Archive for September 2008
A polished Wall Street SHILL in action
Below is a link to a CNBC(trash Financial news) video with Maria Bartiromo and AutoNation CEO Mike Jackson. Unknown to many who will view this video, Mike has been on CNBC regularly cheerleading the markets and all along clinging to the story that there are no problems with the US economy. How wrong he was.
But he likely knew he was wrong, unfortunately he is a paid Wall Street shill, cheer leading the banks and spewing misinformation and outright lies.
Enjoy listening to Mike Jackson(car salesmen sleezebag extraordinaire) try to justify bailing out the bankers with taxpayer money. Truly pathetic and spineless.
Maria actually hits the lie right on the head when she says “Main street needs to realize that this bailout package is not to help the fatcats, but to help the average American”
Nothing could be further from the truth.
The day the markets fell
Well it was big, but not THE BIG ONE.
Anyone who is still long equities or US related assets should really be thinking long and hard about what is coming around the corner. This is far from over.
Triple 7’s on the Dow! -777.68(6.98%)
But what was really telling was the broader S&P 500 being down 106.59(8.79%) and CLOSING AT IT’S LOW! Bad signals.
I love laughing when people say ” My mutual fund (monkey) told me to hold on and things will recover, this is just a cycle, everything will be ok, this is a good time to buy, stocks are cheap(repeated weekly over the last 8 months….don’t worry I really don’t know a thing about the stock market but hey, I work for a big company with nice brochures(for the legions of suckers)”
More carnage to come…Peter Schiff and Ron Paul speaking out on the truth the whole time.
Yes, sadly, people really are THAT STUPID.
House of cards, ready to fall, global chaos
The global financial systems is a house of cards built of greed that is set to fall at anytime. The USA is done, their debt is nowhere close to being AAA, practically worthless considering their ability to pay it back.
Asia Needs Deal to Prevent Panic Selling of U.S. Debt, Yu Says
By Kevin Hamlin
Sept. 25 (Bloomberg) — Japan, China and other holders of U.S. government debt must quickly reach an agreement to prevent panic sales leading to a global financial collapse, said Yu Yongding, a former adviser to the Chinese central bank.
“We are in the same boat, we must cooperate,” Yu said in an interview in Beijing on Sept. 23. “If there’s no selling in a panicked way, then China willingly can continue to provide our financial support by continuing to hold U.S. assets.”
An agreement is needed so that no nation rushes to sell, “causing a collapse,” Yu said. Japan is the biggest owner of U.S. Treasury bills, holding $593 billion, and China is second with $519 billion. Asian countries together hold half of the $2.67 trillion total held by foreign nations.
China, Japan, South Korea and others should meet soon to seal a deal, said Yu, a former academic member of the central bank’s monetary policy committee. The talks should involve finance ministers, central bank governors and even national leaders, he said.
“Whether some kind of agreement between them to continue to hold Treasury bills is viable, I’m not sure,” said James McCormack, head of sovereign ratings at Fitch Ratings Ltd in Hong Kong. “It would be unusual. If it became apparent that sovereigns in Asia were selling Treasuries the market would take that quite badly, it’s something to be avoided.”
The global credit crisis, triggered by a housing slump in the U.S., has saddled financial companies with more than $520 billion in writedowns and losses, collapsing Bear Stearns Cos. and Lehman Brothers Holdings Inc. in the process. Insurer American International Group Inc. and mortgage giants Fannie Mae and Freddie Mac also were rescued by the government.
`Grave Threats’
U.S. Treasury Secretary Henry Paulson is urging Congress to pass a $700 billion plan to remove devalued assets from the banking system. Federal Reserve Chairman Ben S. Bernanke said Sept. 24 that the U.S. is facing “grave threats” to its financial stability.
China’s huge holdings of U.S. debt means it must bear a large proportion of the “burden of sorting things out” in the U.S., Yu said. China is not in a hurry to dump its U.S. holdings and communication between the two nations every “couple of days” is keeping Chinese leaders informed and helping to avoid a potential panic, he added.
“China is very worried about the safety of its assets,” he said. “If you want China to keep calm, you must ensure China that its assets are safe.”
Currency Manipulator
Yu said China is helping the U.S. “in a very big way” and added that it should get something in return. The U.S. should avoid labeling it an unfair trader and a currency manipulator and not politicize other issues, he said.
“It is not fair that we are doing this in good faith and are prepared to bear serious consequences and you are still labeling China this and that, accusing China of this and that,” he said. “China knows what to do. We don’t need your intervention.”
The U.S. financial crisis had taught China a lesson and that was: “Why are we piling up these IOUs if they may default?” China’s economic expansion strategy, which emphasizes export growth that has led to trade surpluses and the accumulation of $1.81 trillion in foreign-exchange reserves, is the main problem, said Yu.
“Our export-growth strategy has run its natural course,” he said. “We should change course.”
China should stop intervening in the foreign currency markets and thus allow rapid appreciation of the yuan, he said. While this would cause pain for exporters, China could ease the transition by using its strong fiscal position to aid those who lose their jobs. It also should stimulate domestic demand to offset lower income from overseas sales.
Without yuan appreciation, China will continue to accumulate foreign reserves, which means further accumulating “IOUs from the U.S.,” said Yu. “This is paper and it may default and it will not increase China’s national welfare.”
If China doesn’t allow the yuan to appreciate and continues to promote export-led growth it will lead to confrontation with the U.S. and Europe, Yu said.
http://www.bloomberg.com/apps/news?pid=20601087&sid=anZHfo6tQi60#
“We cannot continue to manage the economy of the 21st century with the instruments of the economy of the 20th century,”
In times of crisis, governments will use the fear of the public against them to usher through new regulations and trade agreements to benefit only the very wealthy and elite. (Naomi Klein thoughts)
The U.S. dollar will be shattered beyond repair
Those are Peter Schiff’s words, not mine, but as usual I completely agree with him.
