Must Watch Video on Bloomberg, 50%+ Chance of All Financial Market Shutdown

[purepaloma]

Interview on Bloomberg. Unreal !!

WOW!!! Greater than a 50% chance of ALL FINANCIAL SYSTEMS coming to a HALT! ---- and at the end he tightens up a bit regarding Category 3 assets as his own firm is in bad shape!!

Folks, this is the REAL DEAL.

http://www.bloomberg.com/avp/avp.asxx?clip=mms://media2.bloomberg.com/cache/vqjAB8ctLx3E.asf

[seapilot]

You are not kidding. That guy looked like he was obviously uncomfortable talking about it. Think about it these guys usually are saying growth growth, skys the limit! Couldnt believe that woman interviewing him, she seemed taken aback when he said 50 to 60 % chance of a Financial Meltdown! Securities first, financial loans next then consumption comes to a halt in 3 months! Almost cant believe this was broadcast. This is too unreal.

[LinearChaos]

I know what's going to happen. People are going to get out their tar and feathers.

[RP4ME]

What exactly does he mean by markets will completely halt? Define that.

[Malakai0]

Currency collapse would do it. I'll get back to you after the vid.


Markets halting would be everyone stops investing and buying bonds and stuff.


edit: link keeps trying to open my winamp... =(

[dmspilot00]

So, I guess we should sell our gold and silver ETFs and buy the real thing?

[weatherbill]

too alarmist at this point........collapse will come, but they are not ready.....we will see a manged slowdown probably

[yaz]

Look on the bright side, if the economy collapses then Ron Paul will probably win the nomination.

[amonasro]

Look on the bright side, if the economy collapses then Ron Paul will probably win the nomination.

God help us. I hope it doesn't come to that. The Morgan Stanley guy looks visibly nervous and shaken.

[aravoth]

too alarmist at this point........collapse will come, but they are not ready.....we will see a manged slowdown probably

I disagree. It obvious that they are not reporting the real inflation numbers. Between Greenspan and Bernake There has been so much money printed and credit floating out there, that the huge growth we had in the last 20 years was inevitable. But our economy is built on credit, in fact we have to continue growing credit every year just to keep the whole charde going.

Theres just not anything anyone can do. If you tighten the financials you'll cut off the credit, which will stifle economic growth and toss us into a rescession. If you try to lower the rate you'll start to inflate more, and make the bubble bigger. Then the value of the dollar will go down, and countries will start dumping the dollar en masse. Then we'd get hyper inflation and turn into the weimar republic.

No matter what happens now, we are going into a recession. Period. There is no way out. No one really knows how bad it is going to be. We've been relying on Asia to finance our asses forever, we can't ride that wave for too much longer.

[purepaloma]

There is also a NEW accounting regulation going into effect on Nov 15th.

No one so far has marked the category 3 assets (melted down credit and default derivatives on CDOs which are themselves a form of derivative) down to market, which there is no market and is therefore ZERO. According to the accounting law coming November 15th, all holding this garbage must mark to market which NO ONE HAS DONE YET!

This article will help explain. It was mentioned near the end of the Bloomberg video as well.

http://www.timesonline.co.uk/tol/comment/columnists/william_rees_mogg/article2852547.ece

[purepaloma]

By the way, one of the best sources for the scoop on this stuff is Jim Sinclair. He is a billionaire that offers his thoughts on a free blog. He has been dubbed "mr gold" by Fortune Magazine for a good reason.

www.jsmineset.com

[aravoth]

There is also a NEW accounting regulation going into effect on Nov 15th.

No one so far has marked the category 3 assets (melted down credit and default derivatives on CDOs which are themselves a form of derivative) down to market, which there is no market and is therefore ZERO. According to the accounting law coming November 15th, all holding this garbage must mark to market which NO ONE HAS DONE YET!

This article will help explain. It was mentioned near the end of the Bloomberg video as well.

http://www.timesonline.co.uk/tol/comment/columnists/william_rees_mogg/article2852547.ece

Bwahahahahaha!!!! get some popcorn!

