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*Phil*
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Posted: Sat Aug 30th, 2008 04:14 am |
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For the first time ever – the Dow Jones Industrial Average posted quarterly losses instead of earnings.
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Roy
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Posted: Sat Aug 30th, 2008 08:00 pm |
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Phil, thanks for that one.
How come I watch all that news and listen on the radio and never once heard that the Dow had hit all red ink?
Don't like to spread the word, do they?  Got caught with their fiscal "drawers" down, haven't they?
Have some more detail for us on this, Phil?
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"The force and degree of a man's inner benevolence evokes in others a proportionate degree of ill-will" - Gurdjieff
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Roy
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Posted: Sun Aug 31st, 2008 12:08 am |
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Economy at 60-year low, says Darling. And it will get worse Chancellor says Labour failing to communicate with voters
So, the UK is going to be "f"-ed , just as we are. 
Britain is facing "arguably the worst" economic downturn in 60 years which will be "more profound and long-lasting" than people had expected, Alistair Darling, the chancellor, tells the Guardian today.
In the government's gravest assessment of the economy, which follows a warning from a Bank of England policymaker that 2 million people could be out of work by Christmas, Darling admits he had no idea how serious the credit crunch would become.
His blunt remarks lay bare the unease in the highest ranks of the cabinet that the downturn is making it all but impossible for Gordon Brown to recover momentum after a series of setbacks.
His language is much starker than the tone adopted by the prime minister, who aims to revive his premiership this autumn by explaining how he will help struggling families through the downturn.
The chancellor, who says that Labour faces its toughest challenge in a generation, admits that Brown and the cabinet are partly to blame for Labour's woes because they have "patently" failed to explain the party's central mission to the country, leaving voters "pissed off".
In a candid interview in today's Guardian Weekend magazine, Darling warns that the economic times faced by Britain and the rest of the world "are arguably the worst they've been in 60 years". To deepen the sense of gloom, he adds: "And I think it's going to be more profound and long-lasting than people thought."
The economic backdrop presents Labour with its toughest challenge since the 1980s. "We've got our work cut out. This coming 12 months will be the most difficult 12 months the Labour party has had in a generation," he says. But Labour has been lacklustre. "We've got to rediscover that zeal which won three elections, and that is a huge problem for us at the moment. People are pissed off with us.
"We really have to make our minds up; are we ready to try and persuade this country to support us for another term? Because the next 12 months are critical. It's still there to play for.........more.."
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"The force and degree of a man's inner benevolence evokes in others a proportionate degree of ill-will" - Gurdjieff
"In a time of universal deceit, telling the truth is a revolutionary act." — George Orwell
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*Phil*
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Posted: Fri Sep 5th, 2008 01:27 am |
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Oh yeah, UK is in long term deep doo-doo. Due to declines in their off-shore oil feilds they've become a net importer but unlike the US they can't run deficits by printing and borrowing recycled petrodollars forever - their current account deficit will grow ever larger and larger.
Looks like a wiff of deflation is in the air...
Gold Spot $794.70
DJIA 11,188.23 -344.65
NASDAQ 2,259.04 -74.69
RUSSELL 718.62 -23.29
NYSE 8,008.25 -261.00
TSX 12,814.14 -323.58
USD 78.90 +0.88
Crude Oil 107.54 -1.81
The Fed can only loosen the money supply now. To tighten could cause a depression. The Boston Federal Reserve Bank is now saying unemployment will probably go up to %6 and the current Fed Funds Rate of %2 is not too low. A modern Central bank will choose inflation over deflation. When the UK and the US debase their currencies together who can tell since the values are relative? Oil, gold, and silver will over time illuminate any absolute declines in fiat currencies. The ECB is holding firm for now which is causing the Spanish and Italians more and more hardship, but even Germany is starting to show economic decline. A strong currency in absolute is based on a strong economy. We'll just have to watch and wait. My bet is that the Fed will print money like there is no tomorrow causing excesses to get worse and worse. The ECB passed some new rules for using their liquidity window. It seems the banks were packaging all their worthless crap and trading it at the ECB window for the good stuff then using the proceeds to short the stock and commodities markets.
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Roy
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Posted: Fri Sep 5th, 2008 04:37 pm |
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Great analysis and news blurb.
If we drill, set up wind farms and use natural gas, the T. Boone Pickens plan, we could save 700 billion dollars from flowing out of the US.
I think that would be an excellent place to start.
Energy independence is a doable goal and the money staying here would change everything.
