[shakespear1]

I read this on Der Spigel and was not sure what to make of it. Is this for real or just a smoke and mirrors ? Will the IMF do this and then give the blessing that all is fine please continue to do business as usual? I thought that the US calls the shots in this type of stuff

[Denny]

Perhaps Der Spiegel is really hitting on this as the German people were so batttered by inflation in the 1920's.

But, they are really lambasting Dan Bernanke, to the point of total disrespect. I don't think American critics of Bernanke would be so severe and so cruel as Der Spiegel in this article from April, see The Madness of Ben Bernanke

"The dollar is in a tailspin, the trade deficit is growing and a recession is on the horizon. The American way of life is in serious danger. But the head of the Federal Reserve keeps on pumping easy credit into the system -- a crazy policy that will worsen the crisis. "

[Cid_Yama]

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

<b>Cramer warns of meltdown</b>

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.

http://www.cnbc.com/id/27119724

<i>To be that specific, Cramer must be part Vulcan.</i>

<b>Europe scrambles to avert 'game over'</b>

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

[Cid_Yama]

<b>Dutch Finance Minister criticizes US attitude</b>

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.

link

<i>Why are we always on the wrong side of what needs to be done?</i>

[DantesPeak]

<b>Cramer warns of meltdown</b>

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.

http://www.cnbc.com/id/27119724

<i>To be that specific, Cramer must be part Vulcan.</i>

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.

See also my post on Friday:
http://www.peakoil.com/post790193.html#790193

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.

[wisconsin_cur]

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.

[Snowrunner]

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.

See also my post on Friday:
http://www.peakoil.com/post790193.html#790193

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?

[Cid_Yama]

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.

[wisconsin_cur]

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?

[eastbay]

Yes, the market did bottom on Friday.

I note that the US indices are up substantially in futures trading right now:

http://finance.yahoo.com/indices?e=futures

As are Asian markets and oil too. Maybe the tap has been turned on a bit. Certainly hope so.

[Cid_Yama]

<b>Brits get fleeced too</b>

Up to £50bn of taxpayers' cash is to be injected into four of Britain's biggest banks through the government's rescue package, the BBC has learned.

Royal Bank of Scotland (RBS), HBOS, Lloyds TSB and Barclays is to sell off shares, the majority of which the government is expected to buy.

If the government ends up owning more than half of RBS and HBOS, it will be an effective nationalisation.

More details of the deals are expected to be announced later.

http://news.bbc.co.uk/2/hi/business/7665823.stm

<i>per capita it's got to be more than the US</i>

[Cid_Yama]

"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.

http://news.bbc.co.uk/2/hi/business/7665515.stm

<i>If you can invest in this atmosphere you must have brass balls.(or a marshmallow mind)</i>

[alokin]

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)

[Cid_Yama]

<i>And those that have nothing starve to death.</i>

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

[IndigoMoon]

<i>And those that have nothing starve to death.</i>

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.

[DantesPeak]

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.

See also my post on Friday:
http://www.peakoil.com/post790193.html#790193

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.

[Micki]

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.

See also my post on Friday:
http://www.peakoil.com/post790193.html#790193

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.

Why is currency swapping inflationary???
Stronger dollar normally leads to dropping commodity prices etc and that would further boost the view that we are in deflation and in the longer term if the propping of the USD fails, forerign investors may flee and treasury need to monetize like crazy which then would be inflationary. But that is 2-3 steps ahead.
What I am missing is how swapping by itself is inflationary.

[ReverseEngineer]

<i>And those that have nothing starve to death.</i>

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

Depends mostly on where you live, but some places will definitely be CUT OFF. As I mentioned before, this likely happens with greater rapidity then anyone here imagines, besides perhaps you and me.

This is Cascade Failure. the whole damn system is going down at once here. No slow crash at ALL.

Reverse Engineer

[drgoodword]

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.

I don't think the market hit a bottom on Friday. Sure, we'll probably see a couple of wild upswings as part of the increasing volatility of the crashing market, but, in my layman's opinion, the market's true bottom is somewhere below 5000, and we won't reach the bottom until the crash is fully played out and the ensuing recession/depression reaches its deflationary low point.

The forced liquidation was, I think, only part of a larger liquidation which involved mutual funds and hedge funds covering panic redemptions, along with a full-blown classic panic sell-off.

I hope the bounce-backs (which may at times add more than a thousand points to Friday's close) will be short-lived, or a lot of people will drink the kool-aid regarding the inevitable "bargain prices" stock talk.

Also: as mentioned a while back by someone, the volatility we're seeing is more and more resembling a Tacoma Narrows bridge-type collapse driven by a resonance feedback loop. It's even possible that all these weekly unprecedented interventions are increasing the resonance of the feedback loop.

I think anyone going into equities now is putting a match to their money. I would urge anyone contemplating equities to carefully consider a chart of the Dow showing the 1930's. It took three full years to reach bottom from the 1929 peak, and look at those superspikes on the way down. I think the smartest money will sit out on the sidelines for the rest of this year and all of 2009 (if not longer). We live in an era where the most important financial goal is preservation of capital, not creation of wealth.

[eXpat]

Dominique Strauss-Kahn said recent data on the world economy pointed to downside risks to the IMF's latest forecasts, issued last month, which forecast global growth of 0.5 percent in 2009, the weakest since World War Two.
Strauss-Kahn told French Daily Les Echos on Wednesday that forecast could be cut close to zero.
"I'm expecting that 2009 really will be a bad year," he told a news conference on Thursday.

http://www.guardian.co.uk/business/feedarticle/8365370
and http://english.hotnews.ro/stiri-business-5431556-imf-foresees-zero-growth-for-the-global-economy-2009.htm
In fact, according to the IMF we are already in a depression:

International Monetary Fund chief Dominique Strauss-Kahn said the world's advanced economies -- the U.S., Western Europe and Japan -- are "already in depression," and that the IMF could slash its global growth forecasts further. The "worst cannot be ruled out," he said.

The IMF managing director's comments to reporters after a speech in Kuala Lumpur, Malaysia, represent the most dire estimate thus far of the state of the global economy by a major political figure, and were far more pessimistic than forecasts released by the IMF as recently Jan. 28.

Political figures generally avoid using the word depression because of the association with the Great Depression of the 1930s, when unemployment hit 25% in the U.S. and economic output fell even more steeply. Last week, when British Prime Minister Gordon Brown used the word "depression" to describe the global economy, his aides quickly said it was a slip of the tongue.

In the U.S., chief White House economic adviser Lawrence Summers said that while the economic situation was serious, it wasn't as bad as Mr. Strauss-Kahn seemed to suggest.

http://online.wsj.com/article/SB123412011581660991.html?mod=googlenews_wsj