[entropy]

Ben looks left.....big rock
Ben looks right.....hard place

Ben clenches fists and curses Greenspan and Bush

We get screwed......

1970's stagflation here we come.

[seapilot]

This is interesting. Thanks for that vid purepaloma.
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A Crisis to Shatter the World

Adrian Ash
Bullion Vault

13 Nov, 2007

If the US won't swap Dollars for gold, the rest of the world will just have to make the exchange itself... THE PRESIDENT of FRANCE went to Washington this week. He spoke to Congress en Français and told the United States to stop dumping Dollars on the rest of the world, risking a global financial crisis.

Zut alors! Sounds just like old times...

"The Dollar cannot remain solely the problem of others," said Nicholas Sarkozy before a joint session of Congress on Wednesday. He was riffing on the (infamous) joke made by John Connally, Treasury Secretary to Richard Nixon in the early '70s.

Connally had told the world that the Dollar was America's currency "but your problem." Au contraire, replied Monsieur le President this week.

"If we're not careful," Sarkozy went on - apparently using "we" to mean both himself and the US Congress - "monetary disarray could morph into economic war. We would all be its victims."

Ooh la la! Did Sarkozy need to take a little Dutch courage before speaking his mind to US legislators and wonks? (As the Belgian news anchor in this clip from June's G8 summit puts it, M.Sarkozy only ever drinks lots of water.) Telling the US to take responsibility for its actions - and its currency - is a gambit for only the brave.

It weighs heavy with history, too. "What the United States owes to foreign countries it pays - at least in part - with Dollars that it can simply issue if it chooses to," barked French president Charles de Gaulle in a landmark press conference of Feb. 1965.

"This unilateral facility contributes to the gradual disappearance of the idea that the Dollar is an impartial and international trade medium, whereas it is in fact a credit instrument reserved for one state only."

De Gaulle did more than simply grumble and gripe, however. Unlike Nicholas Sarkozy, he still had the chance to exchange his dollars for a real, tangible asset - physical gold bullion - at the Federal Reserve.

Gold "does not change in nature," de Gaulle reminded the world in that 1965 speech. "[Gold] can be made either into bars, ingots, or coins... has no nationality [and] is considered, in all places and at all times, the immutable and fiduciary value par excellence."

How to collect and hoard this paragon of assets? Back in the 1950s and '60s, world governments could simply tip up at the Fed, tap on the "Gold Window", and swap their unwanted dollars for gold.

So that is exactly what de Gaulle did.

Starting in 1958, he ordered the Banque de France to increase the rate at which it converted new Dollar reserves into bullion; in 1965 alone, he sent the French navy across the Atlantic to pick up $150-million worth of gold; come 1967 the proportion of French national reserves held in gold had risen from 71.4% to 91.9%. The European average stood at a mere 78.1% at the time.

"The international monetary system is functioning poorly," said Georges Pompidou, the French prime minister, that year, "because it gives advantages to countries with a reserve currency.

"These countries can afford inflation without paying for it."

In 1968, de Gaulle then pulled out of the London "Gold Pool" - the government-run cartel that actively worked to suppress the Gold Price, capping it in line with the official $35 per ounce ordained by the US government. Three years later, and with gold being air-lifted from Fort Knox to New York to meet foreign demands for payment in gold, Richard Nixon put a stop to de Gaulle's game. He stopped paying gold altogether.

De Gaulle called the Dollar "America's exorbitant privilege", repeating a phrase of his favorite economist, Jacques Rueff. This privilege gave the United States exclusive rights to print the Dollar, the world's "reserve currency", and force it on everyone else in payment of debt. Under the post-war Bretton Woods Agreement of 1946, the Dollar could not be refused.

Indeed, alongside gold - with which the Dollar was utterly interchangeable until 1971 - the US currency was real money, ready cash, the very thing itself. Everything else paled next to the imperial Dollar. Everything except gold.

And today?