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"The force and degree of a man's inner benevolence evokes in others a proportionate degree of ill-will" - Gurdjieff
"In a time of universal deceit, telling the truth is a revolutionary act." — George Orwell
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*Phil*
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Posted: Sat Sep 6th, 2008 01:34 am |
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Yeah, He has my support. He isn't some bloviating politician whos only measure of a project's sucess is the political correctness, the number of votes it gets him, or the tax revenues it bring in. Pickens may be an SOB but he can get big things done and he is putting his own money into the thoroughly thought out and planned project. We can be sure that no deadbeats will be feeding off Picken's project. The corruption and greed in the political/public and financial sectors have become boundless. I wouldn't be suprised if they try to take the project away from Pickens' control or at least get sizable free spot at the feed trough.
I think the global big boys ( China, Russia, EU ) know the US financial system is toast. I can't image they haven't worked out a plan to save themselves. China has been very blunt that they expect due compensation for their investments in US securities or the consequences will be "catastrophic" for us. I'm expecting the shoe to drop at any time but the "plan" probably is event driven. "If this then we do that" sort of thing.
I just love how the Federal Reserve Bank three days ago says unemployment may reach %6 and today the offical news is out that unemployment is 6.1%. These clowns know the situation and won't come clean until the fact is about to reveal itself to everyone. How did the stock market react? It went up. But then the bond master of PIMCO a few days ago sternly advised the US Government to massively purchase securites in order to prevent a "tsunami." So heavy handed market intervention is the norm now, things really have become divorced from reality. Who wants to invest or participate in a market like that where analysis of the facts count for little. Current estimates are the Fed has handed out $1 trillion dollars to its banking and financial friends to help them cover their losses and pay themselves bonuses.
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Roy
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Posted: Sat Sep 6th, 2008 07:07 pm |
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So what is going to happen when the economic tsunami hits?
I am actually really concerned.
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"The force and degree of a man's inner benevolence evokes in others a proportionate degree of ill-will" - Gurdjieff
"In a time of universal deceit, telling the truth is a revolutionary act." — George Orwell
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*Phil*
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Posted: Sun Sep 7th, 2008 04:32 am |
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PIMCO says in their September Outlook that the global financial, bank sectors, SWF, GSE and Institutional investors are develeraging and no one is willing or able to make to make fresh commitments. Without new money coming in to build new balance sheets these agencies have to liquidate assets causing ever more asset price declines and liquidations. Never since the Great Depression have all asset classes declined as they have the past year, according to the PIMCO report.
Another week-end another major announcement: the Treasury Secretary is expected Sunday to announce a plan to put Fannie Mae and Freddie Mac under government control.
When he got congressional authority to deal with these two GSEs he assured congress that it would be done without taxpayer money. He lied - exactly from were does the Treasury get money? The estimated cost of this ranges from 1 to 6 trillion. This is not a bailout to help homeowners. The money will go to the holders of the GSE's bonds and preferred shares: mostly China and other Asian banks. This is a BS game played all too often lately stacked heavily against the average Joe and the taxpayer.
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Pecca fortiter, sed fortius fide et gaude in Christo!
Galactic Signature: Blue Self-Existing Monkey
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Roy
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Posted: Sun Sep 7th, 2008 05:54 am |
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Sounds to me as if this cannot be done. The international trade net has to be rendered asunder at some spots or other, no?
What are the scenarios if the twins died and...and....and...?
A big what?
____________________
"The force and degree of a man's inner benevolence evokes in others a proportionate degree of ill-will" - Gurdjieff
"In a time of universal deceit, telling the truth is a revolutionary act." — George Orwell
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*Phil*
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Posted: Sun Sep 7th, 2008 04:56 pm |
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It has happened.
U.S. nationalizes Freddie, Fannie, wiping out shareholders.
The stocks and bonds of these GSE's counted as AAA reserve capital for banks and finance companies. Now they're in the hole if they were not before. I know a guy who invested in nothing but the stocks of these companies. He's broke. Life savings gone.
If these two GSEs went out of business then the availability of home loans would during normal times at least half and mortgage interest rates skyrocket. At the moment Washington Mutual corp bonds %8.5 due 2010 have a yield of %40. There is tremendous fear to loan money. Fed Fund rate of %2 and Treasuries %4 is does not reflect the reality of extreme tight credit.
on a related note:
Scramble for cash as central banks dry up
"British banks soon could be scrambling for short-term funding once more amid reports that supplies from Threadneedle Street and from Frankfurt may be drying up."
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Galactic Signature: Blue Self-Existing Monkey
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*Phil*
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Posted: Mon Sep 15th, 2008 02:38 am |
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Jim Sinclair offers an interesting history lesson:
JP Morgan is credited with the bank rescues of 1907 by the power of his person, position and capital. He demanded that banks reinstate their willingness to lend to each other.
