10/9/08 - FSME Denninger Special Report - IT'S HERE!

reply to post by wutone


You seem pretty dead set on your views, so Im not going to bother arguing them. You care much more about who to bail and whether or not it was fair than the future of the market.

A depression is a prolonged, and nasty, recession. We haven't officially started a recession. We are still having growth, though I bet it will end for the 4th quater. There is nothing to indicate a depression, unless the bailout fails to unfreeze the credit market.

It is really simple. Credit market freeze for prolonged period of time= depression. End the credit crisis soon=recession.

As for the US government defaulting, you want to tell me less than 1 trillion dollars on an already 10+ trillion debt suddenly caused our credit to go from AAA to junk? Sorry, thats a long time coming, longer than this housing bubble or even the dot com bubble.

Like I said 4th quater and 1st quater negative growth will mark the 2008-2009 recession. the 3rd quater or 4th quater will probably be the end of it.

Quite literally, this credit crisis will end when those bad assets leave the books of the banks, aka the bailout. They have the liquidity, they are just hoarding it because the bad assets are on their books.

I don't understand the logic of alot of people on this board. They want to start trial when the crime is still in progress. How about we stabilize FIRST, then solve the underlying issues. Everyone on here wants to sit around, analyse, and run criminal trials for CEO's when the problem is literally kicking the hell out of our economy.

Now is the time to stabilize the economy and stop the bleeding. This is a patient dying on the table, you can't sit around and analyse the patient for a prognosis. You need to operate and pray the patient doesn't die. We have a general idea of what caused this, and how to stabilize the economy. Luckily, congress came around and passed the bill that will stabilize it. From there we can go about fixing the real underlying problem.

Your revenge will have to wait.

reply to post by grimreaper797


The patient is near terminal and the doctor who is supposedly going to cure him is the one who made him ill in the first place.

It may seem that all that needs to happen is for banks to get rid of bad assets than everything is ok but the fact is that many banks don't even know how many of their good assets might in fact be bad.

The huge amount of credit default swaps have inflated the global economy into what it is today. The fact that the Fed is shoveling billions into banks by the day means that the credit default swap problem is huge and is covering a lot of bank asset problems.

If the amount of outstanding credit derivatives for U.S. banks is about $35 trillion. This is what is covering the books and the rating for the banks.

The bailouts are just a means to suck the wealth from the U.S. citizen to prop up the banks and bondholders.

With the trillions of derivatives world wide and the fact that a major insurer of many of these derivatives went under (AIG) and exposed banks, our patient, the economy is bleeding through the eyes and ears.

As I said earlier, I hope you are right about your views of the economy.

In my opinion, the economy as we know it is being socialized to a degree in order to prop up a group of people that have been benefiting the most out of the current system. The bailouts are just one of the many, many things needed in order to keep this situation afloat.

The problem is that people are starting to see through this and there will be a point where people say no. That is the confidence loss I am afraid of. When the general population loses confidence and patience, there will be chaos and we know how the economy responds to chaos.



[edit on 11-10-2008 by wutone]

Well, looks like someone's listening. Or know that people want to hear. From the G7 Memo:

5. Take action, where appropriate, to restart the secondary markets for mortgages and other securitized assets. Accurate valuation and transparent disclosure of assets and consistent implementation of high quality accounting standards are necessary.

Of course, as they say, what's the plan, Stan? Saying it's 'necessary' isn't quite enough.

THE BOTTOM LINE :

You CANNOT BORROW your way out of DEBT

The USA is BROKE .... BROKEN ..... It Sold Itself Out

If you don't believe anything else on this site, at least believe this

Prepare for WW3 and for Major Chaos at Home in the States

The US Government has their plan of "Crash & Revolt" in place

Martial Law is coming within the short period ahead. It cannot be
avoided. They (The US Govt) set the wheels in motion .....

Be Prepared for the Ride of your Life !!!

reply to post by Evisscerator


Why do the doomsayers keep coming up with WWIII as a result of a financial crisis? Martial law? They didn't even have martial law when the great depression was occuring. Any bad event that occurs isn't automatically a trigger for martial law, and WWIII, as some people seem desperate to have happen.

If anything, if the situation spiraled further out of control, I actually would think we'd see governments helping each other, as their citizens become unruly (which would probably be more likely in some countries, than in others).

Stop with the baseless, unfounded posts about WWIII and martial law already. You have absolutely no proof nor even logic to prove that this is something that might happen based on the financial crisis we are facing at the moment.

