Oil Prices and Speculation by Mark Thoma
Alaska is near Russia, and Gov Palin's other foreign policy experience by Fabius Maximus
CNBC: Lehman Bad Bank Deal Drafted; Firms Expected to Kick in $3 Billion Each by Yves Smith
NY Times: Barclays, Most Likely Lehman Suitor, Walks from Deal by Yves Smith
WSJ: Fed Expands Liquidity Facilities to Include Equities by Yves Smith
WaMu Failure Could Trigger Extension of Deposit Guarantees by Yves Smith
High priority report: a geopolitical sitrep on the financial crisis by Fabius Maximus
The Liquidation Trap by Thomas Palley
Full Version: Financial Turmoil
Common Ground Common Sense > National & International News > Op-Ed Articles from the Mainstream Media
Pages: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28
What a buzz
A momentous week moved towards its conclusion with markets reacting like wasted druggies to the instant buzz of a US$200 billion injection into the global financial system, courtesy central banks. Hong Kong's Hang Seng Index surged nearly 10% on Friday, and even Shanghai snapped back to life as China's government did its bit by scrapping the tax on equity transactions. - R M Cutler (Sep 19, '08)
A momentous week moved towards its conclusion with markets reacting like wasted druggies to the instant buzz of a US$200 billion injection into the global financial system, courtesy central banks. Hong Kong's Hang Seng Index surged nearly 10% on Friday, and even Shanghai snapped back to life as China's government did its bit by scrapping the tax on equity transactions. - R M Cutler (Sep 19, '08)
US at a turning point
The United States is in the middle of a national disaster that has moved well beyond a subprime crisis to one in which the position of the economy is in jeopardy and its way of economic life - tied fundamentally to the availability of cheap credit - is imperiled. - Max Fraad Wolff
The end of a gilded age
The United States government is staring into an abyss as the financial system collapses. Instead of dithering, it must direct investment capital out of speculative paper deals into productive channels matching society's material needs. For now, the rest of us have ringside seats, far too close to the action for comfort, as a gilded age ends.- Steve Fraser
The United States is in the middle of a national disaster that has moved well beyond a subprime crisis to one in which the position of the economy is in jeopardy and its way of economic life - tied fundamentally to the availability of cheap credit - is imperiled. - Max Fraad Wolff
The end of a gilded age
The United States government is staring into an abyss as the financial system collapses. Instead of dithering, it must direct investment capital out of speculative paper deals into productive channels matching society's material needs. For now, the rest of us have ringside seats, far too close to the action for comfort, as a gilded age ends.- Steve Fraser
THE MOGAMBO GURU
Retirement on a pizza slice
Ten years ago, the average person invested a whole six-slice pizza. Now, they have as little as one slice of a pizza to show for their efforts. And somebody still thinks they can fund a retirement on that kind of performance.
CREDIT BUBBLE BULLETIN
Too big to suffer a loss
Perhaps the US Treasury and the administration will stick to their word and not provide taxpayer funds to save Lehman and others. Yet why is there the feeling that the next step of government intervention will be to bolster the "repo" market? (Sep 15, '08)
Doug Noland looks at the previous week's events each Monday.
THE WEEK AHEAD
FROM OUR ARCHIVE
Countrywide exposes
lost virginity
"... [U]ntil the entire subprime problem, both with the mortgages and the Wall Street derivatives that emerged out of them, is comprehensively addressed, the problem will continue to get worse. The nature of the problem today guarantees that it will be worse tomorrow, worse still the day after that." - Julian Delasantellis, Nov 27, 2007
Retirement on a pizza sliceTen years ago, the average person invested a whole six-slice pizza. Now, they have as little as one slice of a pizza to show for their efforts. And somebody still thinks they can fund a retirement on that kind of performance.
CREDIT BUBBLE BULLETIN
Too big to suffer a loss
Perhaps the US Treasury and the administration will stick to their word and not provide taxpayer funds to save Lehman and others. Yet why is there the feeling that the next step of government intervention will be to bolster the "repo" market? (Sep 15, '08)
Doug Noland looks at the previous week's events each Monday.
THE WEEK AHEAD FROM OUR ARCHIVE
Countrywide exposes
lost virginity
"... [U]ntil the entire subprime problem, both with the mortgages and the Wall Street derivatives that emerged out of them, is comprehensively addressed, the problem will continue to get worse. The nature of the problem today guarantees that it will be worse tomorrow, worse still the day after that." - Julian Delasantellis, Nov 27, 2007
SPENGLER
Lehman and the end
of the era of leverage
The failure of Lehman Brothers and Bear Stearns does not reflect the breakdown of a particular kind of corporate culture. What took both firms down, rather, is a sudden break in the chain of expectations between the present and the future. Today’s savers no longer have any confidence that they will earn enough to fund their retirements by putting money at risk. And so the Great Crash of 2008 enters a new phase. (Sep 15, '08)
Silences say it all
Lehman Brothers' death throes demonstrated that here, at last, was one US financial institution that, though big, was not "too big to fail", one that at last would pay for its promiscuous and profligate ways. If we should say nothing but good of the dead, then there's nothing else to say. Next up for the measuring tape is Bank of America/Merrill. - Julian Delasantellis (Sep 15, '08)
Lehman and the end
of the era of leverage
The failure of Lehman Brothers and Bear Stearns does not reflect the breakdown of a particular kind of corporate culture. What took both firms down, rather, is a sudden break in the chain of expectations between the present and the future. Today’s savers no longer have any confidence that they will earn enough to fund their retirements by putting money at risk. And so the Great Crash of 2008 enters a new phase. (Sep 15, '08)
Silences say it all
Lehman Brothers' death throes demonstrated that here, at last, was one US financial institution that, though big, was not "too big to fail", one that at last would pay for its promiscuous and profligate ways. If we should say nothing but good of the dead, then there's nothing else to say. Next up for the measuring tape is Bank of America/Merrill. - Julian Delasantellis (Sep 15, '08)
Economic Turmoil
Fixing Wall Street Won't Fix Our EconomySally Kohn, Movement Vision Lab
Corporate Accountability and WorkPlace: What's really at play here is persistent poverty and Wall Street seeking to make a dime off the poor, while Washington looks the other way.
The Bear is Everywhere
http://online.barrons.com/article/SB122160...most_viewed_day
http://online.barrons.com/article/SB122160...most_viewed_day
Credit Crunch Becomes Excruciating
http://online.barrons.com/article/SB122169...most_viewed_day
http://online.barrons.com/article/SB122169...most_viewed_day
Frozen Capital Markets and Stock Holder Capital Destruction / Economics / Credit Crisis 2008
By: Mick_Phoenix
Recap of the scenario: bubble, easy money, inflation in fiat money supply, inflation in commodities and hard assets, inflation, fear of inflation, rising rates, YC inverting, flattening, rising and inverting again, tightening, withdrawal of liquidity, corrections, crashes, talk of stagflation, FEAR, withdrawal of speculative funds, further corrections and crashes, demand collapse.......Deflation.
Read full article...
Systemic Failure of the United States- Game Over - 18th Sept 08 The Real Reason for the Global Financial Crisis…the Story No One's Talking About - 18th Sept 08 Obama and McCain Don't Understand the Financial Markets - 18th Sept 08
Paulson Plans to Cleanse Companies of Troubled Assets, Insure Market Funds U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke proposed moving troubled assets from the balance sheets of American financial companies into a new institution.
Bailout Backlash Against Fed, Treasury Mounting in Congress, Wall Street Amid calls for the government to take stronger measures to stabilize financial markets, some former Federal Reserve officials, lawmakers and Wall Street executives are saying too much has already been done.
Domino Effect of Takeovers Pushes Bernanke, Paulson to Work With Congress The Federal Reserve and Treasury's efforts to solve the financial crisis may have only undercut the ability of banks and Wall Street firms to raise new equity capital, leaving them to fail or be taken over.
Europe's Major Central Banks Offer Extra Funds to Relieve Credit Squeeze Europe's main central banks lent $71 billion as part of a coordinated effort with the U.S. Federal Reserve to ease a credit squeeze.
Bailout Backlash Against Fed, Treasury Mounting in Congress, Wall Street Amid calls for the government to take stronger measures to stabilize financial markets, some former Federal Reserve officials, lawmakers and Wall Street executives are saying too much has already been done.
Domino Effect of Takeovers Pushes Bernanke, Paulson to Work With Congress The Federal Reserve and Treasury's efforts to solve the financial crisis may have only undercut the ability of banks and Wall Street firms to raise new equity capital, leaving them to fail or be taken over.
Europe's Major Central Banks Offer Extra Funds to Relieve Credit Squeeze Europe's main central banks lent $71 billion as part of a coordinated effort with the U.S. Federal Reserve to ease a credit squeeze.
Fed Keeps Benchmark Rate at 2%, Rebuffing Call for Cut to Soothe Markets The Federal Reserve left its main interest rate at 2 percent, rebuffing calls by some investors for an immediate cut after Lehman Brothers Holdings Inc.'s bankruptcy shook markets worldwide.
Treasury Says Will Issue Debt to Help Federal Reserve Expand Balance Sheet The Treasury is selling $100 billion in short-term debt to enable the Federal Reserve to expand its balance sheet, a sign of the strains created by the biggest extension of central-bank credit to financial companies since the Great Depression.
Treasury Says Will Issue Debt to Help Federal Reserve Expand Balance Sheet The Treasury is selling $100 billion in short-term debt to enable the Federal Reserve to expand its balance sheet, a sign of the strains created by the biggest extension of central-bank credit to financial companies since the Great Depression.
Paulson Plans to Cleanse Companies of Troubled Assets, Insure Market Funds U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke proposed moving troubled assets from the balance sheets of American financial companies into a new institution.
Washington Mutual Said to Attract Several Potential Bidders for S&L's Sale Washington Mutual Inc., the savings and loan seeking a buyer after the stock halved in two weeks, attracted interest from multiple potential bidders for all or part of the lender, a person familiar with the matter said.
