Saturday, 13 September 2008

:: 9/15 thru 9/19...Jim Willie...US financial system breakdown
Bloody birthday is 9/ everything going to fall to bloody pieces on my birthday? :cry:

In truly perverse fashion, only in America, the USDollar is rallying as a prelude to a US financial system breakdown. Call it a blowoff top! The Wall Street carnival seems to celebrate anything to lift the USDollar, even recession and the death knell for USTreasurys. Nationalization is never a positive for financial prospects. A powerful reversal comes when intervention ammunition wanes and the reality of US bank system implosion returns. The rally could reach the 82 mark, if the reversal pattern reaches full completion. The three major factors pulling the US$ down are the bank losses, the housing decline, and the job loss situation. Nothing has changed with these factors, except they have worsened!

My position is unshakable. The financial structure of the Untied States is besieged by powerful bankrupt insolvencies. 1) USGovt federal deficits are exploding, from war, from handouts, from recession, from bailouts. 2) US trade deficits are chronic and have risen over $60 billion monthly, soon to worsen from the US$ rise rendering harm to exports. 3) US banks are insolvent, with congames the only force forestalling bankruptcy as they continue to distort their balance sheets, while showing inability to raise needed cash in their replenishment. 4) US homeowners are now increasingly living with loans that reflect negative equity, as the proportion sits around one third in such upside-down living rooms. In the next few months, all four wrecked pillars will worsen dramatically. Fundamentals drive the USDollar lower. An assault on the USTreasurys will put the US$ into No Man’s Land.

The most dangerous reaction investors can make now is to believe the USDollar has begun a major new upleg. The second most dangerous reaction is to sell gold or silver into this climax of fraud, manipulation, bankruptcy, and protected larceny. The sun is soon to set on the Fascist Business Model network. Those who put leverage into their portfolios have forfeited their freedom to hold. The father of a friend down here in half sunny, half rainy Costa Rica just lost his $250k silver account. He had told me of his father’s strong belief in silver and the wrecked US$ condition, but he was not even aware that his father had a silver futures account, not physical silver bullion or coins. He owned paper silver, bound by the illusion of wealth. Now Dad has no silver at all, as he liquidated after a few margin calls. A piece of the inheritance is gone. My Dad has significant bank deposits, which might be under a different strain as banks drop like flies this winter. My advised strategy since the beginning of the year has been to hold silver or gold in physical form, for at least one third of accounts, maybe more.

The uplift coming this autumn and winter will be historic, as new chapters will be written on the global financial rehabilitation and remake. The world is planning the post-US era, amused by the celebration taking place on Wall Street. It will wind down soon enough. The next chapter will be characterized by isolation, retribution, receivership, dismissed government, overriding supply contracts, and redrawn lines.


A time limit has been granted, with high likelihood via order given by the most powerful bank in the world. The US has been ordered to bring its bonds home, to be buried under an avalanche of nationalized debt, foreign vengeance, and bank system collapse. During that period of time, Wall Street has been given a free ride, a blank check, a certificate of impunity, to rig markets for their own gain, to pull credit from client accounts for their own gain, to do whatever they can to force liquidation of positions, to basically rape & pillage private accounts. The fraud has been protected by regulators at the Securities & Exchange Commission and the Commodity Futures Trading Commission, each staffed by Wall Street mafiosi. They are taking full benefit of the granted OPEN WINDOW TO STEAL, pulling gold below 750 and pulling silver below 11. The total split, the bifurcation described last week, has become even more laughable, stark, and obvious of Wall Street corruption of the precious metals market. The gold & silver owned (on paper) by folks has been taken. Since through corruption of the precious metals market, where supply is largely unavailable, call it theft, robbery, larceny. Call a spade a spade! Wall Street loves an investor panic. Do not give it to them. What infuriates me is the impunity. Wall Street firms have a license to corrupt markets and take money from people and businesses, as they are forced into liquidation or shrunk positions, often with credit pulled tactically. The regulators are sitting on their hands, permitting it all during this climax events of a fiesta. Banksters at the BIS are taken care of banksters inside the Untied States. A climax of theft is nearing an end.


