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Tylerdurden
11-17-2011, 12:43 PM
Update: Just saw this from Reuters whichc could be causing the plunge: No Plans for Financial Assistance for Italy From EFSF
The ES just fell off a cliff. For now there is no news: some speculation attributes the move to news that the supercommittee has been a catastrophic failure and no decision will be reached, but we knew that. Another reason is attributed to Fed member Sandra Pianalto stating that Europe is heading for a recession but that is not news either. Most likely just a case of HFT stop as technicals get hit as the EURUSD slides and selling begets selling. Yes, it is a "broken market" for a reason. Watch for the blame HFT crowd to come out in force in a few minutes on the financial comedy basic cable stations.
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2011/10/ES%2011.17_1.jpg (http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2011/10/ES%2011.17_1.jpg)

http://www.zerohedge.com/news/market-collapses

RodSBT
11-17-2011, 12:47 PM
Reality had to catch up at some point.
A snake can eat it's tail for just so long until it's head is the main course.

Waddie
11-17-2011, 01:06 PM
Europe only has two options, neither of which appeal to the Germans. They can crank up the printing presses ala QE1 & 2 here in the US, but inflation then becomes their big concern, and the Germans have a long memory - and the memories are all bad - regarding inflation caused by monetary easing. Or they can let some members fend for themselves, and there has been a lot of talk recently of a smaller, contracted Eurozone comprised of the more solid countries. Even though Merkel and others have spoken out against such a possibility, it is on the table.

Italy isn't in as bad a shape as Greece. Their problem is the interest rate on borrowing. They can't the afford 7% they're now at but they could afford the 4% they had only a little over a year ago. Problem is, investors won't buy 4% Italian bonds.

We better hope Europe fails to work it out, because if they did get their house in order US bonds would go to much higher rates. Right now we only look good by comparison. And there's really no where else to go. Right now.

BTW., gold would be of value in a complete melt down, but it would take a lot of it to buy anything. Here's a little taste of what the Germans fear;


Over most of Germany the lead was beginning to disappear overnight from roofs. Petrol was syphoned from the tanks of motor cars. Barter was already a usual form of exchange; but now commodities such as brass and fuel were becoming the currency of ordinary purchase and payment. A cinema seat cost a lump of coal. With a bottle of paraffin one might buy a shirt; with that shirt, the potatoes needed by one's family. Herr von der Osten kept a girl friend in the provincial Capital, for whose room in 1922 he had paid half a pound of butter a month: by the summer of 1923 it was costing him a whole pound. ‘The Middle Ages came back,' Erna von Pustau said.

Communities printed their own money, based on goods, on a certain amount of potatoes, or rye, for instance. Shoe factories paid their workers in bonds for shoes which they could exchange at the bakery for bread or the meat market for meat.

Those with foreign currency, becoming easily the most acceptable paper medium, had the greatest scope for finding bargains. The power of the dollar, in particular, far exceeded its nominal rate of exchange. Finding himself with a single dollar bill early in 1923, von der Osten got hold of six friends and went to Berlin one evening determined to blow the lot; but early the next morning, long after dinner, and many nightclubs later, they still had change in their pockets. There were stories of Americans in the greatest difficulties in Berlin because no-one had enough marks to change a five-dollar bill: of others who ran up accounts (to be paid off later in depreciated currency) on the strength of even bigger foreign notes which, after meals or services had been obtained, could not be changed; and of foreign students who bought up whole rows of houses out of their allowances.

regards,
Waddie

Tylerdurden
11-17-2011, 03:26 PM
Market collapse? It's down 180 or so as of this writing... and it's been up and down by more than that numerous times in the last 6 months or so.

WHAT 'market collapse'?

Yeah, your a savy investor alright. :) Thanks, been laughing for 5 minutes now.

Waddie
11-17-2011, 03:47 PM
Market collapse? It's down 180 or so as of this writing... and it's been up and down by more than that numerous times in the last 6 months or so.

WHAT 'market collapse'?