After the mother of all bailouts on the weekend, the USD is down almost 3 whole cents from before the announcements started. Huge move, gold moving up accordingly.
How long it will take for the world to figure this one out and tank the US dollar for good is unclear.
Paulson Goes All In
Just three days ago, after looking at the prospect of bailing a string of distressed financial institution in the country, the government seemingly drew a line in the sand, and refused to bail out Lehman Brothers. The authorities clearly saw Lehman’s demise as a trial balloon to see how the markets would react if the government stayed on the sidelines. That trial balloon quickly turned into the Hindenburg. Immediately reversing course, the Government has decided to go “all in” and bail out every institution with financial exposure to U.S. mortgages. Simply put, Americans will not be allowed to visibly suffer losses after the greatest asset bubble in U.S. history. But make no mistake, the losses are real and Americans will pay one way or another.
Moving beyond the guided munitions of selective bailouts, the Government is now trying the financial equivalent of carpet bombing (for AIG, Merrill Lynch, and especially Lehman Brothers, this gives new meaning to being a day late and a dollar short). To continue with the military analogies, Paulson’s bazooka turned out to be a nuclear tipped ballistic missile.
By committing trillions of tax payer dollars (not the “hundreds of billions” that Paulson predicts), the plan will save commercial and investment banks from certain bankruptcy. In his statement today, Paulson made clear that Congress must pass new legislation to allow the Government to acquire even those loans too poorly collateralized to currently qualify for GSE or FHA absorption. The losses baked into these mortgage products, which Wall Street has been reluctant to even estimate, will now be borne wholly by taxpayers.
In his press conference, Paulson assured us that this plan was designed to safeguard our savings. But in typical government fashion, the plan will have the reverse effect as savings will be wiped out through inflation. He also claims that the plan will safeguard home equity by keeping real estate prices high. Since when did high home prices become a strategic national priority? If the plan succeeds, the gains for home sellers will simply be matched by losses for homebuyers, who end up paying inflated prices, and taxpayers, who get stuck with the losses when those buyers default.
Paulson’s distress and confusion was clearly evident when he fielded questions from reporters. The first asked Paulson to describe his fears regarding the probable economic consequences of government inaction. Paulson provided no answer and promptly exited stage right.
When the U.S. government owns all mortgages, the real estate market will be completely subject to political, rather than financial, concerns. Will foreclosures be outlawed? Will loan term easements and principal reductions become standard campaign issues?
While it is dizzying to predict how this plan will be implemented, it is fairly simple to foresee the macroeconomic consequences. The U.S. dollar will be shattered beyond repair. The government simply has no means to make good on the trillions of new liabilities. Interestingly, while both Paulson and President Bush acknowledge that the plan will put “significant amounts of taxpayer dollars on the line,” they did not mention any tax increases. Given the politics, no such move is forthcoming. The printing press is their only solution.
The government has also decided to insure all money market funds, adding trillions more in unfunded liabilities to the Federal balance sheet in the blink of an eye. Of course, since bad real estate loans are not the only toxic assets on the balance sheets of financial institution, we will also need to absorb other classes of asset-backed securities, such as those backed by credit card debt and auto loans. So while the move ensures that depositors will not lose money, is does insure that the money itself will lose value. Is the trade-off really worth it? Washington thinks so.
Further, since I assume the plan will apply to all mortgage debt, U.S. taxpayers will also be on the hook to bail out foreign institutions that loaded up on the financial sludge. However, once the government takes them off the hook, do not expect them to re-invest the windfall back into other U.S. dollar denominated assets. This get-out-of-jail free card will likely scare them straight. The global mass exodus from the U.S. dollar and Treasury debt is about to begin: do not get caught in the stampede.
Although gold initially sold off as the apparent need for a financial safe haven ebbed, look for a spectacular rally to commence as its traditional role as an inflation hedge returns with a vengeance.
For a more in depth analysis of our financial problems and the inherent dangers they pose for the U.S. economy and U.S. dollar denominated investments, read my new book “Crash Proof: How to Profit from the Coming Economic Collapse.”
Lehman Brothers files for bankruptcy
Done deal. Lehman Brothers is filing for Chapter 11. Merryl Lynch gets bought by BOA and Lehman dies, quite a Sunday night.
Once again the fairytale “free market” needs government intervention to try and sweep this one under the rug once the greed that built it causes it to crumble. Similar to the entire US economy.
Story here from CNBC
Largest Insurance company in the world on the brink of failure
Insurance is a big scam, hence the American(No surprise there) International Group is ready to fail and in a sad irony they are asking the Fed for more cash than their current market capitalization!
Also the corrupt thieves of wall street(C, JPM, GS) have setup a $70B fund to help with market stability and help prevent a global financial meltdown. Money transferred to the banks from the Fed. Taxpayers getting screwed once again to bail out the banks.
“The chickens have come home to roost” US Foreclosures hit alltime highs, again…
It’s the worst housing market since the 1930’s, and it will only get much worse with 3.9 million existing unsold single-family homes on the market.
A absolutely huge loss of wealth that is only beginning to be seen affecting the broader economy. Houses were used as ATMs.
Largest US Savings and Loans=Junk
Washington Mutual debt cut to below investment grade. What a scam.
Watching LEH hit 52 week lows…BSC Redux?
With a smile on my face!
They can hide many of their lies but LEH is getting absolutely slaughtered! DOWN 46% TODAY 88% YTD
It’s only the beginning. How the f is the USD going to sustain yet another bailout? This is getting fing ridiculous!