On the week of September 15 thru 19, some initial events are anticipated to occur. An important event schedule will be initiated. The party and celebration and corrupt raids should come to an end abruptly. Many possible events are offered in conjecture in the September Hat Trick Letter, due out late this weekend. In all, 13 powerful shock wave events are suggested as possible. Foreigners are watching the tainted party, viewing it as staged atop the heavily listing Titanic vessel. The four pillars of insolvency, plus the looming credit derivative roof crumple, seem not to matter. The entire global playing field, related to commerce and finance, is soon to be reshaped, with the Untied States becoming a bit player, or not invited. The turkey carving is nigh.

When the events begin to unfold, one event will lead to another. Just like the Iraq War, a schedule does not adhere to a calendar, but rather to events. One event leads to released new pressures, factors to be made clear, obstacles to be removed (possibly forcibly), and the next event unfolds. My view of the sequence very simple is to reveal the big picture, RECEIVERSHIP & DEFAULT. The gold & silver prices will rocket higher. Part of the event schedule, down the road in time, not at an early stage, is the launch of the gold-backed Russian currency and the gold-backed Gulf dinar. These are not new news items, but well advertised and fully ignored by a dismissive US failing financial fortress. The gold & silver prices have become laughable. Very little supply was available in the low 800s for gold. Very little supply was available at 13 for silver. Now prices are lower. One should try to imagine the building rage by angry foreign owners of physical gold & silver, who look at the price schemes dominated by paperhangers on Wall Street, who use the printing press and electronic switchboards to create new counterfeit supply to sell. Foreigners seek justice, to stem the corruption, to stem the threat to global stability, both financially and militarily. Do Americans have much of any idea of the foreign perspective? Do they know about violated NATO treaties, and poking the Russian bear with sharp sticks repeatedly? Americans are soon to be given a fresh course in receivership. The opening salvo was Fannie Mae and the fat little brother Freddie Mac. Never in modern history has a widened pattern of nationalization been favorable to a currency!

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Buttercup McToots (1000+ posts) Journal Click to send private message to this author Click to view this author's profile Click to add this author to your buddy list Click to add this author to your Ignore list Fri Sep-12-08 12:38 PM
Response to Reply #28
35. In all, 13 powerful shock wave events are suggested as possible
On the week of September 15 thru 19, some initial events are anticipated to occur.

In all, 13 powerful shock wave events are suggested as possible. /

Bolivia and Venezuela kicking out their US ambassadors
NATO ships in the Black Sea
China threatening to dump the US$
Saudis walking out on OPEC
Pakistan furious with the US
Hurricane Ike
Fanny &Freddie failure backlash
PMs crude crushed
Lehman Brothers?
Putin playing war games with Chavez
Palin threating Putin
Israel vs Iran

what else?
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UpInArms Donating Member (1000+ posts) Journal Click to send private message to this author Click to view this author's profile Click to add this author to your buddy list Click to add this author to your Ignore list Fri Sep-12-08 12:22 PM
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29. Fed resorts to begging Japanese investors: U.S. plea: Don't dump Fannie-Freddie debt

SAN FRANCISCO (MarketWatch) -- Seeking to head off any unloading of Fannie Mae and Freddie Mac bonds by Japanese investors, the U.S. Treasury Department is taking the unusual step of directly contacting Japanese financial institutions about the plan to rescue the mortgage giants, according to a published report.

Because a massive unloading of Fannie Mae (FNM: 0.77, +0.03, +4.2%) and Freddie Mac (FRE: 0.59, -0.07, -10.6%) holdings could hamper the U.S. government's efforts to shore up the mortgage firms' finances, the Treasury Department is effectively asking investors to refrain from doing so, Japanese business daily Nikkei said on its Website in a report dated Friday.

According to sources familiar with the matter, Treasury Undersecretary for International Affairs David McCormick on Thursday phoned senior executives at major Japanese banks as well as the Life Insurance Association of Japan to explain Washington's plans for Fannie Mae and Freddie Mac, the report said.