Schwarzman Counsels Patience, Buffett Pays Cash in Distressed Assets Glut Bankrupt Lehman Brothers Holdings Inc. and government-seized American International Group Inc. top the list of distressed sellers seeking buyers for at least $1 trillion of assets. So far, bargain hunters aren't biting.
Lehman Said to Be in Talks to Sell Some Japanese Units to Sumitomo Mitsui Lehman Brothers Holdings Inc. is in talks to sell some Japan assets to Sumitomo Mitsui Financial Group Inc. in a bid to save its 1,300-employee operation in the country, three people familiar with the matter said.
Short Sellers Come Under Fire in U.S., U.K. After Collapse of Lehman, AIG The Securities and Exchange Commission halted short selling of 799 financial companies, pressing an assault on speculators after the collapse of Lehman Brothers Holdings Inc. and American International Group Inc.
Washington Mutual Said to Attract Several Potential Bidders for S&L's Sale Washington Mutual Inc., the savings and loan seeking a buyer after the stock halved in two weeks, attracted interest from multiple potential bidders for all or part of the lender, a person familiar with the matter said.
Schwarzman Counsels Patience, Buffett Pays Cash in Distressed Assets Glut Bankrupt Lehman Brothers Holdings Inc. and government-seized American International Group Inc. top the list of distressed sellers seeking buyers for at least $1 trillion of assets. So far, bargain hunters aren't biting.
Lehman Said to Be in Talks to Sell Some Japanese Units to Sumitomo Mitsui Lehman Brothers Holdings Inc. is in talks to sell some Japan assets to Sumitomo Mitsui Financial Group Inc. in a bid to save its 1,300-employee operation in the country, three people familiar with the matter said.
Short Sellers Come Under Fire in U.S., U.K. After Collapse of Lehman, AIG The Securities and Exchange Commission halted short selling of 799 financial companies, pressing an assault on speculators after the collapse of Lehman Brothers Holdings Inc. and American International Group Inc.
-
Investment banking: Is there a future?
The loneliness of the independent Wall Street bank -
Derivatives of mass destruction: Nuclear winter looms
The fallout from the bankruptcy of Lehman Brothers
Paulson and Bernanke Stampede Washington - Continue Raid On The Public Purse
Citing Grave Financial Threats, Officials Ready Massive "Rescue"
By Binyamin Appelbaum and Lori Montgomery
The Bush administration is urgently preparing a massive intervention to" revive" the U.S. financial system, including a plan to sweep away the unpaid loans that are choking banks and blocking the flow of money to borrowers. - Paulson and Bernanke presented a "chilling" picture of the state of the financial system. - The plan involves using hundreds of billions of dollars in government funding to buy bad loans, leaving banks with more money and fewer problems, according to two sources familiar with what was said at the meeting. Continue
Citing Grave Financial Threats, Officials Ready Massive "Rescue"
By Binyamin Appelbaum and Lori Montgomery
The Bush administration is urgently preparing a massive intervention to" revive" the U.S. financial system, including a plan to sweep away the unpaid loans that are choking banks and blocking the flow of money to borrowers. - Paulson and Bernanke presented a "chilling" picture of the state of the financial system. - The plan involves using hundreds of billions of dollars in government funding to buy bad loans, leaving banks with more money and fewer problems, according to two sources familiar with what was said at the meeting. Continue
Panic, Consolidate, Game Over
http://www.kitco.com/ind/willie/sep182008.html
Financial Crisis: Credit Market Update - David Malpass, Encima Global
The Bright Side of a Total Financial Collapse
- Michael Lewis, Bloomberg
Five Myths About the Wall Street Crisis
- Daniel Ben-Ami, Spiked
America Will Need a $1,000B Bail-Out
- Kenneth Rogoff, Financial Times
Fortunes Will Be Made Amid Uncertainty
- David Wighton, Times of London
- Michael Lewis, Bloomberg
Five Myths About the Wall Street Crisis
- Daniel Ben-Ami, Spiked
America Will Need a $1,000B Bail-Out
- Kenneth Rogoff, Financial Times
Fortunes Will Be Made Amid Uncertainty
- David Wighton, Times of London
Most Popular ArticlesWall Street Journal
Stocks Fall as Bank Gloom DeepensMorgan Stanley, Wachovia in TalksU.S. to Take Over AIGWaMu's Rescue Effort Gets a BoostTheStreet.comCramer's Take on Top-Searched StocksAnalysts' Upgrades, Downgrades: GoldmanWhen an Insurance Company FailsLehman Brothers, Barclays Reach Deal: Report
Stocks Fall as Bank Gloom DeepensMorgan Stanley, Wachovia in TalksU.S. to Take Over AIGWaMu's Rescue Effort Gets a BoostTheStreet.comCramer's Take on Top-Searched StocksAnalysts' Upgrades, Downgrades: GoldmanWhen an Insurance Company FailsLehman Brothers, Barclays Reach Deal: ReportMarket Outlook
- New Game, New Rules on Sep 19, 2008 | by Bill Luby | about QQQQ, DIA, SPY
- The Bumpy Ride Ahead on Sep 19, 2008 | by Felix Salmon | about QQQQ, DIA, SPY
- Armageddon Postponed on Sep 19, 2008 | by Michael Shedlock
- It's a Bull Market in Government Intervention on Sep 19, 2008 | by James Picerno | about QQQQ, DIA, SPY
- Liquidity for the Government, But What About Anybody Else? on Sep 19, 2008 | by David Merkel | about TIP
- No Happy Endings in the Credit Crisis on Sep 19, 2008 | by Sean Maher | about GLD, IVV, SH
- Longer Term Reversal Trigger on Sep 19, 2008 | by Thomas Kee | about QQQQ
The World As We Know It Is Going Down': It really does look as if the foundations of US capitalism have shattered.
In Hard Times, Tent Cities Rise Across the Country: Since foreclosure mess, homeless advocates report rise in encampments.
Escape of the bankrupt: The world's financial markets remain at the eye of a perfect economic storm.- In the most glaring example of capitalism gone wrong, the Russian stock market was forced to close its doors for the second consecutive day yesterday. For a system that is built and flourishes on confidence, the future is extremely uncertain.
Where's Our Bailout?: Almost overlooked in this morning's extraordinary headlines about government intervention to protect the nation's financial system from collapse was the failure of the House of Representatives on Thursday to act on a $50 billion stimulus package for the rest of us.
For AIG, $85 billion might not be enough: AIG had $971.7 billion of liabilities at the end of June, but a subsidiary also has about $447 billion of credit derivatives on its books. That compares with a little more than $1 trillion of assets.
Tab for Government Rescues Rises to $900 Billion +: The U.S. Federal Reserve stepped in to rescue insurance giant American International Group from bankruptcy with an $85 billion loan on Tuesday. The action brings the total tab for government rescues and special loan facilities this year to more than $900 billion. Following are details of actions and amounts:
Fannie Mae and Freddie Mac Invest in Lawmakers; When the federal government announced two months ago that it would prop up mortgage buyers Fannie Mae and Freddie Mac, CRP looked at how much money members of Congress had collected since 1989 from the companies.
Confessions of a sub-prime mortgage baron: Across the US, an estimated 2.5 million people are in danger of losing their homes to foreclosure this year as a result of the sub-prime mortgage crisis. Bitner's description of day-to-day business at Kellner is an eye-watering glimpse of the industry's slide into anarchy..
McCain Attacks Wall Street Greed—While 83 Wall Street Lobbyists Work for His Campaign: McCain has been quick with fiery, populist-tinged speeches. But one thing has been missing: any acknowledgment that McCain's own campaign has been loaded with the type of people he's been denouncing.
In Hard Times, Tent Cities Rise Across the Country: Since foreclosure mess, homeless advocates report rise in encampments.
Escape of the bankrupt: The world's financial markets remain at the eye of a perfect economic storm.- In the most glaring example of capitalism gone wrong, the Russian stock market was forced to close its doors for the second consecutive day yesterday. For a system that is built and flourishes on confidence, the future is extremely uncertain.
Where's Our Bailout?: Almost overlooked in this morning's extraordinary headlines about government intervention to protect the nation's financial system from collapse was the failure of the House of Representatives on Thursday to act on a $50 billion stimulus package for the rest of us.
For AIG, $85 billion might not be enough: AIG had $971.7 billion of liabilities at the end of June, but a subsidiary also has about $447 billion of credit derivatives on its books. That compares with a little more than $1 trillion of assets.
Tab for Government Rescues Rises to $900 Billion +: The U.S. Federal Reserve stepped in to rescue insurance giant American International Group from bankruptcy with an $85 billion loan on Tuesday. The action brings the total tab for government rescues and special loan facilities this year to more than $900 billion. Following are details of actions and amounts:
Fannie Mae and Freddie Mac Invest in Lawmakers; When the federal government announced two months ago that it would prop up mortgage buyers Fannie Mae and Freddie Mac, CRP looked at how much money members of Congress had collected since 1989 from the companies.
Confessions of a sub-prime mortgage baron: Across the US, an estimated 2.5 million people are in danger of losing their homes to foreclosure this year as a result of the sub-prime mortgage crisis. Bitner's description of day-to-day business at Kellner is an eye-watering glimpse of the industry's slide into anarchy..
McCain Attacks Wall Street Greed—While 83 Wall Street Lobbyists Work for His Campaign: McCain has been quick with fiery, populist-tinged speeches. But one thing has been missing: any acknowledgment that McCain's own campaign has been loaded with the type of people he's been denouncing.
