Storm Warning: Global Financial Markets Are Spinning Out Of Control
STORM WARNING: GLOBAL FINANCIAL MARKETS ARE SPINNING OUT OF CONTROL
posted: Tue, 02 Oct 2007
by Jim Deeds, mcalvany.com
"America will never be destroyed from outside. If we falter and lose our freedoms, it will be because we destroyed ourselves." - Abraham Lincoln
"A nation which does not remember what it was yesterday does not know where it is today." - Robert E. Lee
"In a time of universal deceit, telling the truth becomes a revolutionary act." - George Orwell
"When we lose the right to be different, we lose the right to be free." - Charles Evans Hughes
"Make yourselves sheep and the wolves will eat you." - Benjamin Franklin
INTRODUCTION
The little boy tending his flock of sheep thought he heard a strange noise in the dark, and so he called "Wolf!" And the townspeople came to his help. The nights became dark and scary with lots of new noises, so the little boy repeated his cry many times in the nights that followed. And always, after they found no wolf in sight, the townspeople went back home to bed.
Then one night the small boy could even see the wolf‚s gleaming eyes and the silhouette of his ears in the moonlight. He shouted "Wolf," but the townspeople had heard this call too many times before as a false alarm.
So no one came - except the wolf!
Today, world events in financial markets are running ahead of our ability to recognize the breathtaking speed in the reevaluation of both assets and debt. All at once, "perception is reality" is a two-edged sword. The days when the word "risk" conjured up visions of new instant riches are gone. Now, when an investment banker or investor hears the word "risk," it conjures up "fear" in the pit of their stomach. The never-ending "liquidity" and "excess savings" that became the cornerstone of Alan Greenspan and Bernanke‚s "new economy" just went poof! - at least in their future availability to American borrowers.
Real money is something you can feel and touch and see. Debt is only a promise to pay back in the future, and is only as good as the man who made the promise. The world has always been overloaded with good intentions and broken promises! And an electron impulse on a computer screen or bank statement representing a trillion dollars in "sub prime" debt, commercial paper, or an unimaginable 400 trillion dollars worth of an imaginary financial safety net called "derivatives" may not survive the very next financial storm. Power off ! Game over!!
But in America, it feels so good (even today) to dream of future riches - and it is better yet to be the world‚s "financial engine." Borrowing one‚s way to prosperity is fun, and really, really easy. "Just takes a signature!" So, up until August 2007, "good times never seemed so good," (Neil Diamond).
Then - something called "sub prime" happened. But most Americans thought, "Just a tiny blip on the radar screen." And as Southwest Art magazine for October reported, "Coeur d‚Alene Art Auction Tops $35 Million! "The Coeur d‚Alene Art Auction (held in Reno, NV) brought in an astounding $35,402,640, the highest total ever for an auction of western art. With over 850 bidders present, a 1905 watercolor by Charles M. Russell sold for nearly double the pre-show estimate - for $2,912,000. And a painting by Paul Signac also sold for $2,912,000, while a 1918 painting called "Joshing Moon," estimated to sell for $300,000, soared to a final bid of $1,680,000."
Obviously, someone forgot to tell bidders of Western Art in Reno that "times have changed." But, did August 2007 signal a new deflationary depression arriving in America, or a rapid acceleration in our living costs toward hyperinflation? (A clue: figures don‚t lie.)
A. THE END OF THE EASIEST TRADE EVER - DEBT FOR TRUST
In 1987, Alfred L. Malabrae, Jr., economics editor and columnist for the Wall Street Journal, wrote a highly readable and urgent book, Beyond Our Means. The subtitle is: "How America‚s Long Years of Debt, Deficits, and Reckless Borrowing Now Threaten To Overwhelm Us." Al Malabrae was only one of many, many conservative thinkers over the past 30 years that have warned of America‚s addiction to "demon debt." Lots of people have been crying "wolf" for a long, long time! Is the wolf finally at our door?