McCormick is believed to have reiterated plans announced Sunday, including seizure of both mortgage giants and the government's intention to infuse funds if necessary. During the phone calls, he is also said to have urged Japanese institutions to continue investing with confidence in Fannie Mae and Freddie Mac.

According to a Nikkei report earlier this week, Japanese financial institutions own more than 15 trillion yen ($142.5 billion) in securities issued by based on data disclosed by domestic banks, life insurers and others as of March 31. Many Japanese investment trusts also include securities in their portfolios.

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Buttercup McToots (1000+ posts) Journal Click to send private message to this author Click to view this author's profile Click to add this author to your buddy list Click to add this author to your Ignore list Fri Sep-12-08 12:24 PM
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30. Mark, we need your clear thinking..
“Sometimes I wonder whether the world is being
run by smart people who are putting us on
or by imbeciles who really mean it.”
– Mark Twain –
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Buttercup McToots (1000+ posts) Journal Click to send private message to this author Click to view this author's profile Click to add this author to your buddy list Click to add this author to your Ignore list Fri Sep-12-08 01:08 PM
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41. Another One Bites The Dust? (Lehman) ...Denninger

Another One Bites The Dust? (Lehman)
Here we go again.

Even though the press claims that it is "unlikely" that The Fed (or the Treasury) will put in "money" toward a Lehman acquisition, you can't believe a word of it.

In fact, you can't believe anything you read or hear from these clowns in DC.

Slowly, piece by piece, they are dismantling what used to be Free-Market Capitalism.

And how does freedom (both to succeed and fail) die?

To thunderous applause.

Certainly, when Bear Stearns failed, you got thunderous applause.

When The Fed summarily declared the financial system in "crisis", thereby granting itself powers that it arguably did not have (including lending to non-banks acquiring equity interest!) the markets roared with thunderous applause, and Congress clucked with approval. The people yawned and reached for another beer.

When the TAF, PDCF, and TSLF, all "alphabet soup" means of pumping extra liquidity into a financial system that was in trouble as a direct consequence of previous excess liquidity fed into it by Alan Greenspan, the market roared with thunderous applause.

When Treasury instantaneously doubled the federal debt, we heard the roar of thunderous applause.

And last afternoon, when a rumor started floating around that The Fed was going to once again intervene, this time to "take under" Lehman Brothers, we once again heard the market roar with thunderous applause, rising by more than 1% in - literally - less than 5 minutes.

We are truly an idiot nation.

We are being led to the economic gas chamber - quite literally - and cheer on the way.

Anything to prevent home prices from being.... gasp.... affordable!

Anything so the stock market does not go down.

Anything, including licking the boots of the Japanese and Chinese, who we now know threatened our nation's Treasurer if he did not back up debt with the explicit full faith and credit of the United States - debt they bought knowing it lacked that guarantee.

The Truth is that these institutions - all of them - got in trouble by writing paper in an imprudent manner. They loaned money to people who couldn't pay it back. As bankers, it is their job to know whether their customer can in fact pay, but that all went out the window in the "New Era of Finance", where you can shovel off your crap to someone else, forcing them to be the bagholder when it all goes "boom" rather than you.

What these geniuses forgot is that in real life it doesn't work this way, even if you think it should or might. What happens in real life is that people get greedy, and this is shortly followed by a bout of stupidity, where you lend out money on looser and looser terms, until finally you reach the point that the only real qualification is that you have a pulse.

At the same time there is always a backlog of this paper in your shop, and when the inevitable gravy train of suckers runs out, you find yourself sitting on a sizable number of these nuclear weapons - and they're all ticking.

Never mind that there's a matter of ethics here, in that these bankers knew the paper was bad. This no different, really, than selling Pintos that you know will explode if struck from behind. It was and is a defective product, and whether it "booms" on you or someone else the fact remains that these bankers knew these loans were unsound when they wrote them. They simply didn't care.