Paulson, Bernanke Push New Plan to Cleanse Books
- Bloomberg
- 09/19/2008 05:38 AM
- WSJ ($)
- 09/19/2008 09:37 PM
- WSJ ($)
- 09/19/2008 09:37 PM
- FT
- 09/19/2008 09:29 PM
- Washington Post
- 09/19/2008 05:53 AM
- NY Times
- Uchitelle
- 09/19/2008 05:43 AM
- FT ($)
- 09/19/2008 05:40 AM
- WSJ ($)
- 09/19/2008 09:38 PM
- Washington Post
- 09/19/2008 09:34 PM
- Economist
- 09/19/2008 08:36 AM
- Houston Chronicle
- Steffy
- 09/19/2008 08:30 AM
- Business Week
- 09/20/2008 08:29 AM
- Washington Post
- 09/20/2008 08:27 AM
- NY Times
- 09/20/2008 07:02 AM
- WSJ ($)
- 09/19/2008 09:40 PM
- NY Times
- 09/19/2008 09:36 PM
- Financial Week
- 09/19/2008 08:37 AM
- Economist
- 09/19/2008 08:35 AM
- N.Y. Post
- 09/19/2008 06:05 AM
- WSJ ($)
- 09/19/2008 05:45 AM
Bush asks Congress for $700 billion for bailout
- AP
- 09/20/2008 08:37 AM
- Washington Post
- 09/20/2008 07:12 AM
- Reuters
- 09/20/2008 07:06 AM
- Washington Post
- 09/19/2008 06:00 AM
- NY Times
- 09/19/2008 05:42 AM
- Barron's $
- McTague
- 09/20/2008 08:30 AM
- Washington Post
- 09/20/2008 07:10 AM
- CFO.com
- 09/19/2008 08:40 AM
- Financial Week
- 09/19/2008 08:39 AM
- Washington Post
- 09/20/2008 07:13 AM
- NY Times
- 09/20/2008 07:03 AM
A Hail Mary Pass, but No Receiver in the End Zone
- NY Times
- Nocera
- 09/20/2008 07:01 AM
- FT ($)
- Plender
- 09/20/2008 08:33 AM
- Washington Post
- 09/19/2008 06:05 AM
- NY Times
- 09/19/2008 05:52 AM
- Forbes
- 09/20/2008 08:27 AM
- LA Times
- Petruno
- 09/20/2008 07:07 AM
Harming the Rich Won't Foster Recovery - Amity Shlaes, Wall St. Journal
Hail Mary Pass, No Receiver - Joe Nocera, New York Times
No Free Lunch, No Free Economy - Christopher Caldwell, Financial Times
Make Them Pay For the Financial Meltdown - Ann Woolner, Bloomberg
The Irritating Face of Economic Havoc - Colby Cosh, National Post
The Expensive Price of Greed - Colbert King, Washington Post
Restoring the Strength of Our Financial System - Henry Paulson
Paulson's Legacy: Dull Financial Institutions - Damian Reece, Telegraph
After a Breathless Week, I'm Optimistic - Anatole Kaletsky, Times of London
Can the Government Treat Us Like Adults? - Russell Roberts, Forbes
Why Goldman and Morgan Matter - Irwin Stelzer, New York Post
Will a Modern RTC End the Crisis? - Clay Risen, The New Republic
Hail Mary Pass, No Receiver - Joe Nocera, New York Times
No Free Lunch, No Free Economy - Christopher Caldwell, Financial Times
Make Them Pay For the Financial Meltdown - Ann Woolner, Bloomberg
The Irritating Face of Economic Havoc - Colby Cosh, National Post
The Expensive Price of Greed - Colbert King, Washington Post
Restoring the Strength of Our Financial System - Henry Paulson
Paulson's Legacy: Dull Financial Institutions - Damian Reece, Telegraph
After a Breathless Week, I'm Optimistic - Anatole Kaletsky, Times of London
Can the Government Treat Us Like Adults? - Russell Roberts, Forbes
Why Goldman and Morgan Matter - Irwin Stelzer, New York Post
Will a Modern RTC End the Crisis? - Clay Risen, The New Republic
Anonymous Sources & Freddie Mac : Charles Duhigg vs. Calculated Risk
Parsing The Secretary : Hank Paulson vs. Felix Salmon
Whine-Gate and Other Matters : Amity Shlaes vs. Mark Thoma
Blaming Oil Speculation The Way To Go? : Ed Wallace vs. Peter Coy
Would U.S. Tolerate Münchau's Remedies? : W. Münchau vs. Y. Smith
Parsing The Secretary : Hank Paulson vs. Felix Salmon
Whine-Gate and Other Matters : Amity Shlaes vs. Mark Thoma
Blaming Oil Speculation The Way To Go? : Ed Wallace vs. Peter Coy
Would U.S. Tolerate Münchau's Remedies? : W. Münchau vs. Y. Smith
How to Cure This Sick System
- Steve Forbes, Forbes
Never Sell America Short
- Larry Kudlow, RealClearMarkets
How to Save the Financial System
- William Isaac, Wall Street Journal
Is Goldman Sachs Next?
- Tracy Corrigan, Daily Telegraph
- Steve Forbes, Forbes
Never Sell America Short
- Larry Kudlow, RealClearMarkets
How to Save the Financial System
- William Isaac, Wall Street Journal
Is Goldman Sachs Next?
- Tracy Corrigan, Daily Telegraph
Stiglitz: The Fall of Wall Street Is to Market Fundamentalism What the Fall of the Berlin Wall Was to Communism
Nathan Gardels, 09.16.2008
"Obama's diagnosis that our financial sector is in desperate shape is correct. And if it is in desperate shape, that means our economy is in desperate shape."
Read Post
Why the Financial Meltdown Reflects the Fundamental Failure of the Bush-McCain Economic Philosophy
Robert Creamer, 09.16.2008
The American mortgage market now provides us with another clear example of how the fundamental premise of right-wing economic thought is dead wrong.
Read Post
Historic Swindle
William Greider: Paulson's rescue plan is all sugar for the villains, lasting pain for the rest of us. Don't let Wall Street get away with this without enacting significant reform.
William Greider: Paulson's rescue plan is all sugar for the villains, lasting pain for the rest of us. Don't let Wall Street get away with this without enacting significant reform.
The Mother of All Bailouts
Nicholas von Hoffman : Banks & Banking
Even without knowing the specifics of Paulson's staggering rescue plan, you can kiss the environment, preschool education and health insurance for all goodbye.
Nicholas von Hoffman : Banks & Banking
Even without knowing the specifics of Paulson's staggering rescue plan, you can kiss the environment, preschool education and health insurance for all goodbye.
News Analysis
A $700 Billion Rescue Plan for Wall St., but Will It Work?
By PETER S. GOODMAN Some are skeptical of the Treasury plan, despite wide agreement on the need for a broad intervention.
Proposed Bailout Could Set a Record
By DAVID M. HERSZENHORN The Bush administration is requesting virtually unfettered authority for the Treasury to buy mortgage-related assets.
A $700 Billion Rescue Plan for Wall St., but Will It Work?
By PETER S. GOODMAN Some are skeptical of the Treasury plan, despite wide agreement on the need for a broad intervention.
Proposed Bailout Could Set a Record
By DAVID M. HERSZENHORN The Bush administration is requesting virtually unfettered authority for the Treasury to buy mortgage-related assets.
A Professor and a Banker Bury Old Dogma on Markets
By PETER BAKER The Fed chairman and the Treasury secretary have cast aside long-held views about regulation and government intervention.
Lost and Saved: Why Merrill was rescued but Lehman was left on its own.
CNBC Video: Paulson’s Evolving StatementsBubblenomics: It’s been a long period of excess, and the hangover could be long, David Leonhardt writes.
Paulson Urges Quick Action on Bailout Plan Treasury secretary stresses immediate need for reassurance on Wall Street and credit markets, says lawmakers should swiftly pass $700B bill.
Lori Montgomery and David Cho | 10:00 a.m. ET
Lori Montgomery and David Cho | 10:00 a.m. ET
Turmoil on Wall Street Historic Market Bailout Set in Motion The Bush administration yesterday proposed a historic $500 billion bailout of financial firms that would let the government rather than the cold judgment of the marketplace decide the winners and losers from the crisis that has shaken the U.S. economy for the past year.
