The FINal Countdown

UPDATE 3: C -9.7%, BAC -9.3%, MS -7.1% & CDS blowing too in Financials (GS +60 at 387bps, MS +53 at 547, BAC +34 at 451, C +32 at 347...and Insurers (AIG +70 at 540, HIG +45 at 465, MET +27 at 390, PRU +35 at 340, and BRK +20 at 270)
UPDATE 2: Citi, MS, and BofA all down 8%!!!
UPDATE 1: Citi, MS, and BofA all down over 7% now, XLF -3.5%!!
In the last hour, financials have accelerated to the downside very rapidly. It seems perhaps that the credit markets were on to something and now equities are realizing that something is definitely worrying market professionals.
MS -5.7% at $12.7 (from highs just above $14 this morning as Cramer recommended), BAC -4.75% at $5.82 (lows since MAR09), GS -3% at $91.7, C -6%, XLF worst performing sector -2.5% (Is Kass still renting?)

Curve Flattening In Credit - Never A Good Sign

The credit markets here are actually deteriorating and are showing signs that there is growing default concern, rather than just pressure to reduce risk. If investors only wanted liquidity they could sell some of the bonds that have performed better.  If they weren’t hedging jump to default exposure, they wouldn’t be starting to bid up the front end of the curve.  Investors are examining their positions closely and are exiting the positions they fear the most in an economic downturn.

Open Interest Is Key Piece Puzzle For Timing The Correction In Gold & Silver

Eric De Groot at Eric De Groot - 16 minutes ago

Jim and Kenny, The last piece golden puzzle lies within open interest. Whether it be through volatile chop or orchestrated hit, the decline will be over when open interest's WA is flushed as low as physical market will allow it. Silver's massive flush in 2011 foreshadows the desired outcome in gold. Gold London P.M Fixed (Gold) and the COT Futures and Options Open Interest Stochastic Weighted... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

S&P 500 once again nearing 1100

Trader Dan at Trader Dan's Market Views - 22 minutes ago

As you can see on the following chart, other than the day on which it made a spike low and pushed sharply off the break below the 1100 level, the S&P 500 has not since managed to move back below this critical level. Each time it has threatened to do so, it has been resuscitated ( I believe thanks in part to the Exchange Stabilization Fund folks). Today it has pushed below that 1100 level briefly but has popped up. How this thing closes today is going to be interesting. If the ESF rushes back in and props it up and prevents a CLOSE below this level, it will likely bounce, even if the... more » 

Will Morgan Stanley Be The REAL Tipping Point For The U.S.?

Dave in Denver at The Golden Truth - 48 minutes ago

Forget Greece/Europe. To begin with, California alone is a bigger problem than the "PIIGS" less Spain, collectively. Then throw in Illinois. With Greece/Italy, we know what the Too Big To Fail Bank exposure is "on balance sheet." And it doesn't look nearly as bad as that of the European banks. HOWEVER, can someone please tell me what the "off-balance-sheet" exposure is? We don't know. What we do know is that the credit default swap and general derivatives holdings of TBTF's have gone up substantially since 2008. This is a largely an unregulated market and the accounting for i... more » 

Hunting the Squid, Part2: Since When Is Enough Derivative Exposure To Blow Up The World Something To Be Ignored?  

Posted by: Reggie Middleton

Post date: 10/03/2011 - 11:32

How will GS put a real hedge, a counterparty risk mitigating prophylactic if you will, over that big green stalk that is representative of Total Credit Exposure to Risk Based Capital? Short answer...

Graham Summers’ Weekly Market Forecast (Crisis Mode Edition)

Posted by: Phoenix Capital...

Post date: 10/03/2011 - 11:06

I suggested to get defensive weeks ago. I urge you to be even more defensive now. Use rallies to lower exposure to stocks to the longside and to establish some shorts. I would also be heavily exposed...

Qatari wealth fund plans $10 billion gold mine buying spree 

 

 

Martin Armstrong, market forecaster stifled by U.S. government, interviewed by King World News

 

 

Peter Brimelow: Battered gold bugs still defying bear raid

 

 

Words From Master Kenny

October 3, 2011, at 11:26 am
by Jim Sinclair in the category General Editorial |  Print This Post |  Email This Post

Dear CIGAs,

Here are some words from Master Kenny:

“If December does NOT correct with lower closes over the next one or two days, but instead closes above $1695 over the next several days, then our figures would consider this corrective action as finished – albeit the normal back and forth widening action to come, notwithstanding. The other option (still in play), is a continuation of a V bottom and a spike rally moving very quickly up to the second resistance level at $1800/$1850, with very little widening along the way.”

 

 

In The News Today

October 3, 2011, at 11:22 am
by Jim Sinclair in the category In The News |  Print This Post |  Email This Post

Jim Sinclair’s Commentary

While the Sheeplez sleep Lehman approaches again.