1. JIM SINCLAIR, maybe one of the best informed and most successful gold traders ever (I met Jim Sinclair at several gold seminars in San Francisco and New Orleans in the late Œ70s), was a well-recognized gold and conservative financial expert even back then with a well-earned financial reputation - and a very sharp mind. Recently he wrote the following on his web site (www.jsmineset.com) that gives daily and often hourly comments on the gold markets and financial affairs.
My Dear Friends, It is not coming - it is already here. I am convinced that all that has been anticipated since 1968 has now occurred. I see the mountain of interest rate/mortgage related over-the-counter derivatives which, when including all types, exceeds USD $30 trillion. It is shaking quite badly.
The situation now resembles the Weimar Republic in the sense that the Weimar case study is predicated on planned currency destruction to avoid war reparations that got out of control. The present situation is based on the ultimate sin of greed called over the counter derivatives. This mountain of unfunded special performance contracts is shaking and will, as a product of declining US business activity and profits, fall.
Before the fall of the unimaginably big mountain of garbage paper, ALL world central banks will in concert prime the pump any way they can figure out how to. Priming for this purpose has no practical way of being drained. What is going to get out of control now is monetary inflation to offset the shaking mountain of over the counter derivatives. The process of the fall is in progress and will be history by 2012 or SOONER.
Simply stated this is it, today, now! Think the best, but protect yourself under a worst case scenario.
There is no more "if this happens, that will happen" scenario. It has already happened, and the Formula applied internationally is going to bull all commodities to a level that even the wildest (rational) bull cannot not even verbalize. The dollar is headed below the estimates of the biggest (rational) bear.
I take what is said here very seriously. What I have just said I have never said before!
The over the counter shaking mountain of derivatives can‚t be fixed by trying to hide it. The problems cannot be fixed by any interest rate action. The problem will not even be fixed by a monetary inflation of unprecedented amounts. The problem is coming home by 2012 or much SOONER.
Keep in mind that over the counter derivatives generally have the following characteristics:
1. Without regulation.
2. Without listing on public exchanges.
3. Without standards.
4. Therefore not in the least bit transparent.
5. Therefore without an open market of the bid/ask type.
6. Dealt in by private treaty negotiations.
7. Without a clearinghouse.
8. Unfunded without financial guarantee of any kind.
9. Functioning as contracts of specific performance.
10. Financial character or ability to perform is totally dependent on the balance sheet of the loser in the arrangement.
11. Evaluated by computer assumptions made by geek, non-market experienced mathematicians who assume religiously that all markets return to their normal relationships regardless of disruptions.
12. Now in the credit and default category alone considered by accepted authorities as totaling more than USD $30 trillion in notional value.
13. Notional value becomes real value when the agreement is forced to find a real market for ending the obligation which is how one says sell it.
Interestingly, some of us who have lived through the past 40 years of America‚s financial dominance came to the same conclusion at about the same moment - it‚s finally over.
The last week in August it became apparent that America finally crossed a line of no return. The odds today must be 50 to 1 or better that defaulted debt, a rapidly declining dollar, a new flood of both Fed credit and foreign central bank money overwhelming all physical markets worldwide, and a future hyperinflationary run and then collapse seem certain in our immediate future.
B. BYE, BYE, MISS AMERICAN PIE
In August 2007, it became obvious to all who cared to look, that American financial leaders have destroyed our country‚s small remaining credibility and honest reputation with the concluding lies and deception climaxing the greatest dollar Ponzi scheme ever! Alfred Malabre‚s Beyond Our Means finally caught up with us. Living the lie of borrowing ourselves to everlasting prosperity is over.