Sorry I have been unable to be on the board for the past 36 hours. Now I have a lot of catching up to do.

First, to my biggest detractor : You and I have both been around long enough for you to know I have never been a (and did not intend to be now) a panic poster. But at the time I started this post, the world markets were spiralling out of control, as evidenced by the reports that came in Thursday night on this thread. We are in uncharted territory and info KD posts has always been on spot in terms of his economic insight.

I have to tell you if you think the Bailout had to happen, you obviously have not seriously researched the economics or the unconstitutional acts that happened to pass this piece of trash. Intervention was definately needed, but not what they did. I see no more clear evidence than how the crisis deepened after the backdoor/blackmail tactics used to pass this beast took place.

After reading all the posts in the past 36 hours (especially yours) I am sitting here scratching my head.

Originally posted by grimreaper797

That is how I see it. My cheapshot was just annoyance that some one as high as FSME was calling for a collapse, when nothing of the sorts is going to happen.

None of us know what is going to happen, but after your initial cheap shot, which I have no problem with btw, your subsequent posts go on to give explanations of worsening conditions moving forward. Although you also indicate it will get better, your timeframe for this is well beyond my comfort level. I still see no one in a position to FIX this NOW global mess, indicating any real clue on what the solution is.

There are indications that what KD said needed to be done, just might be creeping through to some of these idiots running the show (I have no doubts that plenty of people acted on his call to action) but we have to wait out a long weekend to see if any real impact comes of it.

FYI - we do have this:

10/10/08 Ticker

We learned a number of things today - important things.

First - Lehman's CDS and bond auction process told us two things:

Even though they were dirtier than a hobo who hadn't had a bath in a month, they had enough value left in their bonds to wind up positive. Yes, it was less than a dime on the dollar. But it was a positive number. That's all that matters.

There were no fails on the posting of collateral against settlement.
Now for the last year we have been told that:

You can't trigger the CDS, it will cause a systemic, chain-reaction style nuclear meltdown.
These firms are so broke that there is no value left in them.
Both are now known to be false.

This gives us hope - and a path out of the darkness.

Its called "The Genesis Plan" and is what I have proposed.

He does know his stuff - read the ticker, then read this - short and sweet and amazingly simple. It's all spelled out in the link. I shall just quote the conclusions.

The "Genesis Plan"

This plan will instantaneously stabilize the credit markets as balance sheets will be transparent, the CDS monster will be permanently de-fanged, leverage will be returned to reasonable levels and the forcibly
restructured firms will have no debt on their balance sheets and be able to access the capital markets. Firms that would fail once they have disclosed their true liabilities and result in unacceptable insurance program costs will
be recapitalized with a reasonable expectation of the taxpayer not being stuck with the bill. Systemic risk will be removed.

Best of all, it will require zero taxpayer dollars with few exceptions, and for those instances where taxpayer dollars are required the amount of taxpayer risk would be small and well-protected.

This plan is very similar to what Janet Tavakoli proposed on September 25th in an open letter released on the web. Ms. Tavakoli is an internationally recognized expert in these matters, is an adjunct professor ofderivatives, and is widely published.

This and other alternatives must be examined before our nation embarks on what may be a disastrous path.

Now, in no defense of my position to start this thread, it was a personal risk I took - on my reputation - and I already admitted that - I did it with my eyes wide open. I am not disappointed in the participation and research it sparked (or even your take on it grim). It's not like I need points, my motive was in fact an honest belief that we all need to get educated here and now, because I do strongly disagree with your implications that this is business as usual (except in the sense that I do believe, and this part is not coming from your sentiments, that it IS business as usual in the sense of fraud, lies, and possibly downright treason perpetrated on us by our government).

That being said, now we get to watch and wait. It's a long weekend with a lot happening outside of market hours. Let's see how this progresses. I'm encouraging people to watch the Breaking News section of tickerforum.org and share new developments here, and also continue reporting what is going on in the rest of the world, especially if you are personally in another country than the US.

The latest thing that caught my eye this morning is a thread regarding truckers getting stranded because the credit cards they need to fill their rigs have stopped working. It's not across the board, but it's happening. Others (not truckers) are also reporting, so far isolated incidents, of their bankcards and or credit cards being rejected sporadically on and off. These are the types of things we need to watch.