Rescue Rally, Day 2: Investors Bet Big on Plan To Revive Financial System (Post, September 20, 2008, Page D01)
Wall Street Turmoil Continues To Ripple Through Main Street (Post, September 20, 2008, Page D02)
Congress Members Seek Bailout Details: Officials Want to Protect Taxpayers (Post, September 20, 2008, Page B03)
Bailout Is As Big as Budget for Pentagon: Cost of Rescue to Add to Challenges For Next President (Post, September 20, 2008, Page A10)
Bush Urges Congress to Enact Rescue Package (Post, September 19, 2008; 3:29 PM)
ON ALERT IN ASIA: Japan, China Locked In by Investments (Post, September 20, 2008, Page D01)
Europe Ends Week on an Upswing: Markets Rebound to Post Records on One-Day Gains After News of U.S. Rescue (Post, September 20, 2008, Page D06)
SEC to Expand Trading Probes: Derivatives Now Under Scrutiny (Post, September 20, 2008, Page D01)
U.S. Stock Markets Soar on Financial Rescue Plan (Post, September 19, 2008; 5:29 PM)
Fickle Mortgage Market Demands Quick Decisions: If You Find a Great Rate, Grab It, Consumer Advocates Say (Post, September 20, 2008, Page F01)
Citing Grave Financial Threats, Officials Ready Massive Rescue: Lawmakers Work With Fed, Treasury To Try to Restore The Flow of Money (Post, September 19, 2008, Page A01)
Obama, McCain Trade Shots Over Responses to Financial Meltdown (Post, September 19, 2008, Page A03)
THE INSIDERS: In Crucible of Crisis, Paulson, Bernanke, Geithner Forge a Committee of Three (Post, September 19, 2008, Page A01)
Governments Worldwide Move to Stanch Panic (Post, September 19, 2008, Page A10)
PERSONAL FINANCE: Find Out Where Investment Risks Lie, Financial Advisers Say (Post, September 19, 2008, Page D01)
DECISION-MAKERS: Goldman Alumni Now Call the Shots In Washington (Post, September 19, 2008, Page A11)
WALL STREET: Despite Late Surge, Markets Still Show Signs of Instability (Post, September 19, 2008, Page A01)
THE DOOMSAYERS: Peering Over the Cliff, Saying 'I Told You So' (Post, September 19, 2008, Page D01)
To Plan B, With All Deliberate Speed (By Steven Pearlstein, September 19, 2008, Page D01)
Putnam Investments Closes $12B Money-Market Fund (Post, September 18, 2008; 3:17 PM)
D.C. Area Budgets Mostly Unshaken By Credit Crisis (Post, September 19, 2008, Page D03)
New York AG Launches Probe of Short-Selling (AP, September 18, 2008; 4:42 PM)
THE SEC: Crisis Poses Big Test for Markets' Regulator (Post, September 19, 2008, Page D01)
Morgan Stanley Executives Continue to Weigh Options: Firm Said to Be Eying Merger With Wachovia, Increased Investment From China Fund (Post, September 18, 2008; 4:58 PM)
Rescue Rally, Day 2: Investors Bet Big on Plan To Revive Financial System (Post, September 20, 2008, Page D01)
Wall Street Turmoil Continues To Ripple Through Main Street (Post, September 20, 2008, Page D02)
Congress Members Seek Bailout Details: Officials Want to Protect Taxpayers (Post, September 20, 2008, Page B03)
Bailout Is As Big as Budget for Pentagon: Cost of Rescue to Add to Challenges For Next President (Post, September 20, 2008, Page A10)
Bush Urges Congress to Enact Rescue Package (Post, September 19, 2008; 3:29 PM)
ON ALERT IN ASIA: Japan, China Locked In by Investments (Post, September 20, 2008, Page D01)
Europe Ends Week on an Upswing: Markets Rebound to Post Records on One-Day Gains After News of U.S. Rescue (Post, September 20, 2008, Page D06)
SEC to Expand Trading Probes: Derivatives Now Under Scrutiny (Post, September 20, 2008, Page D01)
U.S. Stock Markets Soar on Financial Rescue Plan (Post, September 19, 2008; 5:29 PM)
Fickle Mortgage Market Demands Quick Decisions: If You Find a Great Rate, Grab It, Consumer Advocates Say (Post, September 20, 2008, Page F01)
Citing Grave Financial Threats, Officials Ready Massive Rescue: Lawmakers Work With Fed, Treasury To Try to Restore The Flow of Money (Post, September 19, 2008, Page A01)
Obama, McCain Trade Shots Over Responses to Financial Meltdown (Post, September 19, 2008, Page A03)
THE INSIDERS: In Crucible of Crisis, Paulson, Bernanke, Geithner Forge a Committee of Three (Post, September 19, 2008, Page A01)
Governments Worldwide Move to Stanch Panic (Post, September 19, 2008, Page A10)
PERSONAL FINANCE: Find Out Where Investment Risks Lie, Financial Advisers Say (Post, September 19, 2008, Page D01)
DECISION-MAKERS: Goldman Alumni Now Call the Shots In Washington (Post, September 19, 2008, Page A11)
WALL STREET: Despite Late Surge, Markets Still Show Signs of Instability (Post, September 19, 2008, Page A01)
THE DOOMSAYERS: Peering Over the Cliff, Saying 'I Told You So' (Post, September 19, 2008, Page D01)
To Plan B, With All Deliberate Speed (By Steven Pearlstein, September 19, 2008, Page D01)
Putnam Investments Closes $12B Money-Market Fund (Post, September 18, 2008; 3:17 PM)
D.C. Area Budgets Mostly Unshaken By Credit Crisis (Post, September 19, 2008, Page D03)
New York AG Launches Probe of Short-Selling (AP, September 18, 2008; 4:42 PM)
THE SEC: Crisis Poses Big Test for Markets' Regulator (Post, September 19, 2008, Page D01)
Morgan Stanley Executives Continue to Weigh Options: Firm Said to Be Eying Merger With Wachovia, Increased Investment From China Fund (Post, September 18, 2008; 4:58 PM)
Financial crisis: Default by the US government is no longer unthinkable
By Liam Halligan
Telegraph.Co.UK
So, here we are - the start of a new world order. After the tumultuous events of the last fortnight, the global economic landscape will never look the same again.
The front page of the Brooklyn Daily Eagle newspaper on the day of the initial Wall Street Crash in 1929
Hard times: central banks have acted to avoid a repeat of 1929
Power has tangibly shifted - away from the United States and the Western world generally, and towards the fast-growing giants of the East. That's been happening for some years now.
But September 2008 marks the moment when the scale of our excesses, the extent of our debts and the moral bankruptcy of our financial regulatory system finally began to be truly exposed.
I say began to be exposed. Back in March, Standard and Poor's, the US ratings agency, estimated some $285bn (£156bn) of mortgage-backed securities would eventually be written-off by the global banking sector. On Friday, almost unnoticed amid the panic, that forecast was upped to $378bn.
In reality, total credit losses will be much higher - at least $750bn in my view. But the extent of the 33 per cent one-off increase in S&P's estimate speaks volumes. It reflects just how little anyone truly knows about either the ultimate size of the sub-prime losses or who ultimately holds the related securities.
advertisement
But with one in ten US mortgages now "delinquent" or "in foreclosure", and house prices still falling, such "toxic waste" is burning holes in balance sheets wherever it sits. That's why this crisis is far from over.
It's difficult to overstate the enormity of what happened last week. By any standard, the collapse of Lehman Brothers was a dramatic - and alarming event. One of the biggest names on Wall Street, the 158-year old bank was consumed by the scale of its losses and crippled by executive feuds. Deemed by the US Federal Reserve to be "sufficiently unconnected" to the rest of the global financial system, Lehman was allowed to fold.
In contrast, American International Group, the world's largest insurer, was judged "too interconnected" to collapse. So the Fed effectively "nationalised" AIG - the biggest rescue of a private firm in human history. And it's only a few weeks, of course, since the even more expensive bail-out of quasi-government lenders Fannie Mae and Freddie Mac - which, between them, account for a mind-boggling $5,300bn of mortgages, around half of America's home loans.
On top of all that, US Treasury Secretary Hank Paulson sent an $800bn financial rescue plan to Congress. He wants to create a second "Resolution Trust Corporation" - or government-owned asset management company - to take on illiquid mortgage-related debts. The original RTC was established to rescue the US Savings and Loans Associations that went bust in the 1980s.
And by the way, the Fed has also just offered another $125bn of liquidity to banks outside the US that are desperate for dollars and can't access America's frozen credit markets - a move co-ordinated with central banks in Japan, the Eurozone, Switzerland, Canada and here in the UK.
The combination of these measures - each of them of enormous significance in its own right - sent stock markets shooting-up on Friday. America's S&P 500 rose 4.03 per cent and London's FTSE 100 soared 8.84 per cent, its largest one-day rise ever. But, despite the end-of-week euphoria and trader-talk that "the only way is up", despite America's undoubted resolve and Paulson's determination to do "whatever it takes", the situation remains very fragile.
Nothing better reflects the amount of fear among banks in America - banks everywhere - than the sky-high rates they're continuing to charge when lending to each other. Ordinarily, inter-bank (or Libor) interest rates are only slightly above base rates. But with so much uncertainty remaining about the scale and occurrence of "sub-prime" - and with desperate bank executives still so reluctant to "fess-up" their losses - the US Libor rate on money to be paid back in three months is now a staggering 1.5 per cent above base. In recent weeks, Libor rates have shot up in other countries too.
Paulson's latest liquidity injection has lowered over-night Libor rates for now. But, despite the torrent of cash the US has directed at the credit markets, longer-term inter-bank rates have stayed stubbornly high, and some have gone up further. In other words, even the banks themselves don't think the rescue plan will work. Expect more - and bigger - liquidity operations in weeks to come.
The trouble is, though, as the bill for these bail-outs keeps rising, so does the possibility that the political consensus will crack and there'll be an almighty, and debilitating, dust-up. Paulson's RTC plan, in theory, could restore confidence. By taking sub-prime loans off banks' books, it could de-ice the inter-bank market, restoring credit lines to households and firms and preventing the "credit crunch" from shifting wholesale, in that fabled phrase, "from Wall Street to Main Street".
But, in the run-up to the US election in November, Democrats in Congress - and even some Republicans - may decide they're simply not having it. How much more can the US taxpayer take? It sounds insane, but the liabilities being taken on by the Fed and the US Treasury are now so enormous that the government itself could default. No?
How fragile we are: Chickens may yet come home to roost for the US government
Check out the chart showing the recent spikes in the US 10-year credit default swap. In other words, the market is now pricing-in the genuine possibility that the US will struggle to pay-back some of its long-term T-bills.
That possibility is still deemed to be quite low. But the ultimate financial question - until recently, unthinkable - is now being asked. Yes siree, the mighty US government could default. That's how much the world has changed.
Liam Halligan is chief economist at Prosperity Capital Management
===================================
Copyright © 1999 - 2008
Le Metropole Cafe, Inc.
By Liam Halligan
Telegraph.Co.UK
So, here we are - the start of a new world order. After the tumultuous events of the last fortnight, the global economic landscape will never look the same again.
The front page of the Brooklyn Daily Eagle newspaper on the day of the initial Wall Street Crash in 1929
Hard times: central banks have acted to avoid a repeat of 1929
Power has tangibly shifted - away from the United States and the Western world generally, and towards the fast-growing giants of the East. That's been happening for some years now.
But September 2008 marks the moment when the scale of our excesses, the extent of our debts and the moral bankruptcy of our financial regulatory system finally began to be truly exposed.
I say began to be exposed. Back in March, Standard and Poor's, the US ratings agency, estimated some $285bn (£156bn) of mortgage-backed securities would eventually be written-off by the global banking sector. On Friday, almost unnoticed amid the panic, that forecast was upped to $378bn.
In reality, total credit losses will be much higher - at least $750bn in my view. But the extent of the 33 per cent one-off increase in S&P's estimate speaks volumes. It reflects just how little anyone truly knows about either the ultimate size of the sub-prime losses or who ultimately holds the related securities.
advertisement
But with one in ten US mortgages now "delinquent" or "in foreclosure", and house prices still falling, such "toxic waste" is burning holes in balance sheets wherever it sits. That's why this crisis is far from over.