1. THE LAST "BIG TRICK" - Like Pinocchio‚s nose, the fanciful schemes of America‚s investment banking industry just grew and grew as our increasing demands for more debt grew. With lots of "leverage" and a little imagination, everything is possible. The final scheme in American finance required a move from reality to illusion that involved five players:
a) INVESTMENT BANKERS - Greenspan‚s "Fed" had to give up its previous control of money and credit "standards and creation" to a gang of thieves. Wall Street‚s investment bankers have always cut corners when under pressure - to make an extra buck. The only love greater than "the game" for most Wall Streeters is the love of money. So, with Greenspan‚s blessings, converting debt into instant cash became easy - every Wall Streeter‚s greatest challenge. And unbelievable leverage built into our financial system became every investment banker‚s sure road to success. So, we needed Wall Street (and London) investment bankers to "fabricate the new money game" of debt.
b) DERIVATIVES/"QUANTS" - "Old fashioned" balance sheets had to be modernized. Leaving the real world of 1+1 = 2 was required for open-ended leveraged success. Today‚s balance sheets for leading investment bankers, like the leader Goldman Sachs, quickly reflect the "new math." The asset side of Goldman‚s balance sheet, to a trained eye, reflects three categories of "hard assets":
1) ASSETS "MARKED TO THE MARKET" - meaning the last recent trade on a market of that particular asset sets its balance sheet price.
2) ASSETS "MARKED TO THE MODEL" - which means the assigned value of that asset is derived by a mathematical formula dreamed up by a former Princeton, Harvard, or MIT math teacher (now employed on Wall Street as a highly paid "quant" by leading brokers).
3) ASSETS "MARKED TO MAKE BELIEVE" - you know the value of this one?
The most amazing part of this is that it is delusional. Americans, from Wall Street‚s brightest analysts to the SEC to John Q. Public all buy this baloney. Why? Everyone just wants one more day to make 10 million more (worthless) dollars!
c) FANNIE MAE & FREDDIE MAC - THE TWO GSE‚S (GOVERNMENT SPONSORED ENTERPRISES) - that have dominated the mortgage creation and underwriting market for the past decade, added total credibility (the trillions of dollars of "paper" they issued were implicitly believed to be backed by the credit of the U.S. government). This all remains "believable" up to this day, in spite of the fact that Congressional sub-committees have found "cooked books" at Fannie and Freddie where imaginary derivative bets protected illusionary profits each of the past four years. Fannie Mae (FNM) is allowed to break New York Stock Exchange rules that require up-to-date audits and annual reports - and is still two years behind in its fiscal reporting. In the meantime, Congressional sub-committee investigators talk on.
d) DEBT INSURERS - By "rating" a new bond offering, Standard and Poors and Moody‚s can change a package of "hodge-podge" lowest quality mortgage loans into AAA paper! Then, investment banking industry "quants" create new interest rate derivatives that are packaged with these junk mortgage bonds "to insure" buyers against any future negative interest rate swings in the market. Hence, Moody‚s and S&P create a prince out of a frog. The only problem? "Make believe" or "mark-to-the-model" derivatives, a $30 trillion block of debt insurance, have no market, are not traded, and are only as good as "the word" of the issuer of the derivative.
QUESTION: What issuer can back up the $30 trillion derivative guarantee on future interest rates if they‚re wrong?
e) INSURERS - Junk mortgage bonds and the lowest rated mortgage-backed commercial paper (short-term business loans) become triple A "paper" when rating agencies Moody‚s and Standard and Poors earn a fee from their customers (the investment banking industry) in rating a pile of junk (junk bonds theoretically protected by make-believe derivatives) as AAA - the best!
QUESTION: Can bond ratings be compromised when the rating agency earns all its income from the bond underwriter paying for the bond rating? Is this an unconscionable conflict of interest?
2. ANALYSIS/CONCLUSION OF THE LAST BIG TRICK - The discrediting or failure of any one of the five lines above in the daisy-chain of the issuance of supposedly triple A rated bonds will destroy the credibility and the secondary market for many trillions of dollars of "supposed" U.S. triple "A" paper. Most of these bonds are held by retirement funds or foreign central banks outside of the United States. This is what the sub-prime debt mess is all about.
C. THE SOLUTION
The "lender of last resort" has to be the only solution to this worldwide freeze-up in secondary debt markets. Overnight, when it was discovered that a $440 trillion derivative "market" wasn‚t really a market at all - but was only the theoretical "insurance scheme" dreamed up by mathematical genius "quants" who had no "real market" experience at all - all mortgage backed securities markets and theoretical valuation of insuring interest rate derivatives came to a screeching halt.