Lehman is just the latest, but not the first or last, of a long line of institutions that has or will explode.

There are no "maybe" involved in this, and if there were two firing neurons in the heads of most stock traders the market would tank every time we discover a new victim of self-immolation, for it would be yet another tick-mark in the contraction of credit, another tick-mark in the lack of diversity of business, and another tick-mark proving that the "smartest guys in the room" - in truth - have an IQ lower than Forest Gump's.

But the institutions that bail people out, including Hank Paulson and Ben Bernanke, continue to come to the microphone and pronounce that "life is like a box of chocolates".

And there we stop listening, having stuck our fingers in our ears for the "you never know exactly what you're going to get, and we may have inserted some arsenic" part of the sentence. Oh no, we hear "chocolate!" and instantly a sugar-high flows through the arteries of the market.

Like Pavlov's dogs we mash the "buy buy buy" button with a mighty roar.... of thunderous applause.

Step back for a moment folks and think about what these failures really mean to American business, and to you as an American.

They mean that the "bastions of capitalism" were in fact either knowingly committing felonies on a many-per-second basis for nearly 10 years, robbing you (collectively and in many cases individually) with each one, or were criminally stupid. It is simply not possible for a hairdresser making $8/hour to afford a $500,000 house, but many of them bought one in California.

How did they get the money?

They mean that the so-called "regulators" - The Fed, the OCC, the OTS, Congress, Treasury and the SEC, for starters, were either bribed, blackmailed ("got Client #9?") or were too blind to be able to see past the end of their noses. Banks and brokerages are regulated entities; they do not get to sell any product to any person they wish without government oversight.

Many of these banks, including but most certainly not limited to WaMu and Wachovia, were offering "nuclear-size debt bomb" mortgages as recently as May of this year, more than a year after we knew they were exploding!

The regulators were and are today either intentionally asleep or grossly incompetent.

If you are a thinking individual this instantaneously calls into question the safety and capability of the FDIC to pay your "up to $100,000" should the bank where your money is immolate itself, especially as the FDIC is now losing over 20% of the assets for each bank it takes over. The historical average, by the way, was in the single digits until this last year. What happens when the FDIC's money runs out? One single large bank and their entire fund is gone. And before you say "Congress will just give them more money" (of course they will) please understand that Congress doesn't actually have any money - the government gets its funds from you via taxes, so in effect you are stealing yet more of your own money in order to pay yourself back when your bank goes under! In other words, there is in fact no insurance since the party paying the check is, in fact, you once the FDIC fund runs out - and run out it will.

The FDIC has historically charged very low insurance premiums, essentially zero in the case of some banks, both because banks rarely fail and because recovery when they do has, historically, been quite high. Neither of these "old paradigms" is necessarily valid any more.

Not that the FDIC failing and having to be bailed out would be new. Does anyone remember the S&L crisis? The FSLIC blew up as a direct consequence of the same regulatory failures in the S&Ls, and when the "insurance fund" imploded Congress was forced to step up and inject huge sums of money into the system. In fact, S&L depositors didn't have FSLIC insurance "make them whole"; they had the government reach into their pocket, extract the money to "pay them", and then give it back to them.

The people roared with thunderous applause.

Now we're living the same nightmare a second time.

None of this should have happened, and we the people should make damn sure that (1) it doesn't happen again, and (2) the people who caused this mess bear "first loss" - loss of their job, loss of their boats, loss of their mansions, loss of their wealth and loss of their freedom - in that order.

We should not and must not bail out any more banks, lenders, or other institutions, and we must insist that the regulators intervene early and often, shutting down those institutions that pose "systemic risk" now if they can't (or won't) take down that "systemic risk."

Today, as you contemplate that CNBC is reporting that "everyone wants the same deal Jamie Dimon got - and they're not going to get it" in the context of "bailing out Lehman" (meaning that all the potential acquiring banks all want you the people to eat the losses - again!) you may wish to consider whether that beer and NFL is such a good idea - or whether a more appropriate response is the (figurative) tar and feather treatment that we the people have the right (and duty) to impose upon our elected and appointed officials via the ballot box.