It's difficult to overstate the enormity of what happened last week. By any standard, the collapse of Lehman Brothers was a dramatic - and alarming event. One of the biggest names on Wall Street, the 158-year old bank was consumed by the scale of its losses and crippled by executive feuds. Deemed by the US Federal Reserve to be "sufficiently unconnected" to the rest of the global financial system, Lehman was allowed to fold.
In contrast, American International Group, the world's largest insurer, was judged "too interconnected" to collapse. So the Fed effectively "nationalised" AIG - the biggest rescue of a private firm in human history. And it's only a few weeks, of course, since the even more expensive bail-out of quasi-government lenders Fannie Mae and Freddie Mac - which, between them, account for a mind-boggling $5,300bn of mortgages, around half of America's home loans.
On top of all that, US Treasury Secretary Hank Paulson sent an $800bn financial rescue plan to Congress. He wants to create a second "Resolution Trust Corporation" - or government-owned asset management company - to take on illiquid mortgage-related debts. The original RTC was established to rescue the US Savings and Loans Associations that went bust in the 1980s.
And by the way, the Fed has also just offered another $125bn of liquidity to banks outside the US that are desperate for dollars and can't access America's frozen credit markets - a move co-ordinated with central banks in Japan, the Eurozone, Switzerland, Canada and here in the UK.
The combination of these measures - each of them of enormous significance in its own right - sent stock markets shooting-up on Friday. America's S&P 500 rose 4.03 per cent and London's FTSE 100 soared 8.84 per cent, its largest one-day rise ever. But, despite the end-of-week euphoria and trader-talk that "the only way is up", despite America's undoubted resolve and Paulson's determination to do "whatever it takes", the situation remains very fragile.
Nothing better reflects the amount of fear among banks in America - banks everywhere - than the sky-high rates they're continuing to charge when lending to each other. Ordinarily, inter-bank (or Libor) interest rates are only slightly above base rates. But with so much uncertainty remaining about the scale and occurrence of "sub-prime" - and with desperate bank executives still so reluctant to "fess-up" their losses - the US Libor rate on money to be paid back in three months is now a staggering 1.5 per cent above base. In recent weeks, Libor rates have shot up in other countries too.
Paulson's latest liquidity injection has lowered over-night Libor rates for now. But, despite the torrent of cash the US has directed at the credit markets, longer-term inter-bank rates have stayed stubbornly high, and some have gone up further. In other words, even the banks themselves don't think the rescue plan will work. Expect more - and bigger - liquidity operations in weeks to come.
The trouble is, though, as the bill for these bail-outs keeps rising, so does the possibility that the political consensus will crack and there'll be an almighty, and debilitating, dust-up. Paulson's RTC plan, in theory, could restore confidence. By taking sub-prime loans off banks' books, it could de-ice the inter-bank market, restoring credit lines to households and firms and preventing the "credit crunch" from shifting wholesale, in that fabled phrase, "from Wall Street to Main Street".
But, in the run-up to the US election in November, Democrats in Congress - and even some Republicans - may decide they're simply not having it. How much more can the US taxpayer take? It sounds insane, but the liabilities being taken on by the Fed and the US Treasury are now so enormous that the government itself could default. No?
How fragile we are: Chickens may yet come home to roost for the US government
Check out the chart showing the recent spikes in the US 10-year credit default swap. In other words, the market is now pricing-in the genuine possibility that the US will struggle to pay-back some of its long-term T-bills.
That possibility is still deemed to be quite low. But the ultimate financial question - until recently, unthinkable - is now being asked. Yes siree, the mighty US government could default. That's how much the world has changed.
Liam Halligan is chief economist at Prosperity Capital Management
===================================
Copyright © 1999 - 2008
Le Metropole Cafe, Inc.
US invests in lifestyle preservation
* Anne Davies
* September 22, 2008
AMERICA, the land of credit cards and seemingly endless debt financing, is standing on a precipice.
For the first time the US Administration is having to consider what might happen if the world decided the US was not such a sure bet to pay back what it owed.
What if investors stopped buying investments in US dollars? What if they stopped investing?
The possible consequences for a country that depends on Chinese savings and Arab oil wealth to fund its lifestyle are so horrifying that no one — not President George Bush nor Treasury Secretary Hank Paulson — is prepared to contemplate it. The President has announced an unprecedented $US700 billion ($A840 billion) plan to buy up poorly performing mortgage-backed securities.
The hope is that this extraordinary commitment will so reassure investors about American markets that the fear of further collapses will recede — and with it fears about American credit-worthiness.
But the announcement is a blow to free-market ideologues.
For the first time, the US may have to come to terms with economic rules that most countries, including Australia, have laboured under for years: that if you run big deficits and accumulate foreign debt, eventually the rest of the world will punish you, beginning with your currency and your interest rates and culminating in a decision to invest elsewhere.
Announcing the first details, Bush said he had become convinced that the contagion could spread to the broader economy and start affecting Americans' ability to get a home loan or a college loan.
"There's going to be billions — hundreds of billions of dollars at risk. This is a big package because it was a big problem," he said.
The President is asking for bipartisan support for a scheme that would generally find greater support from the Democrats than fellow Republicans, because at heart it is a massive nationalisation of risk.
Bush is urging a pragmatic approach to markets that have largely gone unregulated under his own Administration.
When the bill comes before Congress this week, it is certain to lay bare this fissure in the Republican Party.
Republican presidential nominee John McCain, having initially signalled he might favour leaving Wall Street to market forces, tried to seize the initiative by announcing his own rescue package.
Democratic nominee Barack Obama has kept his powder dry so far but from the Democrats' perspective, the issue is just as complex.
A Rasmussen poll last Wednesday, taken in the early stages of the meltdown, showed that only 7% of people supported a Government bail-out — 65% thought Wall Street should bear the losses.
The Democrats are almost certain to push for a part of the package that helps ordinary Americans, whether it be more help for people trapped by subprime loans or a second stimulus package.
After all, asking taxpayers to stump $2000 each for Wall Street is a big deal. It has raised complaints about why it's fine to expand the federal deficit to bail out Wall Street, but it was not appropriate to do so to pay for a national health scheme.
The Bush Administration's hope is that the latest action will serve as inoculation against the worst version of a Wall Street collapse.
* Anne Davies
* September 22, 2008
AMERICA, the land of credit cards and seemingly endless debt financing, is standing on a precipice.
For the first time the US Administration is having to consider what might happen if the world decided the US was not such a sure bet to pay back what it owed.
What if investors stopped buying investments in US dollars? What if they stopped investing?
The possible consequences for a country that depends on Chinese savings and Arab oil wealth to fund its lifestyle are so horrifying that no one — not President George Bush nor Treasury Secretary Hank Paulson — is prepared to contemplate it. The President has announced an unprecedented $US700 billion ($A840 billion) plan to buy up poorly performing mortgage-backed securities.
The hope is that this extraordinary commitment will so reassure investors about American markets that the fear of further collapses will recede — and with it fears about American credit-worthiness.
But the announcement is a blow to free-market ideologues.
For the first time, the US may have to come to terms with economic rules that most countries, including Australia, have laboured under for years: that if you run big deficits and accumulate foreign debt, eventually the rest of the world will punish you, beginning with your currency and your interest rates and culminating in a decision to invest elsewhere.
Announcing the first details, Bush said he had become convinced that the contagion could spread to the broader economy and start affecting Americans' ability to get a home loan or a college loan.
"There's going to be billions — hundreds of billions of dollars at risk. This is a big package because it was a big problem," he said.
The President is asking for bipartisan support for a scheme that would generally find greater support from the Democrats than fellow Republicans, because at heart it is a massive nationalisation of risk.
Bush is urging a pragmatic approach to markets that have largely gone unregulated under his own Administration.
When the bill comes before Congress this week, it is certain to lay bare this fissure in the Republican Party.
Republican presidential nominee John McCain, having initially signalled he might favour leaving Wall Street to market forces, tried to seize the initiative by announcing his own rescue package.
Democratic nominee Barack Obama has kept his powder dry so far but from the Democrats' perspective, the issue is just as complex.
A Rasmussen poll last Wednesday, taken in the early stages of the meltdown, showed that only 7% of people supported a Government bail-out — 65% thought Wall Street should bear the losses.
The Democrats are almost certain to push for a part of the package that helps ordinary Americans, whether it be more help for people trapped by subprime loans or a second stimulus package.
After all, asking taxpayers to stump $2000 each for Wall Street is a big deal. It has raised complaints about why it's fine to expand the federal deficit to bail out Wall Street, but it was not appropriate to do so to pay for a national health scheme.
The Bush Administration's hope is that the latest action will serve as inoculation against the worst version of a Wall Street collapse.
Here's Why Massive Government Intervention Will Fail: McHugh
The Paulson Manifesto Will Fail
Because it Fails American Households
By Robert McHugh, Ph.D.
September 21st, 2008
As a trader, I stopped getting disgusted at government manipulation of markets several years ago, didn't pretend it wasn't happening, just tried to find when it was coming. I decided to develop an indicator that would tell me when the probability was extremely high that the Master Planners would intervene. That approach has served us well, and that indicator is known as the Plunge Protection Team (PPT) Indicator. It flashed a new "buy" signal Monday, September 15th at the close, rising above positive + 20.00, warning that the decline from August 11th was terminal. The Industrials have risen 565 points since that buy signal. When this measure rises above positive + 20.00, it is usually early, but very right, an early warning indicator telling us to enjoy the decline for a few more trading days but get ready for a spike rally.
The current government market intervention ("manipulation" is probably a more appropriate word) that transpired the past two weeks, reaching crescendo Thursday on a rumor, and Friday on an announcement, is one of the most dramatic since the 1930's. It really puts into question the notion of U.S. markets being under capitalism, not socialism. The government nationalized Fannie Mae and Freddie Mac last week, announced its intent to nationalize AIG, a component of the Dow 30, this week, and then pulled out all the stops with the Paulson manifesto Friday. Not sure why he didn't nationalize Lehman Bros, unless it was personal, as he came from competitor Goldman Sachs, and enjoyed watching them declare bankruptcy. Okay, maybe I am a bit cynical - maybe.
