I think this is the beginnings of an economy based on perpetual growth and fossil fuel energy running headlong into geological energy constraints. Basically I see an undulatory downward path for the rest of my life. From here out, I think any rallies in our economic condition are going to be met with spiking commodity prices that knock us right back down.
Joined: May 27, 2007 Posts: 1719 Location: The Post Peak Oil Historian
Posted: Sun Oct 12, 2008 6:40 pm Post subject: IMF: Global financial system faces systemic meltdown
The International Monetary Fund has warned that the world financial system stands on the "brink of systemic meltdown", despite international efforts to bring the crisis to an end. Dominique Strauss-Kahn, the IMF's managing director, made the comments after talks with US President George W Bush and other leading finance minister in Washington as they tried to find a solution to the global financial turmoil, which has seen stock markets around the world plunge on fears of recession.
He said: "Intensifying solvency concerns about a number of the largest US-based and European financial institutions have pushed the global financial system to the brink of systemic meltdown." The IMF also warned global equities could plunge by a further 20 per cent in the coming days unless governments deliver concrete action to address the crisis. At the meeting of finance ministers from the Group of Seven leading world economies, including the UK and US, world leaders pledged to part-nationalise swathes of the global banking system as part of a drastic international plan to halt the panic gripping financial markets and prevent the crisis from descending into a global depression.
link
Cramer warns of meltdown
The Dow lost 2,000 points this week, making it the worst sell-off since 1933, Cramer said. He doesn’t think we’re done, though.
Today’s late-day rally brought us too far too fast, he said, and bottoms rarely happen on Fridays anyway. Main Street isn’t paying attention, they find out what happened over the weekend, and then Monday they start to sell.
Keep this in mind as next week starts. Cramer can’t decide if this market is closer to 1987 or 1929, but he’s pretty sure bad news from Morgan Stanley and lack of good news from the world’s industrialized nations could cause a sizable drop in the markets on Monday and Tuesday. The Dow could go as low as 5,886, he said.
European leaders raced against the clock on Sunday to clinch a rescue strategy for banks battered by the worst financial crisis since the 1930s, under intense pressure to throw them a lifeline before world markets reopen. At a summit in Paris, the focus fixed firmly on how much state money governments could mobilise to buy into banks if needed, and if they would also underwrite lending between banks, paralysed for now by fear and distrust.
"If market confidence is not restored this weekend, it's game over," said Marco Annunziata, chief economist for UniCredit, an Italian bank which is among many whose shares have been hurt in panic-stricken stock markets. The American Standard & Poor's 500 index tumbled more than 18 percent last week, its worst weekly fall on record. European stocks plunged 22 percent and Tokyo's Nikkei crashed 24 percent.
The Paris meeting was hastily arranged by Sarkozy on the heels of a G7 summit of rich nations in Washington that offered no concrete, collective action.
link _________________ In a time of universal deceit, telling the truth is a revolutionary act. - George Orwell
It riles them to believe that you perceive the webs they weave. - Moody Blues
Joined: May 27, 2007 Posts: 1719 Location: The Post Peak Oil Historian
Posted: Sun Oct 12, 2008 7:18 pm Post subject: Re: IMF: Global financial system faces systemic meltdown
Dutch Finance Minister criticizes US attitude
The Dutch Finance Minister Wouter Bos has criticised the US government's attitude to the financial crisis at the International Monetary Fund meeting in Washington.
Mr Bos was surprised that top officials, not ministers, represented the government at important moments during the conference. He says the British do realise there is a need to monitor the financial sector more closely, but the Americans do not.
Why are we always on the wrong side of what needs to be done? _________________ In a time of universal deceit, telling the truth is a revolutionary act. - George Orwell
It riles them to believe that you perceive the webs they weave. - Moody Blues
Joined: Oct 23, 2004 Posts: 5928 Location: New Jersey
Posted: Sun Oct 12, 2008 7:37 pm Post subject: Re: IMF: Global financial system faces systemic meltdown
Cid_Yama wrote:
Cramer warns of meltdown
The Dow lost 2,000 points this week, making it the worst sell-off since 1933, Cramer said. He doesn’t think we’re done, though.
Today’s late-day rally brought us too far too fast, he said, and bottoms rarely happen on Fridays anyway. Main Street isn’t paying attention, they find out what happened over the weekend, and then Monday they start to sell.
Keep this in mind as next week starts. Cramer can’t decide if this market is closer to 1987 or 1929, but he’s pretty sure bad news from Morgan Stanley and lack of good news from the world’s industrialized nations could cause a sizable drop in the markets on Monday and Tuesday. The Dow could go as low as 5,886, he said.
