes, and require that any and all liabilities be properly and completely reported both to regulators and shareholders. These vehicles create an intentionally-false view of firms’ financial condition. In effect, these vehicles serve to fraudulently manipulate a bank’s balance sheet by hiding debt. These are the same accounting tricks that were instrumental in Enron’s bankruptcy. Now, on the front page of the Wall Street Journal (October 13th) we learn that Secretary Paulson is actively involved in attempting to expand this deception! "

Since then we have seen multiple petitions, all of which are chronicled at SupportedTheBailout.Org, and all of which have been largely ignored.

It is willful ignorance of these petitions that leads us to being where we are in this economic crisis.

It is willful ignorance of the facts that has caused your 401k and IRA balances to decline by nearly forty percent, lending to constrict the point that we are threatened with another Depression, and unemployment to skyrocket.

Ben Bernanke claims to be a student of The Depression and has written a thesis paper on it - one that I have read, and, in my opinion, have found to be indefensible. Of course when your defense is heard by a bunch of monetarists who believe that "the answer to all crunches in liquidity is more liquidity", you pass. Such is the ivory tower world, which unfortunately is rather disconnected from the world that those who must "do" in order to survive (instead of "teach") live in.

But Anna Schwartz is no ordinary economist. Nor is she an ordinary student of The Depression.

She, at 92, is one of the few people who actually lived through it and remembers what it was like, never mind quite possibly knowing more about monetary history, theory and the actual practice of banking than anyone alive.

She is co-author (along with Milton Friedman) of the 888-page tome "Monetary History", a book that Ben Bernanke himself has said is "the leading and most persuasive explanation of the worst economic disaster in American History."

And today, in The Wall Street Journal, she calls a spade..... a spade.

Let's use her words, of course, attributed:

"We now hear almost every day that banks will not lend to each other, or will do so only at punitive interest rates. Credit spreads -- the difference between what it costs the government to borrow and what private-sector borrowers must pay -- are at historic highs.

This is not due to a lack of money available to lend, Ms. Schwartz says, but to a lack of faith in the ability of borrowers to repay their debts. "The Fed," she argues, "has gone about as if the problem is a shortage of liquidity. That is not the basic problem. The basic problem for the markets is that [uncertainty] that the balance sheets of financial firms are credible."

So even though the Fed has flooded the credit markets with cash, spreads haven't budged because banks don't know who is still solvent and who is not. This uncertainty, says Ms. Schwartz, is "the basic problem in the credit market. Lending freezes up when lenders are uncertain that would-be borrowers have the resources to repay them. So to assume that the whole problem is inadequate liquidity bypasses the real issue."

Of course it does. That bypass is intentional Ms. Schwartz. It is an outrageous and in fact insane attempt to protect those who have made bad bets from the proper outcome of those wagers.

That protection stems from the fact that both of the main protagonists in "addressing the issue", Chairman Bernanke and Secretary Paulson, in fact were prime architects in causing the problem in the first place.

Chairman Bernanke was on The Federal Reserve Board during the Greenspan years, when Alan Greenspan "pumped liquidity" after 9/11 and the Tech Wreck, yet at the same time removed essentially all regulation and oversight from the banking sector. He is thus complicit in the generation of the credit bubble that led to this disaster, and to take strong action against the perpetrators of same he would both have to admit that he in fact was one of the prime causative factors in the mess and would be forced to resign in disgrace.

Secretary Paulson is in an even worse situation - he, as Chairman of Goldman Sachs, testified in Congress as far back as the year 2000 that Investment Banks should have the shackles of leverage restraint removed from them. He failed to get that from Arthur Levitt in 2000 (President Clinton's chair of the SEC) but came back to the well in 2004 under President Bush and was successful. Two years later, having used that expansion of leverage to garner a personal fortune of $500 million dollars, he cashed out tax-free to take his seat as Treasury Secretary.

Every one of the large firms that has failed - all five (Fannie, Freddie, AIG, Lehman and Bear Stearns) - would still be in operation today if their leverage had been held at the pre-2004 12:1 limit. Therefore, Secretary Paulson must accept personal responsibility for the decisions that led to the failure of these firms, as he was one of the primary individuals in American Business who argued for removal of these constraints.

As for Anna's view on what should be done now, I again quote the esteemed (and unimpeachable) expert:

"Rather, "firms that made wrong decisions should fail," she says bluntly. "You shouldn't rescue them. And once that's established as a principle, I think the market recognizes that it makes sense. Everything works much better when wrong decisions are punished and good decisions make you rich." The trouble is, "that's not the way the world has been going in recent years."

