Will Asia Play an Active Role in Resolving the Financial Crisis?

• Asian countries like China, Japan, South Korea, India, Taiwan, Singapore, and Hong Kong hold more than $4 tr in forex reserves - much of it in U.S. dollars. Asia's surplus position, means that led by China, they will likely be the ultimate source of capital to bail out the financial system to stem their losses on financial assets and avoid further export slump
• Subramanian: Chinese govt could offer to lend up to $500bn to the U.S. govt for the rescue of its financial sector, conditional on restructuring the financial sector and keeping homeowners in place. Rescuing the U.S. financial sector could help avert an economic downturn, protecting China's exports, its growth engine

Click Here For Full Analysis

SEC Removes Ban On Short-Selling: Does It Make a Difference?

• Oct 8: Last day of the SEC rule banning short sales in more than 980 finance related companies. Since it was announced on Sep 18, companies covered by the rule are down an average of 16%
• The global prohibition on short selling may have made volatile markets more erratic and may have contributed to the recent fall in financial stocks because of the disappearance of a key feature: short covers

Click Here For Full Analysis

How Public Ownership Stakes in Banks Made it Through the TARP's Back Door

• Oct 9: Treasury Department is considering taking ownership stakes in many U.S. banks to restore confidence in the financial system; Treasury officials say the just-passed $700 bn bailout bill gives them the authority to inject cash directly into banks that request it

Click Here For Full Analysis

CHAN AKYA
Europe's death
by guarantee
A humiliating deal for Iceland is just the starting marker of the terminal decline of Europe. Domestic economic problems combined with unwieldy banking and regulatory supervision will put paid to the continent's hopes of surviving the current market carnage.

MARKET RAP
Crash!
Led spectacularly by Japan, Asia's markets fell with ever greater vengeance during the week. With European markets picking up the dire tale with a week-ending opening plunge and New York nervous in the wings, talk of support levels risks immediate redundancy.
R M Cutler runs his eye over the ups and downs in the week's markets.

Monetary Stalinism
in Washington
From Stalin's crop appropriation in the Ukraine of the 1930s to China in the late 1960s, the immense human damage wrought by government interference in the pricing mechanism is only too evident. The actions of the US Federal Reserve over the past decade is threatening financial consequences on a similarly tragic scale. - Hossein Askari and Noureddine Krichene

THE MOGAMBO GURU
Reserving the right to destroy
The US Federal Reserve has expanded its balance sheet more in one month than it has in almost all of its first 86 years of existence. This is a fundamental crackup - and means it is time to make some Big Wonderful Money.

Monetary Stalinism in Washington
From Stalin's crop appropriation in the Ukraine of the 1930s to China in the late 1960s, the immense human damage wrought by government interference in the pricing mechanism is only too evident. The actions of the US Federal Reserve over the past decade is threatening financial consequences on a similarly tragic scale. - Hossein Askari and Noureddine Krichene (Oct 10, '08)

CHAN AKYA
Europe's death by guarantee
A humiliating deal for Iceland is just the starting marker of the terminal decline of Europe. Domestic economic problems combined with unwieldy banking and regulatory supervision will put paid to the continent's hopes of surviving the current market carnage

MARKET RAP
Crash
Led spectacularly by Japan, Asia's markets fell with ever greater vengeance during the week. With European markets picking up the dire tale with a week-ending opening plunge and New York nervous in the wings, talk of support levels risks immediate redundancy. (Oct 10, '08)
- R M Cutler runs his eye over the ups and downs in the week's markets.

WILLIAM PESEK
Fears of 1930s Redux Are Pushing Asia to Action The big powers of the day cut interest rates this week to avoid another Great Depression. Joining the Federal Reserve, European Central Bank, Bank of England and Bank of Canada was the People's Bank of China. ANN WOOLNER
No Spas, No Riches, No Reward for Failed Execs Normally you can predict which companies are headed for trouble by finding those that slather multimillion-dollar bonuses on executives without regard to their performance. MICHAEL R. SESIT
Me-First Attitude Won't Rescue Banks, Economy ``United we stand, divided we fall'' is a phrase attributed to people as varied as the 6th century B.C. Greek author Aesop and the American revolutionary patriot Patrick Henry.

How to Save the U.S. Economy- by Richard C. Cook - 2008-10-10
The Financial Woes Signal the Death of the Dollar?- by Rev. Richard Skaff - 2008-10-09

Sarah Palin's Toxic Paradise
How the Alaska governor made her state a dump.
by Sheila Kaplan and Marilyn Berlin Snell

• Scheiber: Bill Clinton Gets DISSED!
• Just How Culpable Is Greenspan?
• Orr: McCain’s Weird Senior Moment
• Silver: Obama Can't Win WV. Right?!
• Cottle: Why Men Cheat

How Did The Perpetrators Of The Darfur Genocide End Up Running A U.N. Anti-Poverty Program?
by Eric Reeves
Leo! Russell! Too Bad 'Body of Lies' Is The Same Old Middle East CIA Thriller You've Seen Before
by Christopher Orr
Bad News, GOP: Obama Is FDR--And McCain Is Hoover
by E.J Dionne, Jr.
Not To Defend The Guy--But Can We Forever Put This One Lie About Bill Ayers To Rest?