Cramer may be right sometimes, but he is completely wrong for now. Yes, the market did bottom on Friday.
The fall in market last week was mostly to do with the Lehman loss settlement - the huge amount of money involved forcing liquidation, the fact the great loss took the PTB by surprise, and the aspect of fraud that companies can conceal such huge losses for so long.
Today's plunge in stocks/commodities has more to do with the settlement of Lehman derivatives than anything else, although ordinary margin calls were also an important factor.
Once the Lehman settlement is passed, and those companies who are on the winning side of Lehman trades are paid off, hundreds of billions of $s from liquidated positions will become available. That money won't be sitting in one month treasury bills earning 0.01% very long.
The $1 trillion added by the Fed, effectively doubling its balance sheet, will have incredibly strong effects on prices. Before long, we are going to a huge move upward in commodity prices, although I don't know exactly when that will start. Remember after the 1929 crash, there was a tremendous price rally for months afterward.
Granted many financial companies will still be failing and going bankrupt as prices rise.
_________________ It's already over, now it's just a matter of adjusting.
Posted: Sun Oct 12, 2008 7:47 pm Post subject: Re: IMF: Global financial system faces systemic meltdown
I hope your right... I put money back in on Friday after selling and putting it into cash 12-18 months ago.
It is free money from my employer but hey, its something...
I figure I need to be in before we hit that inflationary superspike that will send stocks to the moon. _________________ “It does not do to leave a live dragon out of your calculations, if you live near him.”
Posted: Sun Oct 12, 2008 7:56 pm Post subject: Re: IMF: Global financial system faces systemic meltdown
DantesPeak wrote:
Cramer may be right sometimes, but he is completely wrong for now. Yes, the market did bottom on Friday.
The fall in market last week was mostly to do with the Lehman loss settlement - the huge amount of money involved forcing liquidation, the fact the great loss took the PTB by surprise, and the aspect of fraud that companies can conceal such huge losses for so long.
Dunno, I think we may see a day or two of recovery but if something, ANYTHING bad happens it will be down again. I consider the markets more of a thermometer than anything else really, and everything else doesn't look so good.
Which brings me to a question: Why did the Dollar suddenly rally? My take on it is that this is another sign that the credit markets aren't unclogging, but instead people try to get USD in order to be able to serve their liabilities (e.g. pay for goods ordered etc.) and as such this sudden jump really concerns me.
Joined: May 27, 2007 Posts: 1719 Location: The Post Peak Oil Historian
Posted: Sun Oct 12, 2008 8:00 pm Post subject: Re: IMF: Global financial system faces systemic meltdown
Who would have thought this post would have sparked such exuberant optimism.
Frankly guys, it's the end of everything that you have ever known. The world is about to change in such a fundamental way, you will not recognize it a year from now.
You need a broader perspective. If you were in a barrel heading towards Niagra Falls with no window and only instruments showing speed and water temperature, you wouldn't have a clue.
The markets are just like that right now. They don't really have technicals that show when a meltdown is coming.
Just because the instruments weren't designed to measure it doesn't mean it isn't there. _________________ In a time of universal deceit, telling the truth is a revolutionary act. - George Orwell
It riles them to believe that you perceive the webs they weave. - Moody Blues
Posted: Sun Oct 12, 2008 8:08 pm Post subject: Re: IMF: Global financial system faces systemic meltdown
Cid_Yama wrote:
Who would have thought this post would have sparked such exuberant optimism.
Frankly guys, it's the end of everything that you have ever known. The world is about to change in such a fundamental way, you will not recognize it a year from now.
You may very well be right... but I've spent years thinking and preparing for that. Friday it was a lot of fun to take money that I really did not earn and say, "I think this is near the bottom and send it all back into large cap stocks.
If things are that bad I will never have access to the money any way and the program does not offer a way to buy into paper gold or anything so why not? _________________ “It does not do to leave a live dragon out of your calculations, if you live near him.”
Joined: May 27, 2007 Posts: 1719 Location: The Post Peak Oil Historian
Posted: Sun Oct 12, 2008 9:34 pm Post subject: Re: IMF: Global financial system faces systemic meltdown
"Intensifying solvency concerns about a number of the largest US-based and European financial institutions have pushed the global financial system to the brink of systemic meltdown," said Mr Strauss-Kahn.