Overnight, European central banks created over $300 billion in newly created credit (money) to try and liquefy near bankrupt hedge funds and banks. Ditto Japan! And Bernanke and the U.S.‚s newly minted credit that "lenders of last resort" admitted to creating may only be a small part of what they really did in "combined secrecy" - under the table.
D. CONCLUSION
On September 18, the reduction of the discount rate by one-half of one percent by the "Bernanke Fed" told three separate stories:
1) The response indicates the worldwide liquidity crisis (and loss of faith in dollar-denominated debt) is serious. (It is gigantic and out of control!)
2) Today‚s "fragility" of the worldwide money game is the greatest ever - with a dollar-debt debacle now a very real threat to American dominance in a fast-changing world.
3) Everyone still wants to play! As soon as central banks and the "fed" create hundreds of billions of dollars in credit to bail out the greed and mistakes of banks, investment bankers, and highly-leveraged hedge funds, the "new money" (credit) is channeled into new more highly leveraged "plays" by the maestros of Wall Street.
E. THE DAY AFTER
If you give your three-year old another stick of candy every time he cries, you may someday see a 21-year old adult (with no teeth) still sucking on a candy. The same goes for ever-expanding supplies of monetary credit provided by "papa." Net result? Hyperinflation soon!
[ED. NOTE: As time passes between the time this written and when it is published, more huge "disconnects" in the world‚s financial network will occur. We have not only cried "wolf" for many years - but "hyperinflation" for the past decade. Odds of American hyperinflation are now at least 10 to 1. The handwriting is on the wall! Send this MIA to a friend. Call 1-800-525-9556 to order more copies.
As this goes to press, gold is skyrocketing along with oil and global commodities; the dollar is plunging; the public is still in the dark and sleeping - due to history‚s most effective-ever Wall Street propaganda machine; and the seeds of a U.S. hyperinflation are being sown by the financial powers that be. The global financial crisis which MIA has written about for decades is no longer coming! It is here! Prepare your personal finances accordingly!
(yahoo.group)
posted: Tue, 02 Oct 2007
by Jim Deeds, mcalvany.com
"America will never be destroyed from outside. If we falter and lose our freedoms, it will be because we destroyed ourselves." - Abraham Lincoln
"A nation which does not remember what it was yesterday does not know where it is today." - Robert E. Lee
"In a time of universal deceit, telling the truth becomes a revolutionary act." - George Orwell
"When we lose the right to be different, we lose the right to be free." - Charles Evans Hughes
"Make yourselves sheep and the wolves will eat you." - Benjamin Franklin
INTRODUCTION
The little boy tending his flock of sheep thought he heard a strange noise in the dark, and so he called "Wolf!" And the townspeople came to his help. The nights became dark and scary with lots of new noises, so the little boy repeated his cry many times in the nights that followed. And always, after they found no wolf in sight, the townspeople went back home to bed.
Then one night the small boy could even see the wolf‚s gleaming eyes and the silhouette of his ears in the moonlight. He shouted "Wolf," but the townspeople had heard this call too many times before as a false alarm.
So no one came - except the wolf!
Today, world events in financial markets are running ahead of our ability to recognize the breathtaking speed in the reevaluation of both assets and debt. All at once, "perception is reality" is a two-edged sword. The days when the word "risk" conjured up visions of new instant riches are gone. Now, when an investment banker or investor hears the word "risk," it conjures up "fear" in the pit of their stomach. The never-ending "liquidity" and "excess savings" that became the cornerstone of Alan Greenspan and Bernanke‚s "new economy" just went poof! - at least in their future availability to American borrowers.
Real money is something you can feel and touch and see. Debt is only a promise to pay back in the future, and is only as good as the man who made the promise. The world has always been overloaded with good intentions and broken promises! And an electron impulse on a computer screen or bank statement representing a trillion dollars in "sub prime" debt, commercial paper, or an unimaginable 400 trillion dollars worth of an imaginary financial safety net called "derivatives" may not survive the very next financial storm. Power off ! Game over!!