We Have the Tools to Manage This Crisis - Paul Volcker, Wall Street Journal
Crisis Marks New Geopolitical Order - Philip Stephens, Financial Times
The Time to Act is Now - Paul Krugman, New York Times
Barack Obama's Magic Act - Kimberley Strassel, Wall Street Journal
Obama Embodies a New America - Peter Beinart, Time
It's Down to Hope vs. Fear - E.J. Dionne, Houston Chronicle
Obama's Friends Are Fair Game - Charles Krauthammer, Washington Post
McCain and W. - Robert Scheer, San Francisco Chronicle
Smells From the Shadows - Wesley Pruden, Washington Times
Meet Palin's Radical Right-Wing Pals - Blumenthal and Neiwert, Salon
We Must Lead the World to Stability - Gordon Brown, Times of London
Market and Economic Fear Will Subside - Steve Forbes, Forbes
Main Street's Rescue - Sebastian Mallaby, Washington Post
America the Banana Republic - Christopher Hitchens, Vanity Fair
What Barney Frank Doesn't Grasp - Howard Husock, Investor's Business Daily
Americans Deserve a Real Health Care Debate - Sens. Coburn & Burr, RCP
A Short Banking History of the U.S. - John Steele Gordon, WSJ

Editorials
The Financial Decelerator - Washington Post
Senator Dodd and Countrywide - Wall Street Journal
Looking for Leadership - Newsday
John McCain Wants Your Mortgage - Wall Street Journal

Political News & Analysis
McCain Joins Attack on Obama over Ayers - New York Times
Obama Blasts McCain's Mortgage Plan - Wall Street Journal
Anger is Crowd's Overarching Emotion at McCain Rally - Washington Post
Obama Making Huge Network Ad Buy for October 29 - McClatchy

Transcripts & Speeches


Obama Criticizes McCain's Mortgage Plan - Barack Obama
McCain Interview with Charles Gibson - ABC News
Panel on Democrats' Prospects in the Senate - Special Report w/Brit Hume
Obama's Speech in Indianapolis - Barack Obama
McCain, Palin Interview with Hannity - Hannity & Colmes

Best of the Blogs
Let McCain Be McCain - Jon Swift
Why Obama Deserves a Pass on Ayers - Jason Steck, PoliGazette
What if Huckabee Were the Nominee? - Andrew Romano, Stumper
What Is Wisdom? - Victor Davis Hanson, The Corner
The Cowardice Issue - Josh Marshall, TPM

e Have the Tools to Manage the Crisis - Paul Volcker, Wall Street Journal
We Must Lead the World to Stability - Gordon Brown, Times of London
Saving Banks Won't Save the Economy - Casey Mulligan, New York Times
Market and Economic Fear Will Subside - Steve Forbes, Forbes
The Mood of the Market - Redenbaugh & Juliano, RealClearMarkets

This is the US/UK financial assault on the Euro. The US and UK have the ability to shore up the dollar and the pound - - the EU does NOT have the power to shore up the Euro.

This is where the rubber meets the road. If you are the Finance minister of, say, Boswana, would you rather hold your currency reserves in Euros or Dollars?

Stay tuned.

10/10/2008
The End Of American Capitalism?
- Washington Post 10/10/2008
Economists Expect Crisis to Deepen
- Wall Street Journal 10/10/2008
All Signs Pointing to Panic
- Chicago Tribune 10/10/2008
Mutual Fund Withdrawals a Record; Investors Flee
- Bloomberg 10/10/2008
Ins. Industry Joins Banking Giants on the Hot Seat
- New York Times 10/10/2008
Cost of Crisis Action Grows, Along With Debt
- Bloomberg 10/10/2008
Fed, Congress Consider 2nd Stimulus Program
- Boston Globe 10/10/2008
U.S. Running Out of Bailout Options
- Denver Post 10/10/2008
States That Can't Pay for Themselves
- Business Week 10/10/2008
The New Age of Frugality
- Business Week 10/10/2008
Consumers Forced to Rethink Buying Patterns
- Financial Times 10/10/2008
Coldwell Cuts Prices to Sell Homes
- San Diego Union-Tribune

A Pause for Repentance, or The End of Big Bonuses? - John Gapper, FT
The Market Fights the Fed -- and Wins - Randall Forsyth, Barron's
A Short Banking History of the U.S. - John Steele Gordon, Wall St. Journal
Plan B: Flood Banks With Cash - Floyd Norris, New York Times
Me-First Attitude Won't Rescue Banks, Economy - M. Sesit, Bloomberg
The Dollar: The Unlikely Beneficiary of Deleveraging - Colin Barr, Fortune
The End Of American Capitalism? - Anthony Faiola, Washington Post
Why Wall Street Will Survive - Andy Kessler, New York Magazine

We Have the Tools to Manage the Crisis - Paul Volcker, Wall Street Journal
We Must Lead the World to Stability - Gordon Brown, Times of London
Saving Banks Won't Save the Economy - Casey Mulligan, New York Times
Market and Economic Fear Will Subside - Steve Forbes, Forbes
The Mood of the Market - Redenbaugh & Juliano, RealClearMarkets

Tick tock.

Tick tock.

The grey men in the tall towers are all in DC with their leather portfolios. They had dinner last night.

Oh to have been a fly on the wall.

Any news get throught the lockdown?

The Almighty G7

Author: Jim Sinclair







Dear Friends,

According to news reports, the G7 on one weekend of mutual understanding will restructure the entire world monetary system and make the present consequences of more than one quadrillion one thousand one hundred forty-four billion dollars of notional value rotten garbage go away.

A few of the characteristics of the problem that will be solved in two days of deliberation of the G7, but they mistakenly think they are still the Sun of the World around which all other countries orbit quietly and obediently. That alone has to give you some insight into the problem.

Behind the curtain of silence the subprime loan problem, better described as a global meltdown of credit and default derivatives, continues. The reason for this condition is an attempt to value that for which there is no value. It is spreading globally as a product of the limitless manufacturing PRIMARILY (above 75%) by USA financial entities.