"Printing a $100 bill is almost costless to the US government," as Thomas Palley, a Washington-based economist wrote last year, "but foreigners must give more than $100 of resources to get the bill.

"That's a tidy profit for US taxpayers."

This profit - paid in oil from Arabia... children's toys from China... and vacations in Europe's crumbling capital cities - has surged since the Unites States closed that "Gold Window" at the Fed, and ceased paying anything in return for its dollars.

Now the world must accept the Dollar and nothing else besides. So far, so good. But the scam will only work up until the moment that it doesn't."The US trade deficit unexpectedly narrowed in Sept.," reported Bloomberg on Friday, as "customers abroad snapped up American products from cotton to semiconductors, offsetting the deepening housing recession that is eroding consumer confidence.

"Exports have reached a record for each of the past seven months, the longest surge since 2000," the newswire goes on, which "may help explain why the Bush administration has suggested it's comfortable with the Dollar's drop. It has declined in all but one of the past five years, even as officials say they support a 'strong' Dollar."

What Bloomberg misses, however, is the surge in US import prices right alongside. They rose 9.2% year-on-year in October, the Dept. of Labor said on Friday, up from the 5.2% rate of import inflation seen a month earlier.

Yes, the surge in oil price must account for a big chunk of that rise - and the surge in world oil prices may do more than reflect Dollar weakness alone. The "Peak Oil" theory is starting to make headlines here in London. Not since the Club of Rome forecast a crisis in the global economy in 1972 have fears of an energy crunch become so widespread.

But if you - an oil producing nation - were concerned that one day soon your wells might run dry, wouldn't you want to get top dollar for the barrels you were selling today? Especially if the very Dollar itself was increasingly losing its value?

"At the end of 2006, China's foreign exchange reserves were $1,066 billion, or 40% of China's GDP," notes Edwin Truman in a new paper for the Peterson Institute. "In 1992, reserves were $19.4 billion, 4% of GDP. They crossed the $100 billion line in 1996, the $200 billion line in 2001, and the $500 billion line in 2004."

What to do with all those dollars? "If all countries holding dollars came to request, sooner or later, conversion into gold," warned Charles de Gaulle in 1965, "even though such a widespread move may never come to pass... [it] would probably shatter the whole world.

"We have every reason to wish that every step be taken in due time to avoid it," the French president advised. But the step chosen by Washington - rescinding the right of all other nation-states to exchange their dollars for gold - only allowed the flood of dollars to push higher.

Nixon's quick-fix brought such a crisis of confidence by the end of the '70s, Gold Prices shot above $800 per ounce - and it took double-digit interest rates to prop up the greenback and restore the world's faith in America's paper promises.

The real crisis, however - the crisis built into the very system that allows the US to print money which no one else can refuse in payment - was it merely delayed and deferred? Are we now facing the final endgame in America's post-war monetary dominance?

If these sovereign wealth funds - owned by national governments, remember - cannot tip up at the Fed and swap their greenbacks for gold, they can still exchange them for other assets. BCA Research in Montreal thinks that "sovereign wealth funds" owned by Asian and Arabian governments will control some $13 trillion by 2017 - "an amount equivalent to the current market value of the S&P500 companies."

And if China doesn't want to buy the S&P500 - and if Congress won't allow Arab companies to buy up domestic US assets, such as port facilities - then the sovereign wealth funds will simply swap their dollars for African copper mines, Latin American oil supplies, Australian wheat... anything with real, intrinsic value.

They might just choose to Buy Gold as well. After all, it remains - "in all places and at all times... the immutable and fiduciary value par excellence," as a French president once put it.

Charles de Gaulle also warned that the crisis brought about by a rush for the exits - out of the Dollar - might just "shatter the world". It came close in January 1980. Are we getting even closer today?

10 Nov, 2007
Adrian Ash

[LinearChaos]

There was a good article posted today on LewRockwell.com about the Suprime mess, and what is really going on. His conclusion: "And that brings us to Ron Paul. Talk about being in the right place at the right time."

