Archive for the ‘Stock Market Crash Watch’ category

Chronicles Of Depression 2.0: #436: HYPERINFLATION!

November 24, 2008


Bloomberg: Fed Pledges Top $7.4 Trillion to Ease Frozen Credit (Update1)

Nov. 24 (Bloomberg) — The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago.

The unprecedented pledge of funds includes $2.8 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the only plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.

Emphasis added by me.

God Almighty!!!

It gets worse:

“The thing that people don’t understand is it’s not how likely that the exposure becomes a reality, but what if it does?” Issa said. “There’s no transparency to it so who’s to say they’re right?”

The worst financial crisis in two generations has erased $23 trillion, or 38 percent, of the value of the world’s companies and brought down three of the biggest Wall Street firms.

The Dow Jones Industrial Average through Friday is down 38 percent since the beginning of the year and 43 percent from its peak on Oct. 9, 2007. The S&P 500 fell 45 percent from the beginning of the year through Friday and 49 percent from its peak on Oct. 9, 2007. The Nikkei 225 Index has fallen 46 percent from the beginning of the year through Friday and 57 percent from its most recent peak of 18,261.98 on July 9, 2007. Goldman Sachs Group Inc. is down 78 percent, to $53.31, on Friday from its peak of $247.92 on Oct. 31, 2007, and 75 percent this year.

Emphasis added by me.

Twenty-three trillion! Poof! GONE!

Worse still:

The money that’s been pledged is equivalent to $24,000 for every man, woman and child in the country. It’s nine times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office figures. It could pay off more than half the country’s mortgages.

Emphasis added by me.

That $24,000 is on top of the existing debt.

Even more worse:

The commitment of public money is appropriate to the peril, said Ethan Harris, co-head of U.S. economic research at Barclays Capital Inc. and a former economist at the New York Fed. U.S. financial firms have taken writedowns and losses of $666.1 billion since the beginning of 2007, according to Bloomberg data.

Emphasis added by me.

Near three-quarters of a trillion! Poof! GONE!

And yes, even worse:

Bernanke’s Fed is responsible for $4.4 trillion of pledges, or 60 percent of the total commitment of $7.4 trillion, based on data compiled by Bloomberg concerning U.S. bailout steps started a year ago.

Emphasis added by me.

Thank you, Bernanke, for turning us into the next Zimbabwe!

OK, here’s the fatal shot to the head:

Requiring the Fed to disclose loan recipients might set off panic, said David Tobin, principal of New York-based loan-sale consultants and investment bank Mission Capital Advisors LLC.

“If you mark to market today, the banking system is bankrupt,” Tobin said. “So what do you do? You try to keep it going as best you can.”

“Mark to market” means adjusting the value of an asset, such as a mortgage-backed security, to reflect current prices.

Emphasis added by me.

There! It’s been said! The house of cards has collapsed. Economic orthodoxy is over.

What is not being said: This is going to destroy us. Under economic orthodoxy, Bernanke has just set the stage for a lethal hyperinflation crisis next year. That is the consequences of a Central Bank printing massive amounts of funds. There is no escaping that. Nation after nation has suffered this inevitable consequence. We are not immune from it.

And let me remind everyone again: $23 trillion is nothing. There’s a quadrillion total out there. That’s one thousand trillion dollars.

There is now only one way out.


Chronicles Of Depression 2.0: #433: Charts

November 23, 2008

A bit of Show & Tell.

The Dow Jones Industrial Average in the past year:


The Dow Jones Industrial Average in the last six months:


Must it hit 4,000 before you believe?

And what will your skepticism be then? “Lucky guess”?!

Chronicles Of Depression 2.0: #430: Ireland

November 21, 2008

Markets wary of Irish debt as fresh rescue looms
Ireland’s bank rescue has begun to unravel despite a blanket debt guarantee for the country’s top lenders, prompting concerns that Europe’s credit crisis may be entering a second and more menacing phase.

The Taoiseach, Brian Cowen, told the Irish parliament yesterday that he was exploring “all options” to shore up the banks after the collapse of their share prices over recent days.

While talk of a fresh bail-out has helped revive the battered stocks of Anglo Irish, Bank of Ireland and other lenders, it appears merely to have shifted the risk to the Irish state itself.

Michael Klawitter, a strategist at Dresdner Kleinwort, said the cost of insuring Irish sovereign debt through credit default swaps (CDS) has surged to 133 basis points. “The markets have begun to see a risk to the solvency of the Irish government. They are questioning whether it has the financial muscle to back up the guarantees,” he said.

This is a disturbing pattern across Europe as the global credit crisis drags on, with extreme cases in Iceland, Ukraine, Russia, Hungary and Latvia. There are fears that investors could start to shun sovereign debt in Western states where banks have outgrown the underlying economy.

Ireland is vulnerable because financial services make up 9.8pc of GDP, including its ‘Canary Dwarf’ enclave of hedge funds. The liabilities of its lenders are twice Irish GDP. Britain, Switzerland, Belgium, Austria and Luxembourg are in the same boat.

Emphasis added by me.

There are only about six weeks left to this blog.

For eleven months I have screamed about Depression 2.0 coming.

It’s now here.

For the next six weeks or so, you will now hear me screaming about the only possible solution: 777 all of it.

It’s gotten to All Sink or All Swim.

Everyone will be left holding a bag of nothing. Everyone can wind up with nothing after the collapse and ruination of everything or they can wind up with a bag of nothing with nations and societies and companies still intact and all eager to rev up and have another go at things.

We’ve forgiven debts of other countries.