Keep in mind that over the counter derivatives created between 1999 and 2007 generally have the following characteristics:

1. Without regulation.
2. Without listing on public exchanges.
3. Without standards.
4. Therefore not in the least bit transparent.
5. Therefore without an open market of the bid/ask type.
6. Dealt in by private treaty negotiations.
7. Without a clearinghouse
8. Unfunded without financial guarantee of any kind.
9. Functioning as contracts of specific performance.
10. Financial character or ability to perform is totally dependent on the balance sheet of the loser in the arrangement.
11. Evaluated by computer assumptions made by geek, non market experienced mathematicians who assume religiously that all markets return to their normal relationships regardless of disruptions.
12. Now in the credit and default category alone considered by accepted authorities as totaling more than USD$20 trillion in notional value.
13. Notional value becomes real value when the agreement is forced to find a real market for ending the obligation which is how one says sell it.

The US dollar has improved based on the well crafted Urban Myth that Euroland has more problems than the USA. That like all great lies of history becomes true by experts, saying it loud and often. This method of the transition of nonsense into manufacturer truth is known as Spin. It was one of the most important imports from Germany in 1945. Some think this method of spin exceeded the imports of Dr Braun.

The first plan crafted for the dollar recovery was experts assuring everyone that Euroland, as the source of this problem, clearly would have to have more problems than the USA, with a finger clearly pointing at UBS.

Next many interventions took place with fanfare galore. I love the picture of the Congressional personality high fiving on the passage of the bailout bill.

Since then the Secretary of the US treasury has announced investments in bankrupt banks four times, each time as a new intervention cure of problem.

The best of all might be the collapse of FASB this weekend as the overseers of fair accounting making values where there is none.

FASB to release fair value guidance this weekend
Friday October 10 2008

NEW YORK, Oct 10 (Reuters) - The Financial Accounting Standards Board, which sets U.S. accounting rules, is likely to release formal guidance on mark-to-market accounting this weekend, it said at a meeting on Friday.

The board's guidance is intended to formalize clarifications issued by FASB and the U.S. Securities and Exchange Commission last month, which told companies they could rely on internal estimates, rather than fire-sale prices, to value assets trading in illiquid markets.

At a special meeting on Friday to consider the reforms, the FASB directed its staff to rework and clarify certain parts of its proposal, but stuck to the general concepts issued earlier.

FASB members said at the meeting they wanted to make sure companies were not completely disregarding market transactions in illiquid markets, but rather using them as one of many inputs.

More…



THE ABILITY TO GIVE VALUES TO VALUELESS INSTRUMENTS, CLEARLY KNOWN TO THE BANKS TO BE WORTHLESS IS NOT GOING TO MAKE INTER-BANK LENDING RECOVER.



Jim's Formula:
September 1, 2006

1. First interest rates rise affecting the drivers of the US economy, housing, but before that auto production goes from bull to a bear markets.
2. This impacts many other industries and the jobs report. An economy is either rising at a rising rate or business activity is falling at an increasing rate. That is economic law 101. There is no such thing in any market as a Plateau of Prosperity or Cinderella - Goldilocks situations.
3. We have witnessed the Dow rise on economic news indicating deceleration of activity. This continues until major corporations announced poor earnings, making the Dow fall faster than it rose, moving it deeply into the red.
4. The formula economically is inherent in #2 which is lower economic activity equals lower profits.
5. Lower profits leads to lower Federal Tax revenues.
6. Lower Federal tax revenues in the face of increased Federal spending causes geometric, not arithmetic, rises in the US Federal Budget deficit. This is also true for cities & States as it is for the Federal government.
7. The increased US Federal Budget deficit in the face of a US Trade Deficit increases the US Current Account Deficit.
8. The US Current Account Balance is the speedometer of the money exiting the US into world markets (deficit).
9. It is this deficit that must be met by incoming investment in the US in any form. It could be anything from businesses, equities to Treasury instruments. We are already seeing a fall off in the situation of developing nations carrying the spending habits of industrial nations; a contradiction in terms.
10. If the investment by non US entities fails to meet the exiting dollars by all means, then the US must turn within to finance the shortfall.
11. Assuming the US turns inside to finance all maturities, interest rates will rise with the long term rates moving fastest regardless of prevailing business conditions.
12. This will further contract business activity and start a downward spiral of unparalleled dimension because the size of US debt already issued is of unparalleled dimension.

Therefore as you get to #12 you are automatically right back at #1. This is an economic downward spiral.

I heard all this "slow business" as negative to gold talk in the 70s. It was totally wrong then. It will be exactly the same now.



Spin it, intervene in it, witness the media glee. Regardless of it all, gold will trade at $1200 and $1650, the dollar at .72, .62 and .52.