If TD is predicting a sudden 'market collapse' because of what's going on in Europe I wouldn't agree with that. However, if by market collapse he is referring to a recession in Europe then he's probably right. That recession won't collapse our stock market, just drive it done some. A recession in Europe, which accounts for 24% of our exports will put downward pressure on American employment, and make it all that much more difficult for us to reduce unemployment in this country.
Being in a global economy means we need to find global answers to these problems, which must include participation by the BRIC countries. I applaud President Obama's efforts recently to engage the world in a discussion of these issues, and his focus on expanding our export markets.

However, for the life of me I don't understand why we need troops in Australia. It is a direct provocation to China, at a time when we need Chinese participation on economic issues. How would we feel about Chinese troops being sent to Mexico? China is surrounded by hostile nations, or potentially hostile nations. Japan, S. Korea, Taiwan, Russia, and SE Asia (Vietnam especially) have historically been hostile to China. We need to de-escalate tensions. We should try to see their point of view.

It reminds me of the period before WWll. From the Japanese point of view our actions were very threatening. We moved our main naval base from the west coast of the US "forward" to Hawaii. We built more forward bases in the Pacific. We cut off raw materials. We went on a naval building binge. In short, we surrounded them, and in their paranoid minds what we did was provocation for war.

So on one hand the president does something positive and on the other he does something unwise. What would we ever use those troops for? It's not like we will ever invade mainland Asia, or step into something with a major nuclear power. So they are useless anyways.

regards,
Waddie

RodSBT
11-17-2011, 04:03 PM
If TD is predicting a sudden 'market collapse' because of what's going on in Europe I wouldn't agree with that. However, if by market collapse he is referring to a recession in Europe then he's probably right. That recession won't collapse our stock market, just drive it done some. A recession in Europe, which accounts for 24% of our exports will put downward pressure on American employment, and make it all that much more difficult for us to reduce unemployment in this country.
Being in a global economy means we need to find global answers to these problems, which must include participation by the BRIC countries. I applaud President Obama's efforts recently to engage the world in a discussion of these issues, and his focus on expanding our export markets.

However, for the life of me I don't understand why we need troops in Australia. It is a direct provocation to China, at a time when we need Chinese participation on economic issues. How would we feel about Chinese troops being sent to Mexico? China is surrounded by hostile nations, or potentially hostile nations. Japan, S. Korea, Taiwan, Russia, and SE Asia (Vietnam especially) have historically been hostile to China. We need to de-escalate tensions. We should try to see their point of view.

It reminds me of the period before WWll. From the Japanese point of view our actions were very threatening. We moved our main naval base from the west coast of the US "forward" to Hawaii. We built more forward bases in the Pacific. We cut off raw materials. We went on a naval building binge. In short, we surrounded them, and in their paranoid minds what we did was provocation for war.

So on one hand the president does something positive and on the other he does something unwise. What would we ever use those troops for? It's not like we will ever invade mainland Asia, or step into something with a major nuclear power. So they are useless anyways.

regards,
Waddie

You didn't include the massive euro debt instruments held by American banks. The loss in epxort income will not matter when the US banks can't cover their losses.

Waddie
11-17-2011, 04:05 PM
You didn't include the massive euro debt instruments held by American banks. The loss in epxort income will not matter when the US banks can't cover their losses.

Our banking exposure isn't all that large, somewhere around eight billion, I think. Big enough to hurt, but not sink our banking system.

regards,
Waddie

Waddie
11-17-2011, 04:12 PM
Is there any evidence they feel 'provoked'? I really don't see why.... but then again, having not read much about this, it is unclear why we're doing it, anyhow.

Norman, here's a couple of links that show how they feel about the issue; the new US "Air Sea Battle" weapons strategy is directly provoking to China.

http://www.abc.net.au/am/content/2011/s3368476.htm

http://www.csmonitor.com/World/Asia-Pacific/2011/1117/China-gives-cool-response-to-US-military-activity-in-Australia

regards,
Waddie

The Bigfella
11-17-2011, 04:13 PM
I see the wolf is howling at the moon again.

Waddie
11-17-2011, 04:23 PM
You might want to check your source on that figure. This is a snippet from today's Fitch report:
Link (http://www.businessweek.com/ap/financialnews/D9R22U280.htm)

You might be right. If we have that size of an exposure just to French banks, then this a much bigger deal to us. Depending on total exposure, and if you have the facts right, which I assume you do, it might lead to the need for another US bank bailout.

regards,
Waddie

Mrleft8
11-17-2011, 04:26 PM
2,500 hundred marines might prove a threat to the virtue of some of Darwin's innocent young lasses (and lads).... But....That's just a theory.....