Analysts say another week of plunging stock markets has focused minds and the real test of this weekend's scramble by world leaders to shore up the international financial system will come once markets reopen again on Monday.
If you can invest in this atmosphere you must have brass balls.(or a marshmallow mind) _________________ In a time of universal deceit, telling the truth is a revolutionary act. - George Orwell
It riles them to believe that you perceive the webs they weave. - Moody Blues
Posted: Sun Oct 12, 2008 9:55 pm Post subject: Re: IMF: Global financial system faces systemic meltdown
In simple words, you mean the EU rescue plan means employing the printing press and inflation/hyperinflation for the next month/years..?
(Isn't it nice. First you create a whole lot of fiat money. You tell that it's the best investment/retirement plan this to J6P . Meanwhile all rich and super rich buy all the real assets, with all the cheap money which is around. Then you pull the plug ynd those who have the real assets are even more rich)
Joined: May 27, 2007 Posts: 1719 Location: The Post Peak Oil Historian
Posted: Sun Oct 12, 2008 10:01 pm Post subject: Re: IMF: Global financial system faces systemic meltdown
And those that have nothing starve to death.
How long would you survive if you could never buy groceries again? Now consider how much worse that scenario would be if everyone you know was faced with the same question. It may have more relevance than you think. The food distribution system in industrialized nations has a complexity which baffles the mind. Thousands of suppliers coordinate with thousands of distributors to send food to millions of retailers for billions of consumers. But is there enough redundancy in the system to ensure the continued viability of commercially delivered food to your table? What if that incredibly complex system bottlenecked or crashed? Would you literally starve to death?
It has been estimated that the average grocery store has less than a one week supply of food. We have all seen shelves stripped bare following hurricanes or other natural disasters. There is rarely starvation in those settings because aide pours in from unaffected surrounding areas. But what if the shortages were on a regional or national level?
link _________________ In a time of universal deceit, telling the truth is a revolutionary act. - George Orwell
It riles them to believe that you perceive the webs they weave. - Moody Blues
Posted: Sun Oct 12, 2008 10:06 pm Post subject: Re: IMF: Global financial system faces systemic meltdown
Cid_Yama wrote:
And those that have nothing starve to death.
How long would you survive if you could never buy groceries again? Now consider how much worse that scenario would be if everyone you know was faced with the same question. It may have more relevance than you think. The food distribution system in industrialized nations has a complexity which baffles the mind. Thousands of suppliers coordinate with thousands of distributors to send food to millions of retailers for billions of consumers. But is there enough redundancy in the system to ensure the continued viability of commercially delivered food to your table? What if that incredibly complex system bottlenecked or crashed? Would you literally starve to death?
link
Extremely practical advice. Thank you for the link Cid. _________________ Live simply, love generously, care deeply, and speak kindly.
Life isn't about waiting for the storm to pass;
It's about learning how to dance in the rain.
Joined: Oct 23, 2004 Posts: 5928 Location: New Jersey
Posted: Sun Oct 12, 2008 10:11 pm Post subject: Re: IMF: Global financial system faces systemic meltdown
Snowrunner wrote:
DantesPeak wrote:
Cramer may be right sometimes, but he is completely wrong for now. Yes, the market did bottom on Friday.
The fall in market last week was mostly to do with the Lehman loss settlement - the huge amount of money involved forcing liquidation, the fact the great loss took the PTB by surprise, and the aspect of fraud that companies can conceal such huge losses for so long.
Dunno, I think we may see a day or two of recovery but if something, ANYTHING bad happens it will be down again. I consider the markets more of a thermometer than anything else really, and everything else doesn't look so good.
Which brings me to a question: Why did the Dollar suddenly rally? My take on it is that this is another sign that the credit markets aren't unclogging, but instead people try to get USD in order to be able to serve their liabilities (e.g. pay for goods ordered etc.) and as such this sudden jump really concerns me.
Or am I reading that wrong?
The Fed has conducted 'dollar swaps' with foreign central banks for over $200 billion in the last few weeks. That is the US has arranged to sell $200 billion in other currencies and converted them in to dollars. This is the biggest dollar support operation in history, and its being glossed over by even the financial media.
If they try to reverse it now, the dollar would crash immeadiately. So foreign central banks are going to have to inflate their money base rapidly, that is print up money, to give to the Fed - for good.
This is highly inflationary, but curiously, interpreted by almost every one as indicating the 'dollar is strong'. We live in very strange times. _________________ It's already over, now it's just a matter of adjusting.
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after selling and putting it into cash 12-18 months ago.