But in America, it feels so good (even today) to dream of future riches - and it is better yet to be the world‚s "financial engine." Borrowing one‚s way to prosperity is fun, and really, really easy. "Just takes a signature!" So, up until August 2007, "good times never seemed so good," (Neil Diamond).
Then - something called "sub prime" happened. But most Americans thought, "Just a tiny blip on the radar screen." And as Southwest Art magazine for October reported, "Coeur d‚Alene Art Auction Tops $35 Million! "The Coeur d‚Alene Art Auction (held in Reno, NV) brought in an astounding $35,402,640, the highest total ever for an auction of western art. With over 850 bidders present, a 1905 watercolor by Charles M. Russell sold for nearly double the pre-show estimate - for $2,912,000. And a painting by Paul Signac also sold for $2,912,000, while a 1918 painting called "Joshing Moon," estimated to sell for $300,000, soared to a final bid of $1,680,000."
Obviously, someone forgot to tell bidders of Western Art in Reno that "times have changed." But, did August 2007 signal a new deflationary depression arriving in America, or a rapid acceleration in our living costs toward hyperinflation? (A clue: figures don‚t lie.)
A. THE END OF THE EASIEST TRADE EVER - DEBT FOR TRUST
In 1987, Alfred L. Malabrae, Jr., economics editor and columnist for the Wall Street Journal, wrote a highly readable and urgent book, Beyond Our Means. The subtitle is: "How America‚s Long Years of Debt, Deficits, and Reckless Borrowing Now Threaten To Overwhelm Us." Al Malabrae was only one of many, many conservative thinkers over the past 30 years that have warned of America‚s addiction to "demon debt." Lots of people have been crying "wolf" for a long, long time! Is the wolf finally at our door?
1. JIM SINCLAIR, maybe one of the best informed and most successful gold traders ever (I met Jim Sinclair at several gold seminars in San Francisco and New Orleans in the late Œ70s), was a well-recognized gold and conservative financial expert even back then with a well-earned financial reputation - and a very sharp mind. Recently he wrote the following on his web site (www.jsmineset.com) that gives daily and often hourly comments on the gold markets and financial affairs.
My Dear Friends, It is not coming - it is already here. I am convinced that all that has been anticipated since 1968 has now occurred. I see the mountain of interest rate/mortgage related over-the-counter derivatives which, when including all types, exceeds USD $30 trillion. It is shaking quite badly.
The situation now resembles the Weimar Republic in the sense that the Weimar case study is predicated on planned currency destruction to avoid war reparations that got out of control. The present situation is based on the ultimate sin of greed called over the counter derivatives. This mountain of unfunded special performance contracts is shaking and will, as a product of declining US business activity and profits, fall.
Before the fall of the unimaginably big mountain of garbage paper, ALL world central banks will in concert prime the pump any way they can figure out how to. Priming for this purpose has no practical way of being drained. What is going to get out of control now is monetary inflation to offset the shaking mountain of over the counter derivatives. The process of the fall is in progress and will be history by 2012 or SOONER.
Simply stated this is it, today, now! Think the best, but protect yourself under a worst case scenario.
There is no more "if this happens, that will happen" scenario. It has already happened, and the Formula applied internationally is going to bull all commodities to a level that even the wildest (rational) bull cannot not even verbalize. The dollar is headed below the estimates of the biggest (rational) bear.
I take what is said here very seriously. What I have just said I have never said before!
The over the counter shaking mountain of derivatives can‚t be fixed by trying to hide it. The problems cannot be fixed by any interest rate action. The problem will not even be fixed by a monetary inflation of unprecedented amounts. The problem is coming home by 2012 or much SOONER.
Keep in mind that over the counter derivatives generally have the following characteristics:
1. Without regulation.
2. Without listing on public exchanges.
3. Without standards.
4. Therefore not in the least bit transparent.
5. Therefore without an open market of the bid/ask type.
6. Dealt in by private treaty negotiations.
7. Without a clearinghouse.
8. Unfunded without financial guarantee of any kind.
9. Functioning as contracts of specific performance.
10. Financial character or ability to perform is totally dependent on the balance sheet of the loser in the arrangement.
11. Evaluated by computer assumptions made by geek, non-market experienced mathematicians who assume religiously that all markets return to their normal relationships regardless of disruptions.
