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Imminent and severe market correction

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Awesomandy said:
It certainly looks like they've created their own WMDs. Currently, the people who are most likely to destroy the current American way of life are their economic policy makers, rather than Osama and co.
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**WARNING - THEORETICAL BLASPHEMOUS CONTENT FOLLOWS**

In a secret Al-Qaeda holiday resort somewhere near the Pakistan border, a wizened Osama sits, sipping green tea and wringing his hands with glee as he contemplates the Great Satan's (and his buddies) current financial woes and imminent future on his Sat laptop... "We have almost won..." he muses.....

Meanwhile, his foe the Great Burning Bush is tooling up a great cache of WMD's (Weapons of Monetary Destruction) prior to declaring "The Great War On Wall Street" in a last ditch attempt to smash those commie Al_Qaeda Market Terrorists.... :horse:

**END OF BLASPHEMY**
 
assuming the rescue plan goes through and is signed off, i guess we have about a month or two of good trading and then all hell will break loose.

my reason being is that the core of the problem, which is a lack of oversight on the part of the regulatory bodies and the unsatiable greed of the bankers will not be taken care off by the 700 billion.

the question i have is that if they are really sincere about the bailout, then why are they asking for a law that gives them no accountability, no oversight of their decisions or review by any court in the country.

something is missing here....
 
chops_a_must said:
How are those money markets looking atm Wayne?
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Bonds taking it up the khyber. Market having a punt on inflation.

I still favour deflation in the face of all fundamentals to the contrary. (hedged of course)
 
I stayed up late last night to watch Paulson and helicopter Ben talk to the senate committee. I have to say it made for amazing watching. I was expecting another rabbit out of a hat, but instead was quite alarmed by how clearly a desperate move this is. The valuation models favoring a maturity valuation, and the backing away from reverse auctions to more ad-hoc 'expert' valuations of derivatives make this whole thing look like it might be very, very expensive indeed. Of course there's little option, but the less-bad-case scenario is shaping up to be pretty bad I reckon.
 
With EU commissioner Almunia, and a variety of the hoi polloi from the ECB and assorted EU Fin Mins protesting "No US style rescue package needed here" it is interesting to note that in the daily USD auction at the ECB there were still USD 21bn more bids than offers in the overnight auction; at the same time there were only $30bn of bids in the UK, $10bn under subscribed. The relative rates 2.5% ECB, and 2.022% for the UK. Overnight rates in the US are 1.65/2.4% and tom next 2.00/2.10%. Right off the bat that tells you there is a bigger liquidity issue in Europe than either the UK or US. Add to that the EUR term repo of E50bn was three times over subscribed, and it makes you wonder, hmmm - no need for a bail out here. Spain"s housing industry is a train wreck, Italy just registered 0% GDP, Ireland and Portugal have their problems, and some of the cuckoos eggs in German Landesbanks" balance sheets (and the odd French bank) are starting to come to light.
A very interesting note from a Deutsche Bank analyst today commented that even if they wanted to, the Eurozone couldn"t come up with a similar rescue plan on short notice. They do not have the political cohesion, they can"t even agree on a constitution. As there are so many central banks in the Euro zone they would all have to agree to assume the bad debts of their own banks, AND those of the other states; which would require 15 different central banks to go cap in hand simultaneously to their own legislatures AFTER the ECB had to first concur it is what they wanted to do. The reason the ECB officials are "grateful" to the US authorities is because they can"t fix it themselves.

German state-owned KfW started shifting transactional exposure of E20bn to other banks after news that Lehman Brothers had filed for bankruptcy. According to DJ news reporters KfW shifted 173 transactions worth E20.2bn after the announcement they claimed. E319mn from KfW to Lehman was "a contractually agreed settlement of currency swaps scheduled for Sep 15" . In exchange KfW should have received $500mn under normal conditions, equivalent to EUR350 million on the day.
the total loss incurred by KfW including the currency swap transfer could be E536mn, the remaining E186mn results was exposure to Lehman Brothers bonds. Late last week LBBW claimed they would incur a "low three digit millions (Euros) hit due to the Lehman insolvency, and one of the French banks also owned up to the fact they have exposure in the E250mn range; it all adds up - but the banking sector is in good shape, the Fin Min said so.
Likkanen says Europe does not need a rescue bank - maybe that"s because the BoE bought Northern Rock, and Lloyds bought HBOS? Oh, I forgot, they"re not European they"re British. He"s still ruffling his hawks feathers, says "we have to be very vigilant" but on the other hand says the ECB is aiming to keep providing liquidity. Question, if you are keeping rates at 4.25% and making the banks pay that, but you are lending the banks the money to do it, wouldn"t it be better to lower the interest rate so the banks" cost burden decreases, profits fatten, and loan write offs can be accelerated? Maybe not.
There is a view emerging that the problems facing the US financial sector and US economy might not be just isolated to the US, and that Europe could face the same problems without the framework to deal with it as swiftly as the US has. Some call it "decoupling two" and the undermining of the "decoupling one" theory was behind the heavy EUR/USD fall in July and August.