RodSBT
11-17-2011, 04:28 PM
You might be right........ it might lead to the need for another US bank bailout.

regards,
Waddie

The last bail out sessions have worked so well lets throw even more debt at the mess.

You don't fix debt with more debt.

The Bigfella
11-17-2011, 04:30 PM
2,500 hundred marines might prove a threat to the virtue of some of Darwin's innocent young lasses (and lads).... But....That's just a theory.....

Not too many innocent young lasses or lads in Darwin.

Tylerdurden
11-17-2011, 04:31 PM
Just follow MF globals mess. Another Obama crony taking profit before the crash and the impact is far from over. Liquidity is locking up and none of the interventions are having effect. Of course some people will keep believing space aliens will jump in and save this system but smart people are reading the signs all around them.

I do urge everyone who doesn't see it to invest heavily and help make sure the 1% don't suffer like we will. It's the Christian thing to do.

skuthorp
11-17-2011, 04:33 PM
However, for the life of me I don't understand why we need troops in Australia. It is a direct provocation to China, at a time when we need Chinese participation on economic issues. How would we feel about Chinese troops being sent to Mexico? China is surrounded by hostile nations, or potentially hostile nations. Japan, S. Korea, Taiwan, Russia, and SE Asia (Vietnam especially) have historically been hostile to China. We need to de-escalate tensions. We should try to see their point of view.

It reminds me of the period before WWll. From the Japanese point of view our actions were very threatening. We moved our main naval base from the west coast of the US "forward" to Hawaii. We built more forward bases in the Pacific. We cut off raw materials. We went on a naval building binge. In short, we surrounded them, and in their paranoid minds what we did was provocation for war.

So on one hand the president does something positive and on the other he does something unwise. What would we ever use those troops for? It's not like we will ever invade mainland Asia, or step into something with a major nuclear power. So they are useless anyways.

regards,
Waddie

Some of us are asking the same thing here, it's the perception rather than the actuality of course. But our 'leaders' seem quite happy to continue to suck up to a 'powerful friend' in the hope that we will not have to actually take responsibility for our own defence which I might say, apart from the SAS in Afghanistan, is in a mess.
"It reminds me of the period before WWll." It does me too, but it's a risible idea, China doesn't need to invade anyone, they are just buying it already.

Tylerdurden
11-17-2011, 04:34 PM
China is as broke as we are.

Harry Miller
11-17-2011, 04:35 PM
Mark, is Harold Camping your grandfather?

Waddie
11-17-2011, 04:37 PM
The last bail out sessions have worked so well lets throw even more debt at the mess.

You don't fix debt with more debt.

I tend to agree with that, but Norman makes a good point about waiting to see how much of it goes bad. Could be a little, could be a lot.

Of course, we are just a step behind the Europeans. We can't even agree on $1 trillion in cuts over 10 years when we run a deficit of $1.5 trillion EACH year. I would feel a lot better about supporting any tax increases if we could show a little courage on the spending reduction side.

regards,
Waddie

Tylerdurden
11-17-2011, 04:37 PM
Mark, is Harold Camping your grandfather?

Nope Is Mamie VanDoren your Grandmother?

Mrleft8
11-17-2011, 04:38 PM
Not too many innocent young lasses or lads in Darwin.
This explains the Darwin theory then.... :D

Tylerdurden
11-17-2011, 04:40 PM
This explains the Darwin theory then.... :D

My experience there was like butter.

The Bigfella
11-17-2011, 04:43 PM
My experience there was like butter.

Whoa... too much information. Marlon Brando got to you too?

stevebaby
11-17-2011, 04:44 PM
2,500 hundred marines might prove a threat to the virtue of some of Darwin's innocent young lasses (and lads).... But....That's just a theory.....I once saw someone in Darwin eat a beer glass. He just bit pieces out of it and chewed them up...everything but the solid base. The audience in the pub thought it very funny. It was apparently his party trick.

wardd
11-17-2011, 04:44 PM
Thanks for the links.