http://www.jsmineset.com/

Financial Storm to Usher In New World Order - 11th Oct 08

Anatomy of Financial and Economic Disaster -Part2 - 11th Oct 08

G7 Financial Crisis Meeting Geopolitics - 11th Oct 08

The Quadrillion Dollar Powder
Keg Waiting To Blow
By Bob Chapman
TheInternationalForecaster.com
10-12-8 Derivatives at the heart of the crisis, catastrophic losses are inevitable, financial system headed for oblivion, the new world disorder, EU doomed, Credit Default Swaps at the heart of the problem, Plunge Protection Team history, coverups for globalization failures, Bloodbath for the Yen... The heart of the current crisis is the quadrillion plus derivative market. Roughly half of these derivatives are listed on exchanges, but the other half are on the totally unregulated, totally opaque, poorly documented and mostly naked (no reserves or collateral given to secure performance) OTC derivatives market. The subprime and Alt-A mortgage debacles, and the soon to be recognized prime mortgage debacle, are little more than a side show with what will become their one to two trillion in losses which the Phony-Fraudie nationalization and the Paulson Ponzi Plunder Plan are meant to address, albeit futilely. However, the real estate derivative problems created by these debacles have been important catalysts leading to the loss of confidence that is preventing banks from lending to one another, because these problems, like a Zippo lighter on high flame, metaphorically speaking, have lit the fuse leading to the quadrillion dollar powder keg waiting to blow any day now, and Hanky Panky and Helicopter Ben are running around like raving, corporatist, fascist lunatics trying to stomp out the lit fuse before the whole world financial system goes up in a blaze of glory. It is this powder keg that has everyone trembling with fear and foreboding, because the inevitable losses will be catastrophic, with losses which may exceed the entire world's GDP, thus obliterating the balance sheets of every major Wall Street commercial bank, including the Fed itself, while virtually every major bank and financial institution in nations throughout the world join them on the receiving end of a destructive juggernaut of loss, insolvency, failure and bankruptcy. In the aftermath, most will be nationalized. All of Western Civilization is about to become a smoldering collection of fascist police states. The entire world financial system is headed for oblivion, and there is nothing on earth that can stop it. All they can do currently is try to delay and hide the destruction so that they can continue to milk their Ponzi system dry, ripping off the sheople in one final orgy of fraud and profligacy before the government and financial system are merged into an all-powerful super-entity that will rule all non-insider institutions with an iron fist. Frankly, from what we have seen lately, we are already there. The final step to nationalization of our financial system will be little more than a formality. Their intention is to take total control, to make markets do whatever pleases them, thus creating their own reality. The Paulson Ponzi Plunder Plan is the first installment of their final attempt to bankrupt the sheople, who they hope to beat into submission by hyper-inflating and Weimarizing them with bailout after bailout, ad nauseam, knowing full well that these bailouts are futile and useless. The Illuminati will now attempt to force the poor, hapless sheople into a fascist police state as the next giant step toward the creation of a New World Disorder called Novus Ordo Seclorum (a New Order of the Ages), as set forth on the back of every dollar bill under the all-seeing eye overlooking the unfinished pyramid, both symbols of the new age, the occult and the ancient mystery religions. What else would you expect from the satanic trillionaires who hope to become the new lords of the universe. Nice try fellas, but we suspect that God, the current and eternal Lord of the Universe, has other plans. Many of their own henchmen are going to go down in the chaos to follow, but the raving madmen we refer to as the Illuminati will gleefully sacrifice them on the alter of world government. The New World Disorder is the hope and dream of the Illuminati which they have been planning for centuries. But we believe that something is going to happen on the way to that Forum, and that in the end they are all going to end up "swingin' in the breeze." Their plans are unraveling. The destruction is far greater than they had planned. The whole plan is going up in smoke thanks to the bungling of their "Chaos" henchmen in our government and on Wall Street. To think that they attempted to use naked credit default swaps to cover bonds and derivatives secured by houses borrowers could not afford on such a gargantuan scale tells you everything you need to know about their financial acumen. They even permitted ownership of derivatives by those who did not own the underlying assets to be hedged (known as "dry derivatives," which are essentially the equivalent of insurance policies taken out on someone or something in whom the policy holder has no insurable interest), thus turning the world's financial markets into a giant gambling casino, with the added bonus that many unscrupulous people were put into a position where they could force an event that would give them a big payoff without suffering any pain on their end. In essence, by coming up with all these obtuse, Byzantine, rocket-scientist-created derivatives, the smugly clever Illuminati have finally outsmarted themselves. Then there is the one-rate-fits-all plan in the now-doomed European Union. What a freaking blooper that was! We have been saying that this conglomerate banking scheme could not work from the inception of this ill-conceived union of what are very diverse and culturally unique nations, but of course no one listened. They have so thoroughly destroyed the financial system that there is now no hope of keeping the EU together. The plan did not even work well in a period of substantial prosperity, and now they are going to attempt to keep the plan going in circumstances, which are the antithesis of prosperity. Good Luck! If they hadn't allowed their system to be corrupted by all these financial weapons of mass destruction, out of their unending, boundless greed to milk their sheople, they might have had a shot at preserving the EU and then moving on to world government. Now they are the proud owners of 75% of all the toxic waste derivatives produced by the American branch of the Illuminati. And they have piles of banking bonds covered by credit default swaps issued by AIG, and by who knows what other zombie entity, so their stock and bond ratings, as well as their cost of capital, are in serious jeopardy. As the implosion of these derivatives transpires, the majority of their economies are going down in flames as inflation, recession, and eventually depression set in, adding to their already substantial woes. Their fascist dream is about to go up in flames along with their precious EU, the revived British Mercantilist system and the debt-based, fractional reserve Ponzi scheme of the evil European bankers and their Black Nobility clientele. Their American counterparts will fare little better. Note that the major Wall Street investment banks, all leveraged to the hilt, are now all gone, whether by bankruptcy, buyout or change of charter. Goldman Sachs, the only investment bank, which has retained its namesake, other than the bankrupt Lehman Brothers, is on the verge of going under in a Bear Stearns-like squeeze on their liquidity and net equity. The recent demise of all these investment banks is just the first round. Things are going to get much worse as the money from the Paulson Ponzi Plunder Plan gets doled out to the various Illuminist toadies. The latest idea, suggested by the Bank of England (what a feeling of confidence we get knowing that this bastion of financial acumen supports this idea!) and now adopted by Hanky Panky, is to make liquidity injections into the fraudster banks in return for equity positions, such as preferred stock ownership. What a joke. Like that is going to chase the credit default swap monster away and restore a feeling of safety and confidence so banks can start lending again. We have news for you. Even the bondholders of these toxic waste sites are going to get vaporized, so the sheople stockholders can expect to get a Big Zippo. At least by acquiring toxic waste assets we might have an outside chance of picking up some chump change later, but with this new plan to fleece the sheople, you are throwing your money down a rat hole. We are told that this will get the money to where it is needed faster. The only "faster" we see is the rate at which taxpayers will get fleeced. All these toxic cesspool repositories are headed for bankruptcy and nationalization. All you will be doing is keeping people employed with exorbitant salaries and bonuses as they continue to rip you off with insider trading and fraudulent derivative schemes. These witless, pipe-dreaming dolts seem to think that they can get their fractional reserve multiplier going again as the Illuminati try to reinvigorate and re-inflate rampant market speculation along with their profligate money and credit system. They seem to think they can re-inflate the otherwise tanking real estate markets, using their perfect fraud machines, Phony and Fraudie, because they no longer have to worry about ticking off wealthy, influential and politically connected entities that own their stocks. All losses that are suffered by Phony and Fraudie will now go directly to the sheople, do not pass Go, do not collect $200. What are these people thinking? Again we say: "It's the swaps, stupid!!!" The