Don't let freedom - and capitalism - die to thunderous applause.

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DemReadingDU Donating Member (1000+ posts) Journal Click to send private message to this author Click to view this author's profile Click to add this author to your buddy list Click to add this author to your Ignore list Fri Sep-12-08 02:04 PM
Response to Reply #41
52. I was just going to post this, thanks

This sickening feeling in my gut won't go away. Next week sure doesn't look good.
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Dr.Phool Donating Member (1000+ posts) Journal Click to send private message to this author Click to view this author's profile Click to add this author to your buddy list Click to add this author to your Ignore list Fri Sep-12-08 06:36 PM
Response to Reply #52
67. Today would be a "good" day for a major take-over.
They've got a huge distraction down in Houston.

Shock Doctrine.
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Buttercup McToots (1000+ posts) Journal Click to send private message to this author Click to view this author's profile Click to add this author to your buddy list Click to add this author to your Ignore list Fri Sep-12-08 01:20 PM
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42. Joyous Loathing at Lehman's Collapse ...Bloomberg
Joyous Loathing at Lehman's Collapse

Incept: 2007-08-10 ....

Sept. 11 (Bloomberg)-- To see the mental state of financial markets at the moment you need only to sit at a computer with an Internet connection and watch investors respond to journalism.

On Tuesday morning Bloomberg News quoted an unidentified person inside Lehman Brothers Holdings Inc. saying his firm had tried and failed to raise capital from the Korean Development Bank. This report came on the heels of an earlier one in which a named person who regulated the Korea Development Bank denied such a thing had happened -- but no matter.

A few minutes after Bloomberg News posted the piece, it was the most-read news of the day, and Lehman's shares went into a free fall. Fifteen minutes later they had lost almost half their value.

What's interesting, among other things, is the total lack of reflection in the markets. Who had heard of the Korean Development Bank? Who knew what it did, or whether the people inside it were shrewd assessors of subprime-mortgage portfolios?

Basically no one, I'd guess. And yet a single report from an unnamed person inside Lehman that some Koreans had considered, and then passed on, investing in the firm was enough to cause the shares to crash.

And all that had really happened was that KDB proved it may have finally grasped what should be for Asians a cardinal investment principle: Never buy anything an American investment banker is selling.

Lehman Doomed

What one can see from this event is that Lehman Brothers is doomed. It's doomed, in part, because it still owns all sorts of crappy assets at inflated prices.

It holds tens of billions of dollars in subprime-related assets of the sort Merrill Lynch & Co. in July disgorged at 22 cents on the dollar. But that's probably just the beginning.

There's no happy reason they haven't explained in detail their exposure to credit-default swaps. No one -- not its big investors, not the analysts and journalists who cover it, not even, perhaps, the Korean Development Bank -- has had a clear view of its assets and liabilities.

This opacity was once a huge advantage: the people outside assumed the best. It's now an even bigger disadvantage: people outside assume the worst.

But Lehman is doomed for another reason: People are enjoying its failure. The pleasure and interest the markets now take in seeing it fail now exceeds their pleasure and interest in seeing it survive.

Interest in Failure

This is one of the many unintended little side effects of the government bailout of Bear Stearns Cos.: to greatly reduce the interest of the people who do business with Lehman Brothers in the survival of Lehman Brothers.

All those people whose affairs are intertwined with Lehman might have pressured them to handle their problems more briskly and intelligently -- and might also be trying to keep it afloat. The U.S. government has made it possible for them to instead stand back and watch with some detachment and even pleasure as Lehman collapses.

After all, the Federal Reserve will give them their money back, re-insure their credit defaults, take another pile of these distressed assets out of the market. And when the dust settles they can go in and poach Lehman's business and its smarter employees.

The Bear Stearns bailout was supposed to prevent the crisis from rippling through Wall Street. Obviously it hasn't done that. It's merely thrown the crisis into slow motion and prolonged the agony.

And it's given the Korean Development Bank whole new powers.
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