After reading them, my impression is that the Chinese objections are 'pro forma', i.e., it's something they have to say, irrespective of whether they have genuine concerns or not.

The idea of an eventual 2500 Marines representing ANY sort of 'threat' strikes me as pretty laughable.

some here think a hundred troops in africa is a full blown invasion

stevebaby
11-17-2011, 04:45 PM
My experience there was like butter.Were you leading or following in that tango?

Mrleft8
11-17-2011, 04:47 PM
some here think a hundred troops in africa is a full blown invasion If it was a hundred of the guys who eat beer glasses for laughs in Darwin, it'd be an invasion in anyone's book!

Tylerdurden
11-17-2011, 04:50 PM
Definite land of Darwins. They need Marines to improve the Gene pool. I did my share while there. :)

stevebaby
11-17-2011, 04:52 PM
Definite land of Darwins. They need Marines to improve the Gene pool. I did my share while there. :)I very much doubt you've ever been there.

seanz
11-17-2011, 04:58 PM
Probably.........

purri
11-17-2011, 07:45 PM
I very much doubt you've ever been there.

His SEAL impersonation went down well.

Peter Malcolm Jardine
11-17-2011, 09:05 PM
Yeah, your a savy investor alright. :) Thanks, been laughing for 5 minutes now.


What is your investing experience? Do you do your own trading?

Let me put it this way: If Donn starts putting up threads like this, I am going to worry.

Tylerdurden
11-18-2011, 06:44 AM
The next financial crisis will be hellish, and itís on its way
"There is definitely going to be another financial crisis around the corner," says hedge fund legend Mark Mobius, "because we haven't solved any of the things that caused the previous crisis."
We're raising our alert status for the next financial crisis. We already raised it last week after spreads on U.S. credit default swaps started blowing out. We raised it again after seeing the remarks of Mr. Mobius, chief of the $50 billion emerging markets desk at Templeton Asset Management.
Speaking in Tokyo, he pointed to derivatives, the financial hairball of futures, options, and swaps in which nearly all the world's major banks are tangled up.
Estimates on the amount of derivatives out there worldwide vary. An oft-heard estimate is $600 trillion. That squares with Mobius' guess of 10 times the world's annual GDP. "Are the derivatives regulated?" asks Mobius. "No. Are you still getting growth in derivatives? Yes."
In other words, something along the lines of securitized mortgages is lurking out there, ready to trigger another crisis as in 2007-08.
What could it be? We'll offer up a good guess, one the market is discounting.
Seldom does a stock index rise so much, for so little reason, as the Dow did on the open Tuesday morning: 115 Dow points on a rumor that Greece is going to get a second bailout.
Let's step back for a moment: The Greek crisis is first and foremost about the German and French banks that were foolish enough to lend money to Greece in the first place. What sort of derivative contracts tied to Greek debt are they sitting on? What worldwide mayhem would ensue if Greece didn't pay back 100 centimes on the euro?
That's a rhetorical question, since the balance sheets of European banks are even more opaque than American ones. Whatever the actual answer, it's scary enough that the European Central Bank has refused to entertain any talk about the holders of Greek sovereign debt taking a haircut, even in the form of Greece stretching out its payments.
That was the preferred solution among German leaders. But it seems the ECB is about to get its way. Greece will likely get another bailout ó 30 billion euros on top of the 110 billion euro bailout it got a year ago.
It will accomplish nothing. Going deeper into hock is never a good way to get out of debt. And at some point, this exercise in kicking the can has to stop. When it does, you get your next financial crisis.
And what of the derivatives sitting on the balance sheet of the Federal Reserve? Here's another factor behind our heightened state of alert.
"Through quantitative easing (http://us.lrd.yahoo.com/SIG=134saaa21/EXP=1322827013/**http%3A//dailyreckoning.com/why-bernankes-quantitative-easing-isnt-fooling-anyone/) efforts alone," says Euro Pacific Capital's Michael Pento, "Ben Bernanke has added $1.8 trillion of longer-term GSE debt and mortgage-backed securities (MBS)."
Think about that for a moment. The Fed's entire balance sheet totaled around $800 billion before the 2008 crash, nearly all of it Treasuries. Now the Fed holds more than double that amount in mortgage derivatives alone, junk that the banks needed to clear off their own balance sheets.
"As the size of the Fed's balance sheet ballooned," continues Mr. Pento, "the dollar amount of capital held at the Fed has remained fairly constant. Today, the Fed has $52.5 billion of capital backing a $2.7 trillion balance sheet.
"Prior to the bursting of the credit bubble, the public was shocked to learn that our biggest investment banks were levered 30-to-1. When asset values fell, those banks were quickly wiped out. But now the Fed is holding many of the same types of assets and is levered 51-to-1! If the value of their portfolio were to fall by just 2%, the Fed itself would be wiped out."
Mr. Pento's and Mr. Mobius' views line up with our own, which we laid out during interviews (http://us.lrd.yahoo.com/SIG=13bk19anq/EXP=1322827013/**http%3A//newsroom.agorafinancial.com/wiggin-talks-on-the-dollar-with-beijing-youth-daily/) on our trip to China this month.
http://news.yahoo.com/next-financial-crisis-hellish-way-204303737.html