Before getting into market performance and the forecast, let's cover what we know about this historic redefining of the rules of the game that Paulson has placed on the table for Congress to consider next week:
1) The Securities and Exchange Commission has put a ban on short selling (that is entering into a contract to sell a stock at today's price in the future without owning it now, in effect placing a bet the price of the stock will drop) on 799 financial institution stocks - not on any other stocks, through October 2nd, with the possibility of extending the ban for 30 days. This does not prohibit put options.
2) AIG was tossed from the Dow Industrials and replaced with food giant Kraft on Thursday (presumably to replace a loser with a winner to increase the odds that the closely watched Industrials will rise)
3) The Treasury said it would "insure" up to $50 billion in struggling moneymarket fund investments at financial companies (that are not FDIC insured).
4) The Fed announced they would make "unlimited funds" available to banks to finance purchases of asset-backed commercial paper from money market funds (This will be in the trillions).
5) Banks would be allowed to sell their illiquid bad loan assets to the Treasury in exchange for cash.
What is clear from the getgo, is that this is a bailout of Wall Street, not Main Street, that it is going to cost trillions, not billions, and the bill will be paid by both the American taxpayer, and the American consumer via a higher cost of living. Yes, this is going to be hyperinflationary. The Treasury will issue notes to the Fed, the Fed will come up with the cash (printed out of thin air), and the cash will be handed to Wall Street. This process fails miserably to solve the problem, which is the dire financial condition of the average American household. The trillions of dollars being printed out of thin air should be going to each and every household in America, not just Wall Street. If so, Wall Street would benefit because their toxic assets would metamorphose into quality assets as the American household pays off its debts (cash to Wall Street). But what would you expect when the Treasury Secretary authoring this plan is the former Chairman of the largest Wall Street firm in America, Goldman Sachs, which also happens to be a surrogate for the Plunge Protection Team. Because the plan fails to bailout the American household, it will fail - period. But, fail with an even higher cost of living structure than we have today.
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This plan assures that the Dollar will tank. It will lose its value as bad loans are replaced with fresh printed cash. Precious metals will skyrocket as this plan is executed.
As for the lunacy of banning short trading against 799 financial institutions (there are over 10,000 financial institutions in the U.S., so only some are protected from bets they will decline), the Wall Street Journal noted on Friday, "essentially this only allows investors to bet that stocks will rise, and bans investing strategies used by hundreds of mutual funds, pension funds, endowments and governments. These firms use short-selling to protect themselves from unexpected huge losses, some financial firms selling short to offset trades made by their clients so they aren't exposed to large market moves."
Short selling is not only legal, or should we say it was until Friday, but is necessary, and can be quite good for the markets. In a short-sale of a stock, what it does is it requires a purchase of that stock by the time the short sale is contracted to close. In effect, short sales create future demand, as shorts must buy stocks, thereby helping stabilize and even push stock prices higher in the future. Further, if there are an abundant number of short positions, a short-covering rally is possible, driving market prices sharply higher. Banning short selling removes these invisible bids. Banning short selling is robbing Bears and hedge traders who rightfully are entitled to profits. Without short selling, it will be harder to properly gauge the true value of a stock. It could create an artificially high market price that will drop far more severely in a future event than otherwise would have occurred.
Banning short selling is essentially a magician's trick to take the focus off his hand. It is a witch hunt. Someone has to take the hit and the Master Planners have decided to blame the shorts, which is pure lunacy. Shorts had nothing to do with the economic mess this nation finds itself in. The Master Planners continue to equate the economy with Wall Street. They believe if stocks are fine, then the American household is just fine. Nonsense. Shorting is a way of identifying fundamental problems with a company. The health of the economy has nothing to do with whether or not a stock is shorted.
Here's the problem. This government intervention, one that will cost trillions, has failed to bail out the American household, thus is destined to fail, after trillions of new dollars hyperinflate our economy and debase our currency. The expectations for success are running high, creating a false sense that everything is going to be okay. This sets up a monster financial collapse that will dwarf the risks of today once it becomes clear that this program has failed. While old assets are swept into the vaults of the Fed in exchange for cash, via the arms of the U.S. Treasury, more bad assets will be created at an even faster pace as the American household, who is income starved, debt laden, and credit report deficient, will soon get hit by another tsunami of higher costs of living, making it impossible to pay their bills on time.
The Master Planners don't give a royal rip about the consumer. For example, Credit Card company schemes have managed to force 30 percent interest rates on what will be forever debt due to technicalities and small print. They mail statements within days of due dates, creating accidental late payments, granting them the right to raise interest rates to 30 percent. They lower credit limits without proper notice, consumers use their cards over the new limit by accident, and get hit with an increase in their interest rates to 30 percent. If they are late, their credit report gets creamed. Yet, now these credit card companies, Wall Street firms, are being bailed out at taxpayers expense to the tune of trillions without doing a darned thing to improve this economy.
The cost of this Paulson manifesto will be trillions on top of the already $600 billion spent in specific corporate bailouts this year. If they are spending trillions anyway, debasing the Dollar anyway, then the American household should also be bailed out. A rebate of the past ten years income taxes should be sent directly to each and every household, with the caveat that half of that money must be used to pay off existing debt. If no debts, great, the household gets to keep the entire rebate. Further, the unconstitutional confiscation of wealth known as the real estate tax should be eliminated and replaced with a sales tax. Also, a usury interest rate ceiling of 10 percent should be imposed immediately upon all financial institutions, the key beneficiaries of the Paulson manifesto. The Treasury should begin issuing a new currency that it backs with precious metals, and finally, the Federal Reserve should be abolished. The thinking here is trickle up economics is the medicine that is needed, not more trickle down.
The next two charts tell us all we need to know. The first shows the fate of the U.S. Dollar. Down. Big. A massive Head & Shoulders top with an eventual downside target of 40.00. The second chart shows the fate for stocks. More downside, to be followed by an inflationary nominal Bull Market once the downside has been achieved. More downside is coming before that inflationary nominal Bull Market starts.
Last Friday, September 12th, 2008, we warned our subscribers, "a sharp decline will be the market's fate dead ahead. Everything is pointing toward a crash at any time." The next trading day, Monday, September 15th, the Industrials lost 504.48 points, the largest one day decline since the 9/11 attacks in 2001. Two days later, the Industrials lost another 449.36 points. But we noted that our PPT Indicator just generated a new buy on Monday, suggesting a bottom was imminent. The Industrials then rallied 410 points Thursday the 18th, and another 368 on Friday the 19th.
Further, on Friday September 12th, we wrote to subscribers, "A great development for Gold bugs is that the HUI's Daily Full Stochastics generated a new buy signal Thursday, and at a level where significant rallies have started in the past. The PPT's involvement in bailouts, and in stock and bond markets, takes money, and is hyperinflationary. This should be the catalyst for a reversal in commodities, precious metals, and the HUI. We got a new buy signal in the HUI PPI Friday (Sept. 12th), and the chart on page 24 (of last weekend's market newsletter to subscribers) shows a good track record for this indicator."
Of course Gold rose nearly 20 percent at one point this past week, with metals showing the largest one-day price gain ever on Wednesday, the 17th. The HUI also rose sharply, up 50 points, about 20 percent, this past week.
The Paulson Manifesto Will Fail
Because it Fails American Households
By Robert McHugh, Ph.D.
September 21st, 2008
As a trader, I stopped getting disgusted at government manipulation of markets several years ago, didn't pretend it wasn't happening, just tried to find when it was coming. I decided to develop an indicator that would tell me when the probability was extremely high that the Master Planners would intervene. That approach has served us well, and that indicator is known as the Plunge Protection Team (PPT) Indicator. It flashed a new "buy" signal Monday, September 15th at the close, rising above positive + 20.00, warning that the decline from August 11th was terminal. The Industrials have risen 565 points since that buy signal. When this measure rises above positive + 20.00, it is usually early, but very right, an early warning indicator telling us to enjoy the decline for a few more trading days but get ready for a spike rally.
The current government market intervention ("manipulation" is probably a more appropriate word) that transpired the past two weeks, reaching crescendo Thursday on a rumor, and Friday on an announcement, is one of the most dramatic since the 1930's. It really puts into question the notion of U.S. markets being under capitalism, not socialism. The government nationalized Fannie Mae and Freddie Mac last week, announced its intent to nationalize AIG, a component of the Dow 30, this week, and then pulled out all the stops with the Paulson manifesto Friday. Not sure why he didn't nationalize Lehman Bros, unless it was personal, as he came from competitor Goldman Sachs, and enjoyed watching them declare bankruptcy. Okay, maybe I am a bit cynical - maybe.
Before getting into market performance and the forecast, let's cover what we know about this historic redefining of the rules of the game that Paulson has placed on the table for Congress to consider next week:
1) The Securities and Exchange Commission has put a ban on short selling (that is entering into a contract to sell a stock at today's price in the future without owning it now, in effect placing a bet the price of the stock will drop) on 799 financial institution stocks - not on any other stocks, through October 2nd, with the possibility of extending the ban for 30 days. This does not prohibit put options.
2) AIG was tossed from the Dow Industrials and replaced with food giant Kraft on Thursday (presumably to replace a loser with a winner to increase the odds that the closely watched Industrials will rise)
3) The Treasury said it would "insure" up to $50 billion in struggling moneymarket fund investments at financial companies (that are not FDIC insured).
4) The Fed announced they would make "unlimited funds" available to banks to finance purchases of asset-backed commercial paper from money market funds (This will be in the trillions).
5) Banks would be allowed to sell their illiquid bad loan assets to the Treasury in exchange for cash.