It's a great article imo:

http://www.lewrockwell.com/orig5/regan-j2.html


What the 'Subprime' Mess Is Really About

by John M. Regan, Jr.

It’s about the international fiat monetary regime’s denouement, and of course the Ron Paul presidential campaign.

Even the popular name of this "crisis" – implying that the whole problem is "subprime" borrowers with sketchy credit histories – is really just more disinformation. Shaky American borrowers defaulting on their home loans are indeed a great danger, but in the same way that a free press is a danger to despotic government. It is the danger of exposure. It is the end of plausible deniability. If the "markets" of the world perceive – finally – that the emperor has no clothes, the nearly century old game may be over.

First, a little background. Forgive all the quotation marks, but it’s important to maintain a healthy skepticism when considering this subject.

When a "lender" (usually a bank) makes a "loan" to a "borrower," the borrower executes a legal instrument known as a "note," sometimes also called a "bond." The "note" or "bond" is the borrower’s promise to repay the "loan" at such and such an interest rate, over such and such a period of time, consisting of monthly payments in such and such an amount.

There’s a lot more to explain here, but first, before we go there, pull out your wallet and take a look at any currency you have in there. You will notice that the currency is also called a "note." Just like the "note" the "borrower" executes to the "lender," the currency is a promise to pay, but in the case of currency it is minus the interest rate or period of time. Currency notes are "payable to the bearer on demand," also called "bearer paper" and "demand notes."

But if one kind of note functions as currency – money, really – why can’t another? Why indeed. No reason at all. In fact, since in the absence of a gold standard currency "notes" are ultimately unredeemable promises, other kinds of notes are arguably better than currency. Particularly if they are "backed" by something of "tangible" value – like, say, real estate – which is something government currency can’t claim.

This reasoning – and it is valid reasoning – led to a state of affairs in which home mortgage loan paper (the "notes"), primarily from the United States, began to "circulate," just as currency circulates among individuals. This paper, and derivatives of it like CDO’s, mortgage-backed securities, CLO’s, SIV’s, have by now gone all over the world and for all intents and purposes function as "money" in the world’s banking systems, constituting financial "assets" on their books. The nominal aggregate value of all this American mortgage loan paper is many, many trillions of dollars. This actually – and somewhat ironically – dwarfs the nominal value of all official but un-backed US government paper currency in circulation.

Notice I say "nominal" value. This is important. Because while the essence of the international fiat monetary regime is that nothing can have a fixed, permanent or finally determined value, everything must have a "nominal" value, otherwise buying and selling – that is, trade and economic activity itself – would be impossible.

Yet the "market," like the human beings who comprise it, craves precisely assets of a fixed, permanent and finally determined value. This is the basis of the great financial asset game of the 20th century just past: the hoi polloi chasing and acquiring assets they believe to be of permanent value; and the rulers – sometimes slowly, sometimes abruptly – then destroying the value of those assets, in part because not to do so would undercut the regime itself.

The regime is a jealous god.

So the home loans of the hoi polloi, and the homes themselves "backing" the loans, were eventually transformed into "financial assets" like everything else, then sold and marketed all over the world at their nominal value. The current "crisis" is the result of this nominal value being called into question and tested at its very foundation, through the only true "mark-to-market" events that can ever apply to such assets: default, foreclosure and auction of the "collateral" – the homes of the "borrowers."

The problem is, if there’s one thing we’ve learned in the world of financial assets over the last 20 years or so, it is this: the process of questioning and testing their value invariably reveals a cesspool of scandal and fraud. Mortgage-backed paper is no different.

In truth, lenders have been systematically concealing the market value of this paper through a fairly simple and universal manipulation of the foreclosure process: when a property is foreclosed and "publicly" auctioned, the lender itself bids in the amount it claims to be owed at the auction, thus insuring that there is never a loss on the loan itself, since the loan is always "paid in full" at the auction.

When it is the successful bidder – as it almost always is – the lender then winds up owning the property. When the property is finally sold by the lender, there is normally a loss; but technically, that is not a loss on the loan itself. That does not damage the value of the original "paper."