Tylerdurden
11-18-2011, 06:47 AM
"The Entire System Has Been Utterly Destroyed By The MF Global Collapse" - Presenting The First MF Global Casualty (http://www.zerohedge.com/news/entire-system-has-been-utterly-destroyed-mf-global-collapse-presenting-first-mf-global-casualty)"It is with regret and unflinching moral certainty that I announce that Barnhardt Capital Management has ceased operations. After six years of operating as an independent introducing brokerage, and eight years of employment as a broker before that, I found myself, this morning, for the first time since I was 20 years old, watching the futures and options markets open not as a participant, but as a mere spectator. The reason for my decision to pull the plug was excruciatingly simple: I could no longer tell my clients that their monies and positions were safe in the futures and options markets – because they are not. "

Yep, Great time for the Naysayers to invest heavily in the markets. Anyone taking bets how many actually are? :)

TANSTAF1
11-18-2011, 07:01 AM
You might want to check your source on that figure. This is a snippet from today's Fitch report:
Link (http://www.businessweek.com/ap/financialnews/D9R22U280.htm)


Fitch said the top five U.S. banks have a total of $114 billion in loans, deposits and other assets tied to French banks.

Hmmmm. I got the impression from the Fitch report and the Us market's reaction to the report that the exposure was much larger.

$114 billion is chump change these days.

TANSTAF1
11-18-2011, 07:04 AM
I tend to agree with that, but Norman makes a good point about waiting to see how much of it goes bad. Could be a little, could be a lot.

Of course, we are just a step behind the Europeans. We can't even agree on $1 trillion in cuts over 10 years when we run a deficit of $1.5 trillion EACH year. I would feel a lot better about supporting any tax increases if we could show a little courage on the spending reduction side.

regards,
Waddie


Huh? Why should we wait to throw good money after bad and bail out the 1% in Europe? They're 1%ers too.

John Smith
11-18-2011, 07:33 AM
I tend to agree with that, but Norman makes a good point about waiting to see how much of it goes bad. Could be a little, could be a lot.

Of course, we are just a step behind the Europeans. We can't even agree on $1 trillion in cuts over 10 years when we run a deficit of $1.5 trillion EACH year. I would feel a lot better about supporting any tax increases if we could show a little courage on the spending reduction side.

regards,
Waddie

I don't think this is hard and fast rule. Depends what more debt is used for.

In this country we need to rebuild our infrastructure and prime the pump of our economy. Maybe the fragile economy elsewhere will bring factories back here if we play our cards right. If we get our house in order, it may help others do the same.

TANSTAF1
11-18-2011, 08:20 AM
At our significantly reduced level of economic activity, exactly what infrastructure needs to be rebuilt to support it?

wardd
11-18-2011, 09:59 AM
At our significantly reduced level of economic activity, exactly what infrastructure needs to be rebuilt to support it?

mainly money in the pockets of people that will spend it

Gerarddm
11-18-2011, 10:34 AM
?

No market collapse today. You'd think US markets would react; as I write this the Dow, S&P 500, and NASDAQ are all up.