credit default swaps will be the first to blow as we move from hundreds of billions to trillions in quarterly losses. That will send risk into the ozone while the bailouts send inflation into the stratosphere. And that of course means double-digit interest rates are on the way, which are the main fuse leading to the interest rate swap powder keg, which is the largest of all the derivative powder kegs by notional value, and thus by potential loss. Take JP Morgan Chase for example, and their $90 trillion derivative portfolio by notional value. Let's say that $50 trillion are in interest rate swaps. If they have even a mere two percent overhang where they have to pay out variable rates of interest on two percent more of their total interest rate swaps than the portion of swaps on which they are, by contrast, receiving variable rates of interest, they could suffer horrendous losses that could easily put them under. Let's say that everything balances at 4%. But now rates move to 14% as everyone totally ignores the rates set by the central banks sending LIBOR and T-Bill rates to unheard of levels, which are the types of rate indexes commonly used in these swaps. (Note that corporate debt in Europe, due to the lack of so-called insurance from credit default swaps, has already doubled from previous lower single digit rates into much higher double-digit rates in the 12% area). Two percent of $50 trillion is a trillion dollars of notional value overhang on which you are now paying out ten percent more, and ten percent of one trillion is $100 billion, a killer loss. That would put them under. Even an overhang of only one half of one percent pumps out a loss of $25 billion. And what if the overhang is 5%, or 10%, or 20%? With an overhang of 20%, we hit one trillion in losses. Now, what if rates go to 24%? And this is only one bank! As you can see, assuming that the system can survive the credit default swaps, which we very seriously doubt, we will be jumping out of the fire only to land face down in a red-hot frying pan. It is only fitting that the credit-default swaps lie at the heart of the problem, which the fraudster banks now face. When you look at what has been done by these reprobates in the past, this is a most fitting fate for them. First, they had President Reagan pass an Executive Order in 1988 forming the President's Working Group on Financial Markets so they could manipulate markets 24/7 with the PPT. That was forced by the 1987 Stock Market Crash, an event orchestrated by the Illuminati to convince everyone that we had to have an interventional team to stop such extreme market gyrations. Then Slick Willie does away with Glass-Steagall in 1999 to do away with the system of checks and balances that allowed banks to pass on paper that was falsely rated as AAA on to their patsy clients. Then for a double whammy, Slick Willie leaves OTC derivatives unregulated with the passage of the Commodity Futures Modernization Act in 2000, so Wall Street could write insurance policies called credit default swaps without having to comply with annoying, silly and burdensome rules requiring such things as loss reserves or an insurable interest. These were all passed to cover up the devastating losses our economy was suffering on account of free trade, globalization, off-shoring, outsourcing and both legal and illegal immigration. The PPT moved our markets, contrary to what market fundamentals would indicate, to give the appearance of prosperity when we were really getting hammered by the free trade agenda. Our government chimed in with their deceitful and fraudulent economic statistics by use of hedonics. Then credit default swaps were used to falsely suppress interest rates by insuring the risk of default for potential investors, and never mind that there were no loss reserves, collateral or requirement of an insurable interest. AAA credit was assigned to otherwise risky companies based on Ponzi scam bond insurers who were insuring bonds with little or nothing to back up their promises. If our corporations were forced to pay the higher rates demanded by the market without the benefit of these swaps, our corporate earnings would have been dismal, and would have reflected the losses suffered by the globalist free trade agenda. Then the falsely rated subprime derivatives were created so that Wall Street could earn oodles of fees, commissions and spreads by continually rolling over the same money which they were borrowing short-term and lending long-term. These earnings helped to boost our GDP and thus to further cover up the losses being suffered by our bloodied manufacturing sector as everyone became Walmart greeters and hamburger flippers instead of being tool and die makers and machinists and as 5 million of our best-paying jobs were moved overseas. Let's hear it for the Illuminist free trade agenda. Yeah, rah. It appears that for whatever reason the Illuminati now want Obama to become president instead of McCain. The current financial carnage is of course being associated with Caligula, and since McCain is a Caligula Clone, by association he gets hit vicariously with voter ire. Listen to the two of them promise to save the borrowers who were given mortgages based on fraudulent information about their financial circumstances. Let's bail them out too. Why should the fraudsters on Main Street be treated any differently than the fraudsters on Wall Street? Now we will have equal opportunity bailouts. It's enough to make you puke. Worse yet, Obama is the biggest recipient of big banking largesse in the form of campaign contributions, especially from Fannie and Freddie, and he actively encouraged these organizations to pump out mortgages to people who could not afford them. Fortunately for Obama, McCain is not much better. So, what's going down in Illuminati town? In pondering the current pounding of gold and silver, we smell lots of rats. We hold out to you the following potential scenario: On September 15 and 16, the Illuminati thought they had the precious metals markets under wraps, driving gold below $800 per ounce and silver below $11 per ounce, in anticipation of their coming announcement of the Lehman Brothers and Merrill Lynch debacles that were made public late on September 16. Then the specs go wild, and gold is up $90 in one day, giving the Illuminists a collective myocardial infarction. As punishment for such insolence, on Friday, September 19, the SEC takes away their right to short 800 financial companies, a big money maker. They are told to butt out, or they will never get to place another short again, but if they cooperate, they will get the mother of all crashes, which they can short with impunity. Note how open interest in COMEX gold futures declined from 398,386 contracts on September 15 to 321,021 on October 8. Yet the price of gold during this period kept pressing past $900, which means that there was some short-covering to the tune of some 77,000 contracts. The specs under threat from the SEC, are told to butt out while the commercials cover their shorts. They are told that a crash is on its way, so they short all the non-financials, and stay out of the commodity markets. Then the Paulson Plan is introduced around September 20, and prior to the vote, the markets are crashed to make it look like a "no" vote will send us into the deepest depths of Mordor, knowing all along that markets will be crashed anyway no matter how Congress votes. Fortunes are being made shorting with knowledge of when markets will be crashed. A short-covering rally occurs on Tuesday, September 30, as word is received that the Paulson Plan will be reconsidered and probably passed, but insiders know this is all for show as roughly half of Monday's 777 point loss on the Dow is recovered. Markets are crashed again on October 1 and 2 erasing Tuesday's gains, those being the two days leading up to the second vote on October 3, to convince Congressional boneheads that the Paulson Plan must be passed to save the markets, and when the vote starts to look positive on October 3, up the markets go in the early going that day just before the vote in order to give our bribed and threatened Congressional morons the impression that markets will rally if the Paulson Plan is passed. Congressional dimwitted idiots pass the bill, and the markets nose-dive, all as planned. On October 6, paragon of virtue Jim Cramer scares the living daylights out of retirees, telling them they must get out of the markets. Panic hits the streets, and the cascade of losses is under way. The shorts are now cleaning up and are rolling in dough, but of course that was not enough for them. The Paulson Ponzi Plunder Plan also calls for an end to the ban on shorts against financials just before midnight on Wednesday, October 8, and because the specs have all been good little boys, the SEC lets the ban on shorts expire even though they could have extended it another week. The bloodbath continues on Thursday and Friday as the financials get bombed, the specs are fat and happy, and down go gold and silver while the grateful specs look the other way. Meanwhile, the carry trade is unwound and both the dollar and the yen go ballistic due to the crashes around the globe which send traders into yen and dollars to buy Japanese and US treasuries, respectively, and the yen even outperforms the dollar, causing precious metal liquidations by thoroughly bloodying carry traders while the stronger dollar hits the metals also. And of course, just as we predicted, oil gets hammered below 80, giving more dollar support through the euro effect, and reducing the need for gold and silver as a hedge against higher oil costs. http://www.theinternationalforecaster.com/International_Forecaster_ Weekly/The_Quadrillion_Dollar_Powder_Keg_Waiting_To_Blow