What is clear from the getgo, is that this is a bailout of Wall Street, not Main Street, that it is going to cost trillions, not billions, and the bill will be paid by both the American taxpayer, and the American consumer via a higher cost of living. Yes, this is going to be hyperinflationary. The Treasury will issue notes to the Fed, the Fed will come up with the cash (printed out of thin air), and the cash will be handed to Wall Street. This process fails miserably to solve the problem, which is the dire financial condition of the average American household. The trillions of dollars being printed out of thin air should be going to each and every household in America, not just Wall Street. If so, Wall Street would benefit because their toxic assets would metamorphose into quality assets as the American household pays off its debts (cash to Wall Street). But what would you expect when the Treasury Secretary authoring this plan is the former Chairman of the largest Wall Street firm in America, Goldman Sachs, which also happens to be a surrogate for the Plunge Protection Team. Because the plan fails to bailout the American household, it will fail - period. But, fail with an even higher cost of living structure than we have today.
If you would like to become a susbcriber, you can grab our great offer of 5 months for $99 at www.technicalindicatorindex.com Hurry!
This plan assures that the Dollar will tank. It will lose its value as bad loans are replaced with fresh printed cash. Precious metals will skyrocket as this plan is executed.
As for the lunacy of banning short trading against 799 financial institutions (there are over 10,000 financial institutions in the U.S., so only some are protected from bets they will decline), the Wall Street Journal noted on Friday, "essentially this only allows investors to bet that stocks will rise, and bans investing strategies used by hundreds of mutual funds, pension funds, endowments and governments. These firms use short-selling to protect themselves from unexpected huge losses, some financial firms selling short to offset trades made by their clients so they aren't exposed to large market moves."
Short selling is not only legal, or should we say it was until Friday, but is necessary, and can be quite good for the markets. In a short-sale of a stock, what it does is it requires a purchase of that stock by the time the short sale is contracted to close. In effect, short sales create future demand, as shorts must buy stocks, thereby helping stabilize and even push stock prices higher in the future. Further, if there are an abundant number of short positions, a short-covering rally is possible, driving market prices sharply higher. Banning short selling removes these invisible bids. Banning short selling is robbing Bears and hedge traders who rightfully are entitled to profits. Without short selling, it will be harder to properly gauge the true value of a stock. It could create an artificially high market price that will drop far more severely in a future event than otherwise would have occurred.
Banning short selling is essentially a magician's trick to take the focus off his hand. It is a witch hunt. Someone has to take the hit and the Master Planners have decided to blame the shorts, which is pure lunacy. Shorts had nothing to do with the economic mess this nation finds itself in. The Master Planners continue to equate the economy with Wall Street. They believe if stocks are fine, then the American household is just fine. Nonsense. Shorting is a way of identifying fundamental problems with a company. The health of the economy has nothing to do with whether or not a stock is shorted.
Here's the problem. This government intervention, one that will cost trillions, has failed to bail out the American household, thus is destined to fail, after trillions of new dollars hyperinflate our economy and debase our currency. The expectations for success are running high, creating a false sense that everything is going to be okay. This sets up a monster financial collapse that will dwarf the risks of today once it becomes clear that this program has failed. While old assets are swept into the vaults of the Fed in exchange for cash, via the arms of the U.S. Treasury, more bad assets will be created at an even faster pace as the American household, who is income starved, debt laden, and credit report deficient, will soon get hit by another tsunami of higher costs of living, making it impossible to pay their bills on time.
The Master Planners don't give a royal rip about the consumer. For example, Credit Card company schemes have managed to force 30 percent interest rates on what will be forever debt due to technicalities and small print. They mail statements within days of due dates, creating accidental late payments, granting them the right to raise interest rates to 30 percent. They lower credit limits without proper notice, consumers use their cards over the new limit by accident, and get hit with an increase in their interest rates to 30 percent. If they are late, their credit report gets creamed. Yet, now these credit card companies, Wall Street firms, are being bailed out at taxpayers expense to the tune of trillions without doing a darned thing to improve this economy.
The cost of this Paulson manifesto will be trillions on top of the already $600 billion spent in specific corporate bailouts this year. If they are spending trillions anyway, debasing the Dollar anyway, then the American household should also be bailed out. A rebate of the past ten years income taxes should be sent directly to each and every household, with the caveat that half of that money must be used to pay off existing debt. If no debts, great, the household gets to keep the entire rebate. Further, the unconstitutional confiscation of wealth known as the real estate tax should be eliminated and replaced with a sales tax. Also, a usury interest rate ceiling of 10 percent should be imposed immediately upon all financial institutions, the key beneficiaries of the Paulson manifesto. The Treasury should begin issuing a new currency that it backs with precious metals, and finally, the Federal Reserve should be abolished. The thinking here is trickle up economics is the medicine that is needed, not more trickle down.
The next two charts tell us all we need to know. The first shows the fate of the U.S. Dollar. Down. Big. A massive Head & Shoulders top with an eventual downside target of 40.00. The second chart shows the fate for stocks. More downside, to be followed by an inflationary nominal Bull Market once the downside has been achieved. More downside is coming before that inflationary nominal Bull Market starts.
Last Friday, September 12th, 2008, we warned our subscribers, "a sharp decline will be the market's fate dead ahead. Everything is pointing toward a crash at any time." The next trading day, Monday, September 15th, the Industrials lost 504.48 points, the largest one day decline since the 9/11 attacks in 2001. Two days later, the Industrials lost another 449.36 points. But we noted that our PPT Indicator just generated a new buy on Monday, suggesting a bottom was imminent. The Industrials then rallied 410 points Thursday the 18th, and another 368 on Friday the 19th.
Further, on Friday September 12th, we wrote to subscribers, "A great development for Gold bugs is that the HUI's Daily Full Stochastics generated a new buy signal Thursday, and at a level where significant rallies have started in the past. The PPT's involvement in bailouts, and in stock and bond markets, takes money, and is hyperinflationary. This should be the catalyst for a reversal in commodities, precious metals, and the HUI. We got a new buy signal in the HUI PPI Friday (Sept. 12th), and the chart on page 24 (of last weekend's market newsletter to subscribers) shows a good track record for this indicator."
Of course Gold rose nearly 20 percent at one point this past week, with metals showing the largest one-day price gain ever on Wednesday, the 17th. The HUI also rose sharply, up 50 points, about 20 percent, this past week.
http://www.lemetropolecafe.com/Le_Menu.cfm "There are no markets anymore, just interventions."
Remarks by Chris Powell, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
GATA Goes to Washington -- Anybody Seen Our Gold?
Hyatt Regency Crystal City Hotel, Arlington, Virginia
Friday, April 18, 2008
Can there be one nitwit out there now who (outside of imbecile Jon Nadler) doesn’t realize the extent to which the price of gold has been manipulated?
The bottom line … never thought I would hear this from Planet Wall Street:
"FREE MARKET CAPITALISM IS DEAD," One Of The Muppets On CNBC
This may not happen but it was said:
Senator Bunning Says Paulson Acts Like Socialist, Should Resign
Source: Sept. 9 (Bloomberg)
Senator Jim Bunning said Treasury Secretary Henry Paulson, by rescuing Fannie Mae and Freddie Mac, is acting like China's finance minister and both Paulson and Federal Reserve Chairman Ben S. Bernanke should step down.
``I sincerely believe that Henry Paulson and Ben Bernanke should resign,' said Bunning, a Republican from Kentucky on the Senate Banking Committee. ``They have taken the free market out of the free market.' ...
The bottom line of all the commotion out there on Planet Wall Street is Comrade PAULSON has changed the US financial landscape, maybe forever, while he saved Goldman "Hannibal Lecter" Sachs’ bacon in the process. Goldman Sachs’ share price was going under (or close to it) when their old boss bailed them out.
Therefore, perhaps I have to rethink about The Gold Cartel falling apart. As we all know, gold should be up hundreds of dollars per ounce today, and yet it has been crushed compared to its Comex close yesterday. A quid pro quo for the US Government bailing GS out appears to be that they get back on board with the gold price suppression scheme….
Eventually but not today:
Then again, I still think The Gold Cartel is going to fall apart now. The reason is what is occurring is mindboggling and INCREDIBLY bullish for gold. Once the dust settles, most everyone with half a brain is going to go out and buy gold and silver. That goes from Joe and Jane investor in America to Sovereign Wealth Funds. The small gold and silver markets will not be able to handle the demand without sending their prices sharply higher … like WAY sharply higher. I can’t imagine the bullion banks, and other banks, willing to take on the coming tide. It would be financial suicide from here on in. Therefore, I look for bullion banks to cover shorts and even try and get LONG.
Adrian has it nailed…
Bill,
I have a real uneasy feeling about today’s euphoria. This sudden socialistic fervor is extremely unsettling in a country that has long heralded itself for having the most competitive and free markets (cough, cough). The rise in equities makes me feel like the sea just suddenly went out from the beach and I am watching millions of people rushing on to the beach to pick up all the free fish that are stranded. Yes, this is the scenario just before a Tsunami hits. We, the gold investors, are sitting on high ground watching in horror as the government cheer leads on the expedition onto the beach.
It's NOT that Citigroup says Gold should be a $2000, its:
Citigroup metals analysts ask why gold is not already at $2,000/oz
"We have been surprised that gold has been so heretofore quiet, and have expected a much strong and more immediate response to the government takeover of GSE [Government Sponsored Enterprises]/mortgage insurance entities, and broker-deal bankruptcies," they wrote. "It is notable that hard-core goldbugs have been proven correct in the decade-long contention that an overwhelmingly vast and complex pool of nested financial derivatives would ultimately result in cascading defaults and ruin for major portions of the banking system. Frankly, we're surprised that gold is not already at $2,000 per ounce."
http://www.mineweb.co.za/mineweb/view/mineweb/en
/page33?oid=62900&sn=Detail
U.S. options group slams SEC short-sales ban
CHICAGO, Sept 19 (Reuters) - The SEC's emergency order to ban short sales of many financial stocks will have "potentially disastrous effects" on the U.S. listed options market, the head of the Options Clearing Corp said on Friday.
"As written, this order does not allow for an options market maker exemption to ensure liquid and orderly markets starting on Monday. This will have dire consequences on the U.S. equities markets," Wayne Luthringshausen, chairman and CEO of the OCC, said in a statement.
The OCC is the world's largest equity derivatives clearing organization.
From Jesse:
These bailouts miss the point.