In this way mortgage paper and its many derivatives can be and have been marketed as very "safe" investments, providing a "good return" with "no risk of loss." But of course there is no such thing. There is a risk of loss; it has just been hidden.

Now that risk is materializing. As defaults and foreclosures increase, the lenders have to pay out more and more to hide the losses. But the lenders can only make this up by making more loans, because this is how they increase their cash flow; and now it is clear they can make more loans, and thereby increase their cash flow only by simultaneously increasing their losses, since their "loans" are proving to be losers. So no one wants their "paper" anymore, because – well – it’s the financial equivalent of toxic waste. The "subprime" stuff is just the first surge: the tidal wave is close behind. Because all of it, the subprime, the prime, the AAA and everything in between, is the product of a previously hidden, but now obvious…Ponzi scheme. A Ponzi scheme that is in the process of unraveling, as all Ponzi schemes eventually do. And what person wants to be the last idiot to buy into a Ponzi scheme?

So now the lenders are squeezed on all sides: they have defaults bubbling up from underneath; they can’t access credit on their now questionable paper; and it appears their whole business is structurally geared to lose money. One by one they begin firing their CEO’s, warning their investors (closing the barn door after the horses are gone, but what else is new?), being investigated, probed, etc. We all know the drill. Some very big names are already involved.

This is all supposedly "very scary." The credit markets are "seizing up." The Federal Reserve is doing this and that, but even they can’t fix problems in the tens of trillions of dollars. Oh sure, they can goose the stock market, but only temporarily. They put the money in but it all comes back out within a few days. The whole idea is just to get the lemmings to jump in after them. But it only takes what – $40 billion max? – to pull that stunt. The mortgage backed paper problem is many, many times bigger, and can’t be solved in a few days of goosing.

Now. Why is all this a threat to the international monetary regime?

It’s really very simple: debt cannot be money, this whole debacle is showing emphatically that debt cannot be money. But the regime is built entirely on the principle that debt is money.

It’s an elegant deception. In the world of accounting, my debt is an "asset" on the books of my creditor. There is nothing really wrong with looking at it this way, and indeed it is a useful fiction to "account" for economic relationships. But we cannot lose sight of the fact that it is a fiction. A "receivable" based upon someone’s promise to pay is not the equivalent of a hard asset that does not depend upon someone’s promise. A "promise to pay" cannot be "payment" – by definition.

But because the regime says otherwise a worldwide home mortgage paper market with a nominal value in the tens of trillions of dollars – all debt – exists, though it appears not for much longer. And compared with that market the Federal Reserve System itself, with all of its regional branches, its Board of Governors, its "congressional mandate," its annual reports and so on, is a mere trifle. We could so easily be rid of it.

And that brings us to Ron Paul. Talk about being in the right place at the right time.

[jacmicwag]

I thought I read somewhere that Nov. 15th is when companies must come clean on their Level 3 holdings. If so, the market today does not seem to worried about it. You would think the experts would be dumping everything if big time trouble is near. Then again, maybe they are and we just don't know about it.

Guess it's time to put all my cash in a shoe box under the bed!

[Malakai0]

Ben looks left.....big rock
Ben looks right.....hard place

Ben clenches fists and curses Greenspan and Bush

We get screwed......

1970's stagflation here we come.

If he truly cared, he would be honest and advise publicly that we leave Iraq and dump the money back into our economy to soften the blow of the recession we are going to take.

[RPFTW!]

I'm glad I just bought 3000$ worth of silver!

[Johnnybags]

even precious metals as the panic kicks in. The basic notion is the world is tired of our dollar, we undertax our citizens based on our largesse and its either tax, cut spending or hyperinflation. Take your money out of those money market market funds. But the politicians play the inflation tax game to hold power as John Q Public believes the 2.3 percent inflation figures. Remember, Bush is incharge so you know the odds are 100 percent a crisis will take place, just not when. England had a run on the banks and we will soon enough.