Mind you, this is not the whole story. As always, the historian creates history. Had the markets continued lower, Morgan would not have been able, by any means, to reinstate financial confidence.
JP Morgan issued an invitation to Jesse Livermore to visit with him in his Ivory Tower office. It was at this meeting that JP Morgan asked Jesse Livermore, the largest short seller of 1907, to cease short selling. Jesse Livermore came from humble beginnings as compared to JP Morgan. Jesse was complimented that Morgan approached him making such a request, PRIOR to taking any of the reported action he planned to take. It was critical to his plans that the then ILLEGAL short selling ceased. Without Livermore’s cooperation all other plans he had would have failed.
Short selling in 1907, although commonly done, was illegal. JP Morgan knew that unless the major short sellers could be neutralized the crash of 1907 would have broken the nation - if not the world. The key difference between the crash of 1907 and the collapse of 2007– 2011 is that for some reason the opposite has occurred. If Jesse Livermore were the top gun of all hedge fund managers on the planet today his meeting with today’s JP Morgan would give him a free pass to wreak hell and mayhem.
Because the key criterion in the comparison of 1907 to 2007– 2011 has been missing, this nation if not the world haven’t a snowball’s chance in hell.
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*Phil*
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Posted: Mon Sep 15th, 2008 01:01 pm |
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World's central banks move to calm Lehman storm
excerpts:
TOKYO/FRANKFURT, Sept 15 (Reuters) - European and Asian central banks followed the U.S. Federal Reserve on Monday in trying to support markets wilting under the bankruptcy of Lehman Brothers and the sale of crisis-hit Merrill Lynch…
The Fed, preparing for gyrations in the week ahead, announced emergency measures on Sunday, including accepting equities as collateral for cash loans at one of its special credit facilities for the first time in its 90 year history…
Analysts said cash and words may not be enough to steady market nerves.
“There is now speculation that the Fed might decide an emergency rate cut to help the market absorb the stress. This cannot be excluded if signs of meltdown materialise,” said Marco Annuziata, global chief economist at Unicredit in London.
Summary:
– The Fed accepting equities as collateral for cash loans
– trading thinned by a holiday in Japan, Hong Kong, China and Korea
– “We are monitoring financial market conditions while in contact with the Fed and authorities from other countries,” a source at the Bank of Japan told Reuters
– The European Central Bank said it was “ready to contribute to orderly conditions in the euro money market.”
– The Bank of England said it would act if necessary.
– The Swiss National Bank said it would respond “flexibly and generously” to money markets and followed that up with an offer of extra liquidity
– The Reserve Bank of Australia provided the banking system with more money than its estimated need
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Galactic Signature: Blue Self-Existing Monkey
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*Phil*
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Posted: Mon Sep 15th, 2008 07:02 pm |
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RIP Lehman - at 158 years old and the fourth largest investment bank in the world folds with record $613 billion debt.
Next...
AIG with over $1 Trillion.
and a busy week-end it was for the derivatives folks:
Derivatives market trades on Sunday to cut Lehman risk Sun Sep 14, 7:47 PM ET
Reuters
Sunday September 14, 9:52 pm ET
NEW YORK (Reuters) - Major players in the $455 trillion global derivatives market rushed Sunday to scale back exposure to a potential bankruptcy filing by investment bank Lehman Brothers in a rare emergency trading session.
Trading took place as U.S. regulators and bankers were making last-ditch efforts to prevent toxic assets from ailing Lehman Brothers (NYSE:LEH - News) spilling into global markets and rupturing investor faith in the international financial system. For details see (ID:nN14440361)
"This is an extremely, and I stress extremely, rare event. It also speaks to the more general notion that, in today's highly disrupted financial markets, the unthinkable is thinkable," said Mohamed El-Erian, the chief executive of Pimco, the world's biggest bond fund, based in Newport Beach, California.
Not so rare - eh? El-Erian is damn good but his risk management technique under-wieghted the so-called "rare" because what was thought rare 8 years ago is now a certainty for almost all the Wall-Street financers. How about all the other lesser lights?
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Roy
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Posted: Tue Sep 16th, 2008 01:33 am |
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We can't cover that level of debt and all the other merde of the world banking system at the same time.
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"The force and degree of a man's inner benevolence evokes in others a proportionate degree of ill-will" - Gurdjieff
"In a time of universal deceit, telling the truth is a revolutionary act." — George Orwell
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*Phil*
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Posted: Tue Sep 16th, 2008 01:55 am |
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We can't but it seems that monetization of a lot of this bad debt is unavoidable if the current global system is to survive long enough to enable the major players to exit and fashion a new system.