Oh, and let me just clarify ONE MORE TIME. The premise of the Denninger post was the worst case scenario if we didn't act right now to stop the bleeding. I'm sure he will continue to analyze if the actions in the next couple of days are going to impact good or bad, and I for one intend to watch this closely. After how many down days on the markets in the past two weeks and the loses in the trillions on paper because of it, don't give you cause for pause, I am happy for you. I just can't ignore it myself.

I am seeing people hurting so bad, and crime rising in my area in direct relation to state of the economy, people being laid off daily, people who haven't gotten laid off having their hours cut and they can't make ends meet now, and they just don't know what to do. I was chatting with a group of 40 something to 50 somethings yesterday afternoon, just a chance gathering, and they all said the same thing, not knowing whether to laugh or cry. "I feel like I'm 20 years old again!" Why? Because they are all now at a point in their lives where everything they worked for has crumbled, and they are back to living paycheck to paycheck. In fact those that are single are even back to sharing apartments with each other, truly living the way they did in their 20's, except now they don't have the luxury of time on their side for the future, or the optimism of their youth. Two to three more years of this? If they already can't make their rent/mortgage payments and the numbers continue to rise the way they are (which is the only scenario if this recession continues, even as it is now) what do you think this world is going to look like by the time it's over? Certainly not pretty and nothing like I've ever seen in my lifetime.

Oh good god!

www.abovetopsecret.com...#

Leading into this:

www.abovetopsecret.com...

This should give you Pause4Thought! (Pun)

Well, I feel so vindicated! No one can blame me for inciting a riot if Cramer did this:

www.abovetopsecret.com...#

AHAHAHAHAHAHAHAHAHA!

Edit: (Hey - I don't listen to him, but a lot of uneducated people still do)

[edit on 10/11/2008 by Relentless]

Everyone needs to settle down over this whole event. The media wants you to panic and fear the worst. The worst thing you can do is stir yourself and everyone around you into a frenzy. Don't got out to your local bank and start withdrawing money, don't go out to your local supermarket and buy $200 worth of spam and don't go down to your local gas station with red gasoline jugs intending to fill up. Settle down people...you will be ok.

There is some truth to the impact. Up in Maine the price of Lobster has plummeted in the past week.

the international credit crisis has effectively shut off orders from major processors in Canada
(www.seafoodsource.com...

This article from the 9th, had the price near lows from the 80's! The entire industry is near collapse. Lobstermen have found it not worth fishing.

Your boy Karl was quoted in The New York Times today.

Late on Thursday, right after that awful 679-point drop in the Dow, I got an e-mail message from someone I didn’t know, a trader and blogger named Karl Denninger. “We have an extremely serious credit market dislocation about to occur — like maybe tomorrow,” he wrote. He asked me to call him. So I did.

“There is a flight of money from the U.S.,” he said breathlessly. “We need $2 billion a day in foreign capital to operate our government, and that has mostly come from China and the oil-producing countries. Now that money is leaving. We are going to have a complete lockup of the credit markets within 48 to 72 hours. Everybody is trying to push this off to the election. But we’re not going to make it to the election.”

Originally posted by Anonymous ATS
Everyone needs to settle down over this whole event. The media wants you to panic and fear the worst. The worst thing you can do is stir yourself and everyone around you into a frenzy. Don't got out to your local bank and start withdrawing money, don't go out to your local supermarket and buy $200 worth of spam and don't go down to your local gas station with red gasoline jugs intending to fill up. Settle down people...you will be ok.

Mr. President! I am honored to have you on this thread BUT - Haven't you noticed everytime you open your mouth things just get worse?

Seriously, it IS NEVER a bad idea to have a full tank of gas, extra non-perishable food and emergency cash in the house (with a gun if your State allows it). If you live in a hurricane prone state, or not, since there can always be an unexpected even natuaral calamity) it's par for the course. If you don't take some precautions in life, there will come a time you may regret it. I for one am only prepared to the point I would be anyway if a hurricane struck, since i do live in Florida.

As for the media, I don't think they are trying to scare us, but I am totally baffled at what I am seeing. Mostly because they have not been truthful about anything that's been going on to date, and I can't believe the change in tone now is what it is.

reply to post by Mainer



Thanks for the link Mainer - I missed it - lol!

That entire article is an excellent read, and finally they are talking to Karl too, and finally you can all see he is not alone in his take. There's some pretty good company being quoted along with him.

reply to post by Relentless


You're right Relentless, we should stock up on some standard goods and survival equipment. Let's just build up our own personal stock. That way when marshal law does take place and we get pulled from our homes, the military can have a ready supplied cache waiting for them in every home.

reply to post by 21Freeman


Let's not exagerate here - I am talking about a weeks worth of whatever would be needed, the same as hurricane prepartions.