Instead, we've been hearing for most of the past year about "systemic risk" -- the notion that allowing one firm to fail will cause a cascade that will take down otherwise healthy companies in its wake.

Ms. Schwartz doesn't buy it. "It's very easy when you're a market participant," she notes with a smile, "to claim that you shouldn't shut down a firm that's in really bad straits because everybody else who has lent to it will be injured. Well, if they lent to a firm that they knew was pretty rocky, that's their responsibility. And if they have to be denied repayment of their loans, well, they wished it on themselves. The [government] doesn't have to save them, just as it didn't save the stockholders and the employees of Bear Stearns. Why should they be worried about the creditors? Creditors are no more worthy of being rescued than ordinary people, who are really innocent of what's been going on."

Exactly. Thank you Ms. Schwartz for adding the imprimatur of an unimpeachable expert, perhaps the most credible expert on monetary and banking policy alive, to the view that I and a few others have been shouting to Congress and others over the last year.

[teomaxxx]

And the root cause?

"How did we get into this mess in the first place? As in the 1920s, the current "disturbance" started with a "mania." But manias always have a cause. "If you investigate individually the manias that the market has so dubbed over the years, in every case, it was expansive monetary policy that generated the boom in an asset.

"The particular asset varied from one boom to another. But the basic underlying propagator was too-easy monetary policy and too-low interest rates that induced ordinary people to say, well, it's so cheap to acquire whatever is the object of desire in an asset boom, and go ahead and acquire that object. And then of course if monetary policy tightens, the boom collapses.""

Uh, yeah.

And now Congress has turned to those who were responsible for creation of the mess and believes that their tonic for cleaning it up will be effective.

The simple fact of the matter is that Congress has made a critical error in allowing Ben Bernanke and Hank Paulson to oversee this mess and its resolution. Both men are hopelessly compromised in that taking true, effective action would require both to admit to their complicity in the creation of the bubble in the first place, and in Secretary Paulson's case it would involve the admission that his personal fortune was gained through the unwise and imprudent advocacy of the very policies that led to the collapse now upon us.

Neither of these men are going to admit any such thing, for doing so would likely lead to immediate removal from office at best. Indeed, now that they have undertaken the extreme measures that have been practiced to cover up the original event and its causes, protecting those who were complicit, they might even come under federal indictment for racketeering should they come clean and tell the truth.

It is, however, the job of Congress to put a stop to such outrages before these two men, in cohorts with their friends in the banking system, lead us straight into The Greater Depression.

Indeed, history has shown that when The Executive oversteps its boundaries, or when other elements of the government do so, that Congress is the body retaining not only the authority but the requirement to act in a fashion that protects the body politic.

In this case, that protection is urgently needed, as in "today". Secretary Paulson and Ben Bernanke's pursuit of policies that are harmful has now gone on for more than a year, and should this be allowed to continue, irrespective of who holds the title in the office, we will see the destruction of financial firms and American Sovereignty piece-by-piece until what remains is unable to be saved at all.

I close with a final quote from The Wall Street Journal interview:


"Fed Chairman Ben Bernanke, of all people, should understand this, Ms. Schwartz says. In 2002, Mr. Bernanke, then a Federal Reserve Board governor, said in a speech in honor of Mr. Friedman's 90th birthday, "I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again.""

Ben Bernanke (and Secretary Paulson) not only will do it again, he has done it again - unless Congress acts here and now to stop him.

The Genesis Plan is one such way to stop him.

[The Duck]

It's all by design and I have been saying it for years.

[EscortBiz]

taken from amazingjokes.com credit to them

Bar Stool Economics

Our Tax System Explained: Bar Stool Economics

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that's what they decided to do.
The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. 'Since you are all such good customers,' he said, 'I'm going to reduce the cost of your daily beer by $20.' Drinks for the ten now cost just $80.
The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free.
But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?'
They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer.
So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so:
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.
'I only got a dollar out of the $20,'declared the sixth man. He pointed to the tenth man,' but he got $10!'
'Yeah, that's right,' exclaimed the fifth man. 'I only saved a dollar, too.
It's unfair that he got ten times more than I got' 'That's true!!' shouted the seventh man. 'Why should he get $10 back when I got only two? The wealthy get all the breaks!'
'Wait a minute,' yelled the first four men in unison. 'We didn't get anything at all. The system exploits the poor!'
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn't show up for drinks so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!
And that, ladies and gentlemen, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D.
Professor of Economics
University of Georgia

For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.