In the past Too Big to Fail was applied by the Fed to much much smaller institutions. Now with Lehman we will find out what happens when x10 Too-Big-To-Fail is allowed to fail.
I know AIG has a great load of state sponsored 403(b) retirement accounts. If AIG goes under like Lehman what will happen to the assets in those accounts so many public school teachers have saved into?
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Galactic Signature: Blue Self-Existing Monkey
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*Phil*
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Posted: Wed Sep 17th, 2008 01:06 am |
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U.S. Govt. to buy 80% of AIG with $85 billion loan
From CNBC.com
Tuesday, September 16, 2008
American International Group will get an $85 billion loan from the federal government in exchange for an 80 percent stake in itself, sources have told CNBC.
Things are going south fast this week. AIG Commodity investment funds drop %50 in one day then trading halted because they were based on the credit worthiness of the futures contract issuers. I'm sure a lot of 403(b) custodial retirement accounts has money in AIG Commodity ETFs. Old folks and savers getting creamed there. Mass liquidations across the board in all asset classes. Treasury Bonds will soon follow. We may see oil at $50 yet gasoline nowhere to be found. The oldest and best Money Market fund "The Reserve" freezes payouts for one week and values 1 share at 97 cents.
It looks to me that the economy is now strongly pushing to go into a severe recession - a deflationary depression. Another shock-wave is hitting. This is probably what naturally should occur. Bernanke vows to fight deflation tooth and nail. He will by inflation.
We shall see!
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Galactic Signature: Blue Self-Existing Monkey
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*Phil*
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Posted: Wed Sep 17th, 2008 11:14 am |
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AIG is being liquidated…. over 2 years, instead of new york minute.
SNIP:
The purpose of the "liquidity facility is to assist AIG in meeting its obligations as they come due," the Fed said in its statement. The facility has a 24-month term. Interest will accrue on the outstanding balance at the three-month Libor rate plus 8.5 percentage points.
"The loan is expected to be repaid from the proceeds of the sale of the firm's assets," the Fed said. "The U.S. government will receive a 79.9 percent equity interest in AIG and has the right to veto the payment of dividends to common and preferred shareholders."
Notice also, that the FED provides the cash pool, but UNCLE SAM holds the "equity". Bernanke cant afford this sort of garbage on his balance sheet.
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Pecca fortiter, sed fortius fide et gaude in Christo!
Galactic Signature: Blue Self-Existing Monkey
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*Phil*
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Posted: Wed Sep 17th, 2008 03:13 pm |
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Central banks pump £100bn into money markets
By Peter Taylor
Last Updated: 9:16pm BST 16/09/2008
Central banks around the world yesterday pumped more than £100bn into money markets in a desperate move to avert an inter-bank lending shutdown of potentially dire economic consequences
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Pecca fortiter, sed fortius fide et gaude in Christo!
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*Phil*
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Posted: Wed Sep 17th, 2008 08:26 pm |
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THE FEDERAL RESERVE IS LOSING THE BATTLE! WEIMAR ECONOMICS FOLLOWS.
“We have lost control,” said Bernanke. “We cannot stabilize the dollar. We cannot control commodity prices.”
http://www.chicagotribune.com/business/chi-wed_oilsep17,0,4833605.story
US TREASURY AUCTIONS BILLS TO PROVIDE FEDERAL RESERVE WITH CASH.
Treasury said it has established a Supplementary Financing Program (SFP) ‘at the request of the Federal Reserve’ under which Treasury can auction Treasury bills that will ‘provide cash for use in the Federal Reserve initiatives’.
and everyone panics into shortest term treasuries:
Treasury 3-Month Bill Rates Drop to Lowest Since World War II (Jan 1940)
By Sandra Hernandez
Sept. 17 (Bloomberg) -- U.S. Treasury three-month bill rates dropped to the lowest since World War II as a loss of confidence in credit markets worldwide prompted investors to abandon higher-yielding assets for the safety of the shortest- term government securities.
Investors pushed down the rate to 0.0203 percent
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Pecca fortiter, sed fortius fide et gaude in Christo!
Galactic Signature: Blue Self-Existing Monkey
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Corvus
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Posted: Fri Sep 19th, 2008 10:32 pm |
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and then
http://www.youtube.com/watch?v=UppX6vP3c4g
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"In a person (not Corvus) who is open to experience each stimulus is freely relayed through the nervous system, without being distorted by any process of defensiveness." -C. Rogers
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