Time To Let the Markets Do Their Messy Work - Jonathan Macey, WSJ
Whiplash Ends a Roller Coaster Week - Vikas Bajaj, New York Times
Feds Need to Start Buying Troubled Assets Fast - Don Luskin, SmartMoney
Where Do We Go From Here? - John Mauldin, Thoughts from the Frontline
How To Keep Americans In Their Homes - Luis Ubinas, Forbes

The Obama Surge: Will It Last?
- Joe Klein, Time
Can McCain Come Back?
- Richard Baehr, American Thinker
Will 2008 Be a Major Realigning Election?
- Steven Stark, Boston Phoenix
McCain in a Bear Market
- George Will, Washington Post

How to Capitalize Banks and Save Finance - George Soros, Financial Times
Free Markets Are Our Best Hope - Judy Shelton, Wall Street Journal
The Engine of Market Mayhem - Robert Samuelson, Washington Post
Crisis Shows Paulson Has No Clothes - Anatole Kaletsky, Times of London
The Light at the End of the Crisis - Larry Kudlow, RealClearMarkets

• The Next Bubble? on Oct 13, 2008 by Gary Tanashian about QQQQ, SPY, DIA
• Coming Soon: The 600 Trillion Derivatives Emergency Meeting on Oct 13, 2008 by The Prudent Investor
• Return of Weimar Monetary Policies? on Oct 13, 2008 by The Prudent Investor about DBV, FXB, FXE
• There's No Way to Go Back to Business as Usual on Oct 13, 2008 by Paolo Pezzutti
• In the Great Global Macro Experiment, the Next Bubble to Burst Is... on Oct 13, 2008 by Reggie Middleton
• Are Analysts Being Fooled By The Data? on Oct 13, 2008 by Cam Hui about C, BNPQY.PK
• Economic Outlook: Is It Safe? on Oct 13, 2008 by James Quinn about QQQQ, SPY, DIA
• More On Housing And Employment Correlative Effect [Housing Tracker] on Oct 13, 2008 by SA Editor Judy Weil
• Competitive Markets Don't Just Happen; It's Time to Regulate In the Public Interest on Oct 13, 2008 by Mark Thoma
• The Budget Deficit & Macro Policies Going Forward on Oct 13, 2008 by Menzie Chinn

SPENGLER
Gambling, growth and imagination
Paul Krugman this week won the Nobel Prize in economics for his "analysis of trade patterns and location of economic activity". Reuven Brenner would have been a more deserving winner. Rather than put bells and whistles on the conventional economic model - now in cataclysmic breakdown - Brenner yanks economics inside-out by placing risky behavior at its center.