12. Now in the credit and default category alone considered by accepted authorities as totaling more than USD $30 trillion in notional value.
13. Notional value becomes real value when the agreement is forced to find a real market for ending the obligation which is how one says sell it.
Interestingly, some of us who have lived through the past 40 years of America‚s financial dominance came to the same conclusion at about the same moment - it‚s finally over.
The last week in August it became apparent that America finally crossed a line of no return. The odds today must be 50 to 1 or better that defaulted debt, a rapidly declining dollar, a new flood of both Fed credit and foreign central bank money overwhelming all physical markets worldwide, and a future hyperinflationary run and then collapse seem certain in our immediate future.
B. BYE, BYE, MISS AMERICAN PIE
In August 2007, it became obvious to all who cared to look, that American financial leaders have destroyed our country‚s small remaining credibility and honest reputation with the concluding lies and deception climaxing the greatest dollar Ponzi scheme ever! Alfred Malabre‚s Beyond Our Means finally caught up with us. Living the lie of borrowing ourselves to everlasting prosperity is over.
1. THE LAST "BIG TRICK" - Like Pinocchio‚s nose, the fanciful schemes of America‚s investment banking industry just grew and grew as our increasing demands for more debt grew. With lots of "leverage" and a little imagination, everything is possible. The final scheme in American finance required a move from reality to illusion that involved five players:
a) INVESTMENT BANKERS - Greenspan‚s "Fed" had to give up its previous control of money and credit "standards and creation" to a gang of thieves. Wall Street‚s investment bankers have always cut corners when under pressure - to make an extra buck. The only love greater than "the game" for most Wall Streeters is the love of money. So, with Greenspan‚s blessings, converting debt into instant cash became easy - every Wall Streeter‚s greatest challenge. And unbelievable leverage built into our financial system became every investment banker‚s sure road to success. So, we needed Wall Street (and London) investment bankers to "fabricate the new money game" of debt.
b) DERIVATIVES/"QUANTS" - "Old fashioned" balance sheets had to be modernized. Leaving the real world of 1+1 = 2 was required for open-ended leveraged success. Today‚s balance sheets for leading investment bankers, like the leader Goldman Sachs, quickly reflect the "new math." The asset side of Goldman‚s balance sheet, to a trained eye, reflects three categories of "hard assets":
1) ASSETS "MARKED TO THE MARKET" - meaning the last recent trade on a market of that particular asset sets its balance sheet price.
2) ASSETS "MARKED TO THE MODEL" - which means the assigned value of that asset is derived by a mathematical formula dreamed up by a former Princeton, Harvard, or MIT math teacher (now employed on Wall Street as a highly paid "quant" by leading brokers).
3) ASSETS "MARKED TO MAKE BELIEVE" - you know the value of this one?
The most amazing part of this is that it is delusional. Americans, from Wall Street‚s brightest analysts to the SEC to John Q. Public all buy this baloney. Why? Everyone just wants one more day to make 10 million more (worthless) dollars!
c) FANNIE MAE & FREDDIE MAC - THE TWO GSE‚S (GOVERNMENT SPONSORED ENTERPRISES) - that have dominated the mortgage creation and underwriting market for the past decade, added total credibility (the trillions of dollars of "paper" they issued were implicitly believed to be backed by the credit of the U.S. government). This all remains "believable" up to this day, in spite of the fact that Congressional sub-committees have found "cooked books" at Fannie and Freddie where imaginary derivative bets protected illusionary profits each of the past four years. Fannie Mae (FNM) is allowed to break New York Stock Exchange rules that require up-to-date audits and annual reports - and is still two years behind in its fiscal reporting. In the meantime, Congressional sub-committee investigators talk on.
d) DEBT INSURERS - By "rating" a new bond offering, Standard and Poors and Moody‚s can change a package of "hodge-podge" lowest quality mortgage loans into AAA paper! Then, investment banking industry "quants" create new interest rate derivatives that are packaged with these junk mortgage bonds "to insure" buyers against any future negative interest rate swings in the market. Hence, Moody‚s and S&P create a prince out of a frog. The only problem? "Make believe" or "mark-to-the-model" derivatives, a $30 trillion block of debt insurance, have no market, are not traded, and are only as good as "the word" of the issuer of the derivative.