Banking crisis set to trigger new credit crunch
The global financial system is on the edge of a new credit crunch as the cost of insuring the bonds of banks across the world hits new highs, analysts have said. By Harry Wilson, Banking Correspondent
8:39PM BST 02 Oct 2011
Credit default swaps on lenders as far afield as China and Australia, countries that until recently seemed immune to the chaos, have doubled in the last two months to levels not seen since the financial crisis.
In Europe, French and Belgian government officials are due to meet on Monday to discuss the crisis enveloping Dexia as speculation mounts about a possible break-up of the Franco-Belgian lender.
Last week, the cost of insuring Dexia bonds hit an all-time high of 900 basis points, nearly double the level just two months ago, meaning the annual cost to insure €10m (£8.59m) of the bonds is £900,000.
"The money ran out in June and what you are seeing now is the beginning of a new credit crunch, except this time it will be truly global, not Western," said one senior London-based credit analyst.
Dexia, along with other European lenders, has been hard hit by the closure of the interbank lending markets and the continuing unwillingness of investors to buy the bonds of eurozone banks.
"Nothing is really working at the moment. None of the markets are functioning. Until Greece defaults it’s hard to see any resolution," said one senior London-based credit analyst.
More…

 

 

Four Biggest Banks In America Have Huge Leverage

October 3, 2011, at 10:38 am
by Greg Hunter in the category USAWatchdog.com |  Print This Post |  Email This Post

By Greg hunter’s USAWatchdog.com

Dear CIGAs,

I keep hammering away at the fact the Fed doled out $16 trillion in the wake of the credit crisis of 2008.  This is an enormous sum that is greater than the all goods and services produced in the U.S. in a single year.  Domestic banks and companies got the money, right along with foreign banks and companies.  In effect, the Federal Reserve bailed out the world financial system.  Now, we are right back to square one facing another financial meltdown with European banks and sovereign debt.  If the Fed spent $16 trillion, why in the heck is this problem not fixed and why isn’t the world economy taking off like a rocket?”  The simple answer is it wasn’t enough money. 
The Bank of International Settlements pegs the total world over-the-counter (OTC) derivative exposure at around $600 trillion, but many experts say the real figure is more than twice that amount.  No matter which figure you use, it is a gargantuan sum.  OTC derivatives are an unregulated dark pool of money with no public market.  These are basically debt bets between two entities on things such as credit risk, currencies, interest rates and commodities.  According to the latest report from the Comptroller of the Currency, just four U.S. banks have an eye popping $235 trillion of OTC derivative leverage. (Click here for the complete Comptroller of the Currency report.)  As a nation, U.S. banks have a total OTC derivative exposure of $250 trillion. So, the fact that just four U.S. banks have this much leverage and risk is astounding!  The banks are listed below in order of size and approximate OTC exposure:
1.)     JP MORGAN CHASE BANK NA OH
           $78.1 trillion OTC derivatives
2.)    CITIBANK NATIONAL ASSN
           $56.1 trillion OTC derivatives
3.)    BANK OF AMERICA NA NC
           $53.15 trillion OTC derivatives
4.)    GOLDMAN SACHS BANK USA NY
           $47.7 trillion OTC derivatives
Considering that the total assets of these four banks are a little more than $5 trillion, I see a frightening amount of risk with a total derivative exposure of $235 trillion!  This is nearly 50 to 1 leverage.  On top of that, assets such as real estate or mortgage-backed securities can be held on the books at whatever value the banks think they can sell them for in the future.  I call this government sanctioned accounting fraud, or mark to fantasy accounting.  Who knows what the true value of the banks “assets” really are.
More…

Dear Daily Readers (500-750).

I run this blog to help keep you informed and ahead of the herd. 

I make Nothing for this service. (Not to mention the 4 hours a day labor 7 days a week).

In 2009 I had a loss of $60.00 running this blog. 2 months internet access. (I wouldn't need this as my phone has internet)

In 2010 $360.00 internet access + $150.00 computer repair/hard drive.(I only use the laptop for the blog).

In 2011 $360.00 internet access + $400.00 Cheap laptop + $100.00 replacement modem/router (old ones died).

Total -$1430.00

Donations from Tim, Hui, James, David and Shaun +$130.00 (Thank You your donations are greatly appreciated).

That leaves a loss of  - $1300.00

Any help would be Greatly Appreciated.

Please consider making a small donation, to help cover some of the hard costs for running this blog.

Thank You

I'm PayPal Verified

 

Guest Post: When Money Dies - A "Live From The Summit" Report

Where is the US and global economy going? What will happen to the dollar and euro? And how can investors protect themselves from the fallout? All these questions and more were answered at the Casey Research/Sprott, Inc. Summit When Money Dies. Kevin Brekke reports live from the conference…



Weimar HyperInflation When Money Dies PDF file Pat 











"For the first time in history, silver coin, of the leading nations of Europe sold at a higher price than gold coin. This of course does not mean that silver is more valuable than gold, merely a silver dollar or shilling is worth more than a gold dollar or shilling."
Silver the World Sensation in 1919-1920
January 24th, 1920

http://chroniclingamerica.loc.gov/lccn/sn96060547/1920-01-24/ed-1/seq-7/ 








News to expect in the coming days and weeks:
•Greece defaults
•Germany protects German banks but other countries cannot do the same thus quickly provoking multiple sovereign defaults and or bank failures, all of which may easily lead to a payments crisis in the global banking system. Derivatives are particularly at risk in terms of operation and execution.
•The Euro falls in value especially against the US dollar
•The Germans announce they are re-introducing the Deutschmark. They have already ordered the new currency and asked that the printers hurry up.
•The Euro falls even more on any news that Germany is withdrawing from the Euro.
• Legal wrangling begins as to the legality of Germany’s decision. Resolution takes years.
•Germany insists that the Euro continues to exist even they do not use it any longer. They emphasize that European unification will continue and suggest new legal instruments to strengthen European Unification including new EU Treaties.

Please note his specific language: "Roesler told the Monday edition of Germany's Welt daily there should be "no limits to thinking" of possible scenarios of how to end the euro crisis."[iii]

The Germans have already concluded that if they are going to write any further checks then they are going to write them to their domestic institutions and protect their domestic investors. Necessarily, this means that many Eurozone countries will default on their debt. It now seems this will happen within a matter of days.

http://www.pippamalmgren.com/77.html