Ayatollah's sums not
of this planet
Whatever the merits of an Iranian cleric's views linking America's economic turmoil to divine wrath, the impact of the US crisis on the Iranian economy and Iranian people will be severe. As oil prices tumble, the forces of supply and demand may do to Iran in a few months what the mighty US has been unable to do in 30 years. - Hossein Askari

CREDIT BUBBLE BULLETIN
Hoping there's hope
The collapse of the hedge fund industry is now at the epicenter of global market upheaval. As markets from silver to currencies to stocks exhibit complete disarray, the leveraged speculating community is in a panic de-leveraging. We must really hope everything is not as dire as it appears.
Doug Noland looks at the previous week's events each Monday.

THE WEEK AHEAD

THE BEAR'S LAIR
Armageddon - or a
bumpy landing?
After a week when the whole world has turned bearish, not to say frightened out of its wits, a more rational approach indicates that the stock market has finally come to its senses, and the US economy should be the better for it - if the politicians don't get in the way. - Martin Hutchinson

Yes!! It's a miracle!!!
The miracle of the rising US dollar when so much money is being thrown at the financial system defies belief, yet supposedly intelligent writers say this "may" tempt the US government to inflate away its debts by printing money. What on earth do they think Washington is doing already??!!!

We're Laying Groundwork for Recovery - Ben Bernanke, Wall Street Journal
Call It Bailout, Take Two - Editorial, New York Times
How The Bailout Auction Should Work - Steven Landsburg, Slate
GOP Throws Aside Rand for Marx - Eugene Robinson, Washington Post
Shott the Wounded to Restore Bank Confidence - Scott Shay, Bloomberg

• Don't Take Over the Free Markets to Save Them on Oct 14, 2008 | by Michael Shedlock
• State Capitalism: Ideology Now Bonds Russia, U.S. on Oct 14, 2008 | by Rakesh Saxena
• John Hussman: Market Poised for High Returns on Oct 14, 2008 | by John Hussman | about QQQQ, DIA, SPY
• Continuing to Watch the VIX Trend on Oct 14, 2008 | by Dr. Duru
• Bernanke: "We're Laying the Groundwork for Recovery" on Oct 14, 2008 | by Mark Thoma
• Here's the Financial Markets Stabilization Act We Should Have Seen on Oct 14, 2008 | by Dear John Thain
• America Will Print as Much Money as It Takes on Oct 14, 2008 | by Dr. Duru
• Neel Kashkari Is the Banks' Zombie Master on Oct 14, 2008 | by Brad DeLong | about XLF
• What Kind of Company Do These Markets Keep? on Oct 14, 2008 | by Macro Man | about QQQQ, DIA, SPY
• 1929 All Over Again? on Oct 14, 2008 | by Avery Goodman | about QQQQ, DIA, SPY

10/14/2008
Volcker Warns of "Considerable Recession"
- Associated Press 10/14/2008
Banks Urged to Deploy Capital to Spur Economy
- Bloomberg 10/14/2008
U.S. Is Investing $250 Billion in Banks
- New York Times 10/14/2008
9 Banks Forced To Accept Partial Nationalization
- Washington Post 10/14/2008
CA, Under S&P Review, Seeks to Avert Cash Crunch
- Bloomberg 10/14/2008
Lending Restrictions May Add to GM's US Sales Woes
- Bloomberg 10/14/2008
As Economy Sinks, Off. Fear Violent Solutions
- CNN 10/14/2008
Where's the Beef Going?
- Raleigh News & Observer 10/14/2008
As Economy Weakens, Sports Feel a Chill
- Wall Street Journal 10/14/2008
NBA Cutting U.S. Staff by 9% Because of Economy
- CBS Sports 10/14/2008
Retailers Cutting Back on Holiday Hiring
- Los Angeles Times 10/14/2008
Economic Woes Hit HDTV Sales
- Wall Street Journal

Banks Need Capital, Not Government Management - J. Berry, Bloomberg
Washington Simply Didn't Catch Up To Wall Street - A. Faiola et al, WaPo
How To Prevent Foreclosures - Charles Calomiris, Forbes
Stop The Bleeding, Hank - Luigi Zingales, Foreign Policy Magazine
Credit Derivatives: The $58 Trillion in the Room - Jesse Eisinger, Portfolio
Central Banks Reconsider Doctrine of Preemption - C. Baum, Bloomberg
What’s the Future for Much-Maligned Derivatives? - Dan Weil, Big Money
Blanket Deposit Insurance Is a Bad Idea - A. Blinder & G. Hubbard, WSJ

How to Manage the Banks - Boone, Johnson & Kwak, Washington Post
What Paulson Is Trying to Do - Andy Kessler, Wall Street Journal
The Feds Take Control of Lending - William Dunn, RealClearMarkets
Regulating Bankers' Pay Is a Bad Idea - Jamie Whyte, Financial Times
How Long Will Governments Stay Invested? - Adrian Michaels, Telegraph
The Gilded Age of Deregulation - Dave Jamieson, The New Republic
Deregulation Was Not the Problem - John Stossel, RealClearPolitics
Fed Should Reduce Margin Requirements - Bob McTeer, Washington Times
Paul Krugman: Professor and Pundit - Arvind Subramanian, Forbes
Paul Krugman Died a Decade Ago - Donald Luskin, National Review
Next Victim of Turmoil: Your Salary - David Leonhardt, New York Times
No Government Jobs Recession Yet - Steven Malanga, RealClearMarkets

.S. Fiscal Deficit Surges to $455 bn in FY2008: Govt Bailouts and Recession Making the Deficit Unsustainable?