It’s time for all of us to wipe every slate clean.

Chronicles Of Depression 2.0: #429: Pre-Splat

November 21, 2008

What’s The Next Big Thing For 2009?

How far the stock market will fall is anyone’s guess, the next support on the charts is roughly around today’s close. So we may expect an engineered Xmas rally by the Plunge Protection Team. But I’m on the lookout for the coming day when both the stock and bond markets head down together. That’s when we know that the Great Bond Collapse of 2009 will be underway. After that I suspect that the 2009 bond collapse will eventually transmogrify into a global fiat currency collapse, given that the only thing backing the world’s currencies is hot air issuing from the collective mouths of the world’s central bankers. From every indication they are going to need to blow a lot more smoke up bondholders skirts to give them a warm feeling about the pile of fiat paper.

Emphasis added by me.

Imagine being in a speeding car with failed brakes heading towards a wall.

Would you continue to steer straight ahead or pull on the wheel and change direction?

Everyone continues to steer straight ahead — to the inevitable smashup.

Change course!

Chronicles Of Depression 2.0: #428: Go Crazy!

November 21, 2008

Over at Nouriel Roubini’s site, there’s this headline that caught my eye:

Red underline by me.

Unfortunately, it’s behind a paywall.

But yes, let’s go crazy: 777 crazy.

The sooner, the better.

Chronicles Of Depression 2.0: #427: 777

November 20, 2008

October 10, 2009: There is an important update to this post at the bottom.

All sink or all swim?

Deuteronomy 15: 1-11

At the end of every seventh year, cancel all debts. This is the procedure: Everyone who has lent money to a neighbor writes it off. You must not press your neighbor or his brother for payment: All-Debts-Are-Canceled—God says so. You may collect payment from foreigners, but whatever you have lent to your fellow Israelite you must write off.

There must be no poor people among you because God is going to bless you lavishly in this land that God, your God, is giving you as an inheritance, your very own land. But only if you listen obediently to the Voice of God, your God, diligently observing every commandment that I command you today. Oh yes—God, your God, will bless you just as he promised. You will lend to many nations but won’t borrow from any; you’ll rule over many nations but none will rule over you.

When you happen on someone who’s in trouble or needs help among your people with whom you live in this land that God, your God, is giving you, don’t look the other way pretending you don’t see him. Don’t keep a tight grip on your purse. No. Look at him, open your purse, lend whatever and as much as he needs. Don’t count the cost. Don’t listen to that selfish voice saying, “It’s almost the seventh year, the year of All-Debts-Are-Canceled,” and turn aside and leave your needy neighbor in the lurch, refusing to help him. He’ll call God’s attention to you and your blatant sin.

Give freely and spontaneously. Don’t have a stingy heart. The way you handle matters like this triggers God, your God’s, blessing in everything you do, all your work and ventures. There are always going to be poor and needy people among you. So I command you: Always be generous, open purse and hands, give to your neighbors in trouble, your poor and hurting neighbors.

This is God telling us: Mortal Capitalism doesn’t work.

Well, look, here are the choices:

1) Global financial collapse, millions starve, millions die, international upheavals. Gotterdammerung.


2) Wipe out all the debt. National, corporate, consumer. Just erase all of it. The assets still remain. Nothing really becomes zero.

Unemployment will stop growing, financing will begin again, people will shop again.

Tell me what the difference is! Write-downs are happening right now. Bankruptcies are happening right now. Just take one global eraser and wipe it all out.

Replace the fear and misery with jubilation.

Can any of you envision the worldwide happiness that would result?

Once that mess is gone, be ruthlessly honest in future transactions.

Economics is supposed to be about creating value, not cancerous debt.

Imagine what life would be like in just six years from now if this was followed.

The prosperity would be absolutely breathtaking.


As of October 10, 2009, I disavow this proposed solution. It is simply and entirely wrong.

The fundamental error I made is the one everyone is making: not getting to the root cause.

The root cause is the structure of the entire monetary system itself.

Wiping out all debt will still keep us trapped within that system and continue the boom and bust cycle for the benefit of a select few instead of the well-being of all.

If you are serious about finding a solution, then you will have to do some work of your own. I recommend a book as a starting point: Web of Debt, by Ellen Hodgson Brown. I have no connection to this book other than as someone who was lent a copy to read.

Pay particular attention to this quote by Benjamin Franklin, who was discussing the pre-Revolutionary American Colonies:

There was abundance in the Colonies, and peace was reigning on every border. It was difficult, and even impossible, to find a happier and more prosperous nation on all the surface of the globe. Comfort was prevailing in every home. The people, in general, kept the highest moral standards, and education was widely spread.

All of that was because of the kind of monetary system the Colonies had. They had divorced themselves from the brutal system that dominated English finance.

We can have that system again today. We have a tool — and a weapon — the Colonists lacked: the Internet.

Educate yourself about money — while there is still time to do so.

Don’t fall for “solutions” that will impoverish all of us.

Chronicles Of Depression 2.0: #425: Con Game

November 20, 2008

Pulling The TARP Over The Taxpayer Eyes

Lucky for us Hanky and Benny have deigned not to use any funds to stabilize the real estate market. Nor have they chosen to time bomb the 55 trillion dollar credit default swap time bomb. Their inaction virtually guarantees some combination of worldwide depression, hyperinflation, and eventually a worldwide currency collapse. Thankfully Hanky and Benny have save us from the moral hazard of socialism. Would you like fries with that?

Emphasis added by me.

This is a wonderful post that describes matters as they are — and not as D.C. wants you to believe.