I have never personally subscribed to, or encouraged major stocking, partially for the reasons you state, but also because you are just going to be a target of the criminal element too, if you obviously are okay when everyone else is hurting.

I intend to go down with the masses - if it gets that bad that I'm kciking myself for not having a 6 month stash, well, I think I'd rather starve to death than be here for it.

reply to post by Relentless


If you want to create a clean break from the system you first have to be a part of it. Don't try to go against the grain, instead go along with it and your cut will be smoother and cleaner. You can do a lot more damage from the inside out.

Bspiracy: Do you ever watch CNN? Have you ever seen a Democratic analyst diss Obama? Have you ever seen a Republican anaylst diss McCain? Never happens. They all have bias towards their own party (def: inclination towards a particular viewpoint). I, an alternative viewpoint type of person, will sooner believe information on conspiracy websites moreso than the info I see on CNN - so you could say I'm"biased" in favor of alternative viewpoints. I simply was trying to establish that my Dad, however, is "unbiased" i.e. no particular viewpoint towards information on conspiracy website - doesn't really agree, but doesn't really disagree with them. With this in mind, the fact that he 100% emphatically agrees with the explanation for this corporate financial mess (he's had experience in the big corp biz for 40+ years) - provided on a conspiracy website - says *alot* - at least to me.

reply to post by Bspiracy

Originally posted by Relentless
First, to my biggest detractor

: You and I have both been around long enough for you to know I have never been a (and did not intend to be now) a panic poster. But at the time I started this post, the world markets were spiralling out of control, as evidenced by the reports that came in Thursday night on this thread. We are in uncharted territory and info KD posts has always been on spot in terms of his economic insight.

Yes I know that. But still, I say you were definately jumping the gun. I was worried, stayed up most of the night watching different stock markets, and analyse of those markets, but there was nothing to indicate that a fundamental meltdown was going to occur.

That is not to say it wouldn't be bad, just that a meltdown was completely aggerating a sensitive situation.

I have to tell you if you think the Bailout had to happen, you obviously have not seriously researched the economics or the unconstitutional acts that happened to pass this piece of trash.

Trust me, I read the bill, all 400+ pages. Taking a fair amount of political science classes in college I have learned to understand the lingo.

Do I like it? NO. Was it necessary? Yes. Was all that BULL pork necessary? No.

Intervention was definately needed, but not what they did. I see no more clear evidence than how the crisis deepened after the backdoor/blackmail tactics used to pass this beast took place.

The reason for that, is because you don't see what happened as a result of the bailout not passing. There is no doubt our economy would already been in shambles if something was still not passed.

The meltdown of our economy won't be sudden. It will be a drain, followed by more drain, followed by cardiac arrest. This bailout will be the tourniquet. It is NOT a fix, and wasn't intended to be.

Things NEED to change once we apply this bailout, or else we will have the same situation over again. Credit risk management needs to be regulated. I won't go into details right now, just that this bailout was necessary. This credit crisis needs to be ended ASAP. The only ways to end the credit crisis is:
Bailout
Nationalization of the banking sector
... Thats really all I can think of. Either buying their bad assets, or having government take them over by force. You could guarantee interbank lending, but what happens when the bank lends out all sorts of money and then fails because they don't have the capital on hand, as a result of lending the money? Guess who would have to foot the bill. Us.

So aside from government nationalizing the banking sector, ending capitalism, there was no way to end this credit crisis WITHOUT putting tax payers on the hook.

None of us know what is going to happen, but after your initial cheap shot, which I have no problem with btw, your subsequent posts go on to give explanations of worsening conditions moving forward. Although you also indicate it will get better, your timeframe for this is well beyond my comfort level. I still see no one in a position to FIX this NOW global mess, indicating any real clue on what the solution is.

I am talking best case scenario in my posts. There is nothing to stop a recession. Its going to happen. IMO, the 4th quater, and probably the 1st quater, WILL experience negative growth. You could nationalize the banking sector tomorrow, and the 4th quater is still going to go negative.

The global mess is fixed, investors are just a step behind. The stock market does not always accurately reflect conditions of the now. When the stock market was 14,000+ it wasn't accurately reflecting our economy and such.