Cheers
...........Kauri
 

Quite right -- desperate, and sadly misguided.

However, latest news is a deal has been done and the bail-out is about to happen. Some band-aids around exec compensation and mortgage relief, but otherwise it's just Helicopter Hank dropping money on banks, and especially his alma mater Goldman Sachs. At least Warren will get a bit richer.

Now if this doesn't move markets, the USD and gold, what will???
:grenade:
 
talk that HBSC may buy the embattled Swiss banking giant UBS and share prices have already rallied over 5%.

rumours of a suspension to a major European banking stock have sent the Euro tumbling.

talk from Washington that the bailout bill will be signed, sealed and delivered before the close of business this week, and perhaps even today.

Cheers
...........kauri
 

HSBC have also been rumoured to be circling the mortally wounded Bradford & Bingley.
 
US durable goods fig. down 4.5%, more than expected
Jobless claims up to 500,000 worst since after 9/11
GE outlook down

So their futures go up.
Rabbit in a spotlight.
 
CAB SAV said:
US durable goods fig. down 4.5%, more than expected
Jobless claims up to 500,000 worst since after 9/11
GE outlook down

So their futures go up.
Rabbit in a spotlight.
Click to expand...

Beat me to it CAB SAV, good to see someone else is paying attention to the deteriorating economic fundamentals. Keep the faith.
 
According to the NY Times there is disappointment that the meeting between US President Bush and US lawmakers at the White House Wednesday afternoon didn"t produce a firm agreement. The NY Times states that the status of the plan "was in doubt" when Senator Dowd complained that late complications were making the episode sound more like "a rescue plan for John McCain." The senator was apparently alluding to a growing revolt by conservative House Republicans against the proposed 700 BLN USD rescue, and the fact that Senator McCain has not yet endorsed the plan, whose concept runs contrary to the policy positions he has taken for years.
The USD and Wall Street moved a lot higher after House Democrats announced that they had come within a whisker of agreeing to the Treasury plan. Republicans, including the White House and leaders of the House and Senate, scrambled for the rest of the afternoon to insist that word of an agreement was premature. .. After all, they have made an art form out of leaving ann's. to the weekend..


Cheers
...........Kauri
 
Could anyone reasonably expect an answer by Monday, you'd think they'd take a bit more time yet to reach a decision on the $700B.

We'll have to see how far they get in this next week.

It'll be busy there on Friday.
 
How much do you think the push to 'get the deal done' because of the election? A commentator on CNBC said that it is far too rushed; he feels the rush is due to election conditions and should wait until one of them is the new President.

I sometimes feel Bush is forcing the issue to make a quagmire of the crisis he is not educated to make any decisions and his ability to be manipulated is like Play-Dough. The odds on Obama getting in are weighed towards him. So if Obama is President and you can tell is will be for 1 term then the Republicans are in for another run. Obama wouild be blamed for this catastrophe.

I looked at Bush on his address to the nation last night and thought, I hope people aren't taking you seriously you have made many incorrect speeches re; nuclear weapons in Iraq , we won the war etc. People must be sick of it.
 
In elaborating on crap, Chuck Butler describes the bailout as "Cash for Trash" I remember Kiyosaki using the same words here last year. Anyway Chuck's (from Us Everbank) take is worth a look:-

 
Ze Germans aren't happy it would seem - article quoting Germany's Finance Minister Peer Steinbrueck.

http://www.marketwatch.com/news/sto...-BC7E-4178-9BFE-F9A8C897D209&dist=SecMostRead

Two things that struck me about the article -

1. Herr Steinbrueck believes that the US will lose it's status as 'superpower of the global financial system' via the death by a 1000 cuts it is enduring at the moment (presumably to be replaced by those sensible Germans -oh the irony); and

2. I know how senstive the shorters are to any overt criticism of their trading system, so I note that I am quoting the journo who has paraphrased the good minister; here it is -

' The finance minister said he would push for a global ban on speculative short selling and would use next month's meeting of the Group of Seven finance ministers and central bankers in Washington to press for new rules that would prevent banks from fully securitizing loans and selling them to third parties. '

So it would seem that ze Germans ain't that keen anymore on 'speculative' short selling (I'm guessing this is directed at hedge funds) and securitisation! Would have thought you just need to temper securitisation of leveraged mortgages to get the desired effect but then again my name is not Herr Steinbrueck.
 
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