QUESTION: What issuer can back up the $30 trillion derivative guarantee on future interest rates if they‚re wrong?
e) INSURERS - Junk mortgage bonds and the lowest rated mortgage-backed commercial paper (short-term business loans) become triple A "paper" when rating agencies Moody‚s and Standard and Poors earn a fee from their customers (the investment banking industry) in rating a pile of junk (junk bonds theoretically protected by make-believe derivatives) as AAA - the best!
QUESTION: Can bond ratings be compromised when the rating agency earns all its income from the bond underwriter paying for the bond rating? Is this an unconscionable conflict of interest?
2. ANALYSIS/CONCLUSION OF THE LAST BIG TRICK - The discrediting or failure of any one of the five lines above in the daisy-chain of the issuance of supposedly triple A rated bonds will destroy the credibility and the secondary market for many trillions of dollars of "supposed" U.S. triple "A" paper. Most of these bonds are held by retirement funds or foreign central banks outside of the United States. This is what the sub-prime debt mess is all about.
C. THE SOLUTION
The "lender of last resort" has to be the only solution to this worldwide freeze-up in secondary debt markets. Overnight, when it was discovered that a $440 trillion derivative "market" wasn‚t really a market at all - but was only the theoretical "insurance scheme" dreamed up by mathematical genius "quants" who had no "real market" experience at all - all mortgage backed securities markets and theoretical valuation of insuring interest rate derivatives came to a screeching halt.
Overnight, European central banks created over $300 billion in newly created credit (money) to try and liquefy near bankrupt hedge funds and banks. Ditto Japan! And Bernanke and the U.S.‚s newly minted credit that "lenders of last resort" admitted to creating may only be a small part of what they really did in "combined secrecy" - under the table.
D. CONCLUSION
On September 18, the reduction of the discount rate by one-half of one percent by the "Bernanke Fed" told three separate stories:
1) The response indicates the worldwide liquidity crisis (and loss of faith in dollar-denominated debt) is serious. (It is gigantic and out of control!)
2) Today‚s "fragility" of the worldwide money game is the greatest ever - with a dollar-debt debacle now a very real threat to American dominance in a fast-changing world.
3) Everyone still wants to play! As soon as central banks and the "fed" create hundreds of billions of dollars in credit to bail out the greed and mistakes of banks, investment bankers, and highly-leveraged hedge funds, the "new money" (credit) is channeled into new more highly leveraged "plays" by the maestros of Wall Street.
E. THE DAY AFTER
If you give your three-year old another stick of candy every time he cries, you may someday see a 21-year old adult (with no teeth) still sucking on a candy. The same goes for ever-expanding supplies of monetary credit provided by "papa." Net result? Hyperinflation soon!
[ED. NOTE: As time passes between the time this written and when it is published, more huge "disconnects" in the world‚s financial network will occur. We have not only cried "wolf" for many years - but "hyperinflation" for the past decade. Odds of American hyperinflation are now at least 10 to 1. The handwriting is on the wall! Send this MIA to a friend. Call 1-800-525-9556 to order more copies.
As this goes to press, gold is skyrocketing along with oil and global commodities; the dollar is plunging; the public is still in the dark and sleeping - due to history‚s most effective-ever Wall Street propaganda machine; and the seeds of a U.S. hyperinflation are being sown by the financial powers that be. The global financial crisis which MIA has written about for decades is no longer coming! It is here! Prepare your personal finances accordingly!
(yahoo.group)
bin66 - 4. Okt, 01:37