An entire economy was created to irrationally slingshot the US economy to this tipping point. The economy is based on the activity of gearing up to create, finance, market and exploit malinvestment. (Quote of the day)
That doesn't mean that malinvestment can continue, and it doesn't mean that this malinvestment is going to become valuable. Losses will have to be realized - nothing is going to magically give this house of cards real world economic value. The talking heads are saying "get this toxic debt off the banks books." Well, what is going to prevent them from putting new toxic debt back on as soon as they have the opportunity? Did they suddenly grow wisdom? Learn from experience? Become chaste and humble?
And when this latest plan fails, because they are still only treating symptoms, and enriching the bankers, and manipulating markets, what will they do next?
Forced buying of Treasuries? Currency controls on the dollar? Production quotas for industries? Government lists of patriotically favored stocks and commodities from homeland security?
When the banks and the government become trading partners we are beyond simple moral hazard.
http://jessescrossroadscafe.blogspot.com/2008/09/sec-issues-emergency-order-bans-all.html Bill,
As we wind down the saddest week in the history of free enterprise we have plenty to extrapolate. Here is what we now know:
1. The Paulson proposal of putting all financial garbage into a RTC-type public trashcan is mind-numbingly corrupt. We know the fascist business model is now official. This isn't a financial garbage can, it's a toxic waste dump the size of New Jersey. Better to bury the garbage in a landfill rather than let it rot on the streets for the public to smell. Just because they buried the toxic waste doesn't mean it goes away. A by-product of rotting garbage is methane gas, and we all know its explosiveness.
2. The fascist business model includes changing ANY and ALL rules necessary to screw ANYBODY that isn't a bankster. In the blink of an eye the government has now basically nationalized the mortgage lending industry, the banking industry, and the insurance industry. Can the auto industry be far behind? Can any rule be considered too sacred to change?
3. The Working Groups HAD to take immediate action. Today was triple-witching Friday, and 3rd quarter fund statements go out in a couple weeks. Huge redemptions were imminent. Just the whiff of money market fund redemptions was enough to send chills down the spines (actually they're spineless) of Wall Street. Fractional reserve banking had no pulse. Inflationary confiscation once again proved preferable to outright confiscation.
4. Lending of all kind is contracting and seizing up. Next up in the insolvency parade is box stores, commercial paper, and student loans, and that's just for starters. The approaching ripple effect is another economic catastrophe. A big contraction in credit kills virtually all business. The bailout beggar line is so monstrous it simply can't be accommodated. Paulson and the Working Group gang knew this. They only had two plays left in their playbook, bluffing and pumping liquidity. Bluffing failed miserably, so now they're down to one play. The entire world now knows that play in advance. Anybody not drinking the Wall Street kool-aid knows hyperinflation is coming with a vengeance.
5. They are ultimately sacrificing sovereign debt rating for the sake of banksters who should be imprisoned. How on earth can U.S. Treasuries remain AAA when Wall Street has unlimited power to dump their toxic sludge on the public? Look at that 3-digit gold price again, and think about what just happened. Gold should skip 4-digits and go directly to 5-digits immediately, it's that bad.
<
Remarks by Chris Powell, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
GATA Goes to Washington -- Anybody Seen Our Gold?
Hyatt Regency Crystal City Hotel, Arlington, Virginia
Friday, April 18, 2008
Can there be one nitwit out there now who (outside of imbecile Jon Nadler) doesn’t realize the extent to which the price of gold has been manipulated?
The bottom line … never thought I would hear this from Planet Wall Street:
"FREE MARKET CAPITALISM IS DEAD," One Of The Muppets On CNBC
This may not happen but it was said:
Senator Bunning Says Paulson Acts Like Socialist, Should Resign
Source: Sept. 9 (Bloomberg)
Senator Jim Bunning said Treasury Secretary Henry Paulson, by rescuing Fannie Mae and Freddie Mac, is acting like China's finance minister and both Paulson and Federal Reserve Chairman Ben S. Bernanke should step down.
``I sincerely believe that Henry Paulson and Ben Bernanke should resign,' said Bunning, a Republican from Kentucky on the Senate Banking Committee. ``They have taken the free market out of the free market.' ...
The bottom line of all the commotion out there on Planet Wall Street is Comrade PAULSON has changed the US financial landscape, maybe forever, while he saved Goldman "Hannibal Lecter" Sachs’ bacon in the process. Goldman Sachs’ share price was going under (or close to it) when their old boss bailed them out.
Therefore, perhaps I have to rethink about The Gold Cartel falling apart. As we all know, gold should be up hundreds of dollars per ounce today, and yet it has been crushed compared to its Comex close yesterday. A quid pro quo for the US Government bailing GS out appears to be that they get back on board with the gold price suppression scheme….
Eventually but not today:
Then again, I still think The Gold Cartel is going to fall apart now. The reason is what is occurring is mindboggling and INCREDIBLY bullish for gold. Once the dust settles, most everyone with half a brain is going to go out and buy gold and silver. That goes from Joe and Jane investor in America to Sovereign Wealth Funds. The small gold and silver markets will not be able to handle the demand without sending their prices sharply higher … like WAY sharply higher. I can’t imagine the bullion banks, and other banks, willing to take on the coming tide. It would be financial suicide from here on in. Therefore, I look for bullion banks to cover shorts and even try and get LONG.
Adrian has it nailed…
Bill,
I have a real uneasy feeling about today’s euphoria. This sudden socialistic fervor is extremely unsettling in a country that has long heralded itself for having the most competitive and free markets (cough, cough). The rise in equities makes me feel like the sea just suddenly went out from the beach and I am watching millions of people rushing on to the beach to pick up all the free fish that are stranded. Yes, this is the scenario just before a Tsunami hits. We, the gold investors, are sitting on high ground watching in horror as the government cheer leads on the expedition onto the beach.
It's NOT that Citigroup says Gold should be a $2000, its:
Citigroup metals analysts ask why gold is not already at $2,000/oz
"We have been surprised that gold has been so heretofore quiet, and have expected a much strong and more immediate response to the government takeover of GSE [Government Sponsored Enterprises]/mortgage insurance entities, and broker-deal bankruptcies," they wrote. "It is notable that hard-core goldbugs have been proven correct in the decade-long contention that an overwhelmingly vast and complex pool of nested financial derivatives would ultimately result in cascading defaults and ruin for major portions of the banking system. Frankly, we're surprised that gold is not already at $2,000 per ounce."
http://www.mineweb.co.za/mineweb/view/mineweb/en
/page33?oid=62900&sn=Detail
U.S. options group slams SEC short-sales ban
CHICAGO, Sept 19 (Reuters) - The SEC's emergency order to ban short sales of many financial stocks will have "potentially disastrous effects" on the U.S. listed options market, the head of the Options Clearing Corp said on Friday.
"As written, this order does not allow for an options market maker exemption to ensure liquid and orderly markets starting on Monday. This will have dire consequences on the U.S. equities markets," Wayne Luthringshausen, chairman and CEO of the OCC, said in a statement.
The OCC is the world's largest equity derivatives clearing organization.
From Jesse:
These bailouts miss the point.
An entire economy was created to irrationally slingshot the US economy to this tipping point. The economy is based on the activity of gearing up to create, finance, market and exploit malinvestment. (Quote of the day)
That doesn't mean that malinvestment can continue, and it doesn't mean that this malinvestment is going to become valuable. Losses will have to be realized - nothing is going to magically give this house of cards real world economic value. The talking heads are saying "get this toxic debt off the banks books." Well, what is going to prevent them from putting new toxic debt back on as soon as they have the opportunity? Did they suddenly grow wisdom? Learn from experience? Become chaste and humble?
And when this latest plan fails, because they are still only treating symptoms, and enriching the bankers, and manipulating markets, what will they do next?
Forced buying of Treasuries? Currency controls on the dollar? Production quotas for industries? Government lists of patriotically favored stocks and commodities from homeland security?
When the banks and the government become trading partners we are beyond simple moral hazard.
http://jessescrossroadscafe.blogspot.com/2008/09/sec-issues-emergency-order-bans-all.html Bill,
As we wind down the saddest week in the history of free enterprise we have plenty to extrapolate. Here is what we now know:
1. The Paulson proposal of putting all financial garbage into a RTC-type public trashcan is mind-numbingly corrupt. We know the fascist business model is now official. This isn't a financial garbage can, it's a toxic waste dump the size of New Jersey. Better to bury the garbage in a landfill rather than let it rot on the streets for the public to smell. Just because they buried the toxic waste doesn't mean it goes away. A by-product of rotting garbage is methane gas, and we all know its explosiveness.
2. The fascist business model includes changing ANY and ALL rules necessary to screw ANYBODY that isn't a bankster. In the blink of an eye the government has now basically nationalized the mortgage lending industry, the banking industry, and the insurance industry. Can the auto industry be far behind? Can any rule be considered too sacred to change?
3. The Working Groups HAD to take immediate action. Today was triple-witching Friday, and 3rd quarter fund statements go out in a couple weeks. Huge redemptions were imminent. Just the whiff of money market fund redemptions was enough to send chills down the spines (actually they're spineless) of Wall Street. Fractional reserve banking had no pulse. Inflationary confiscation once again proved preferable to outright confiscation.
4. Lending of all kind is contracting and seizing up. Next up in the insolvency parade is box stores, commercial paper, and student loans, and that's just for starters. The approaching ripple effect is another economic catastrophe. A big contraction in credit kills virtually all business. The bailout beggar line is so monstrous it simply can't be accommodated. Paulson and the Working Group gang knew this. They only had two plays left in their playbook, bluffing and pumping liquidity. Bluffing failed miserably, so now they're down to one play. The entire world now knows that play in advance. Anybody not drinking the Wall Street kool-aid knows hyperinflation is coming with a vengeance.
5. They are ultimately sacrificing sovereign debt rating for the sake of banksters who should be imprisoned. How on earth can U.S. Treasuries remain AAA when Wall Street has unlimited power to dump their toxic sludge on the public? Look at that 3-digit gold price again, and think about what just happened. Gold should skip 4-digits and go directly to 5-digits immediately, it's that bad.
<