• FY2008 fiscal deficit rose 181% to $454.8 bn (3.2% of GDP, largest since 2004) from $161.53 bn in FY2007 (1.2% of GDP) as financial crisis and economic slowdown caused revenues to fall -1.2% y/y (first time since 2003) with decline in corporate (-17.8%) and individual income tax (-1.5%) revenues

Click Here For Full Analysis

Nominal U.S. Retail Sales Drop for the Third Month in a Row: Biggest Fall in Three Years

• Sales at U.S. retailers dropped in September for the third consecutive month (first time since 1992) and the most in three years as U.S. consumers retrenched in the face of mounting job losses, falling home prices (and equity), falling stock prices, tighter credit conditions and record foreclosures. Consumer spending growth will likely turn negative in Q3.
• September nominal retail sales dropped 1.2%; Excluding automobiles, purchases were down 0.6%
• (Sep 08) Excluding autos, gasoline and building materials, the retail group the government uses to calculate GDP figures for consumer spending, sales dropped 0.7 percent, after a 0.4 percent decrease in August

Click Here For Full Analysis

Rushing to See the Economic Apocalypse
- David Callaway, MarketWatch
Credit Derivatives: The $58 Trillion in the Room
- Jesse Eisinger, Portfolio
Paul Krugman Died a Decade Ago
- Donald Luskin, National Review
What the $596T Derivatives Market Means
- Jacob Leibenluft, Slate

Our Choice: Recession or Depression
- Nouriel Roubini, Forbes
Time To Let the Markets Do Their Messy Work
- Jonathan Macey, WSJ
We Haven't Hit the Bottom Yet
- Mark Hulbert, MarketWatch

The $58 Trillion Elephant in the Room

• Conde Nast
• Eisinger
• 10/16/2008 11:24 AM

U.S. Industrial Output Fell 2.8% in September, Most Since 1974

• Bloomberg
• 10/16/2008 08:23 AM

Merrill Lynch Reports Fifth Straight Quarterly Loss

• Bloomberg
• 10/16/2008 08:14 AM

Citigroup Posts Fourth Consecutive Loss on Mortgage Writedowns

• Bloomberg
• 10/16/2008 06:01 AM

Citadel Hedge Fund Falls 30% on Bond, Stock Losses

• Bloomberg
• 10/15/2008 09:16 PM

Banks Brace for Slump as Economy Weakens

• NY Times
• 10/15/2008 09:09 PM

Financial crisis:
Global banking reshaped As uncertainty continues to afflict world markets, FT.com offers users a multimedia snapshot of what has become one of the most radical reshapings of the global banking sector. Visit our special section on the financial crisis to get news packages, interactive features and video showing how governments and the private sector are battling to shore up the financial system:

• Government bailouts – interactive graphic of recent state help to banks
• Bank street – multimedia feature following fortunes of world's largest banks
• Economists' Forum - governments have at last thrown the world a lifeline
• Gillian Tett – policymakers save world in the final reel
• John Authers – Short View video on why investors are selling off equities
• IMF in depth – the scramble to avoid collapse
• US banks – in depth on banking turmoil

Global financial crisis in depth

Special report:
World Economy 2008 The financial system, always weakly glued together with confidence and trust, has flirted with collapse. So quickly and deeply has the crisis engulfed financial markets that the world's most powerful politicians have become impotent commentators.

As we near the end of a turbulent year with continuing instability in the world markets, visit us online for the complete picture of what has happened so far and how it might develop in the future.

World Economy 2008 special report

10/16/2008
Losing Las Vegas Shows How Americans Crap Out
- Bloomberg 10/16/2008
Don't Blame Capitalism
- Washington Post 10/16/2008
Signs Point to Long Recession
- Chicago Tribune 10/16/2008
Experts Say Recession May Be a Shocker
- Dallas Morning News 10/16/2008
Banks Brace for Slump as Economy Weakens
- New York Times 10/16/2008
Banks Hoard Cash as Credit Card Defaults Rise
- Washington Post 10/16/2008
Slump Deepens in Face of Bailout
- Toronto Globe and Mail 10/16/2008
Bernanke: End to Hands-Off Approach to Bubbles
- Bloomberg 10/16/2008
U.S. Deficit Could Hit $1 Trillion
- UPI 10/16/2008
Home Prices Seem Far From Bottom
- New York Times 10/16/2008
Losses Pile Up at Key US Banks
- BBC 10/16/2008
Industrial Production Fell 2.8%, Most Since 74'
- Bloomberg

U.S. EconoMonitor this week:

• Balance sheet of the Federal Reserve by James Hamilton
• The USA *after* this financial crisis - part 2, a new economy for America by Fabius Maximus
• Bernanke: We're Laying the Groundwork for Recovery by Mark Thoma
• The Budget Deficit...and Macro Policies Going Forward by Menzie Chinn
• Deficit Shackles: Will January, 2009 Repeat January 1993? by Robert Reich
• The global recession by James Hamilton
• US Treasury First Lien Mortgage Notes by Michael Jaliman