The simple truth is, this has happened before. And everytime it does, certain people get richer. The average investor loses big, because he is a step behind.

FYI - we do have this:
10/10/08 Ticker
He does know his stuff - read the ticker, then read this - short and sweet and amazingly simple. It's all spelled out in the link. I shall just quote the conclusions.

Yes but he is assuming we would have the time to do something like that. You do realize what happened to the stock market when lehman went under, right? You do his plan over the course of a week and the market would collapse on itself. Nobody would want any part of the banking sector because it would pretty much be a forced revaluation.

If you owned 100,000 in JPM, and tomorrow they were going to force revalue the company, and you knew that the company was going to, without a doubt, be valued less (since pretty much all the major banks have bad assets) what are you going to do? You are going to sell. The company becomes a HORRIBLE investment. Nobody will touch the banking sector. There stocks will, in all senses, crash.

You would have to do this one by one, over a prolonged period of time, and even then you will still see the market take a significant downturn.

Point is, with his plan, nobody would ever invest in any of the banks. Just imagine JPM, BAC, WFC, GS, and MS all just completely tanked to the point of crashing. Game over.

His plan says "Instantaneously", but it would also instantaneously crash the entire banking stock. None of those banks would be good investments with forced recapitalization.

After reading the plan, although I may have misinterpreted it, I do have a question. If both bank A and bank B are nearly cleaned out as a result of this plan, how are they going to lend to eachother? In fact, WHAT are they going to lend to eachother?

These firms, most likely, will at the time of this process, probably not get more than 20 cents on the dollar in equity. You just cut the company down by 4/5th, how are they going to be expected to lend?

I may have messed up my understanding off this, but it sounds as though this plan says "Lets force a revaluation of these banks, and when they all turn out to only be worth a fifth or less than what they were at before, they will lend again." If that is the case, it is wrong on so many different levels its not even funny.

Oh, and let me just clarify ONE MORE TIME. The premise of the Denninger post was the worst case scenario if we didn't act right now to stop the bleeding. I'm sure he will continue to analyze if the actions in the next couple of days are going to impact good or bad, and I for one intend to watch this closely. After how many down days on the markets in the past two weeks and the loses in the trillions on paper because of it, don't give you cause for pause, I am happy for you. I just can't ignore it myself.

IMO, this correction is a good thing, for those that know how to play it. Many people will lose their savings, and it is partially their own faults. The Denninger posts seems to make the assumption that after all these banks are exponentially cut down in value that they will lend again...assuming they have anything left to lend.

I am seeing people hurting so bad, and crime rising in my area in direct relation to state of the economy, people being laid off daily, people who haven't gotten laid off having their hours cut and they can't make ends meet now, and they just don't know what to do. I was chatting with a group of 40 something to 50 somethings yesterday afternoon, just a chance gathering, and they all said the same thing, not knowing whether to laugh or cry. "I feel like I'm 20 years old again!" Why? Because they are all now at a point in their lives where everything they worked for has crumbled, and they are back to living paycheck to paycheck. In fact those that are single are even back to sharing apartments with each other, truly living the way they did in their 20's, except now they don't have the luxury of time on their side for the future, or the optimism of their youth. Two to three more years of this? If they already can't make their rent/mortgage payments and the numbers continue to rise the way they are (which is the only scenario if this recession continues, even as it is now) what do you think this world is going to look like by the time it's over? Certainly not pretty and nothing like I've ever seen in my lifetime.

It's too bad they didn't think of that a year ago, or two years ago, or three years ago, or four, or five, because thats how long people have been warning about this. None of them cared. They care now. Today you turn a blind eye to a warning, and tomorrow you will face the disaster.

President Bush even attempt to stop this back in 2003. Congress shut him down and he gave up on pursuing it. Greenspan warned about it in 2005. Ron Paul warned about it for years.

These people didn't listen, so I have no sympathy for them. This is the kind of correction you get when you let the market and the banking sector get out of control. It seems that each generation has to learn the hard way.

The idea that this is a meltdown though, its not. Nobody likes a recession. Its never a comfortable thing. But it IS normal. It is a nasty recession. Maybe it is effecting your area particularly hard, for whatever reason. The fact is though, we have seen worse.

If the bailout fails to do anything, I might change my tone since socialism and a banking collapse would be about the only two ways out of the mess.

reply to post by grimreaper797


We shall agree to disagree I guess on a lot of points over this, but I'm going to say just two things right now (because your questions about Denningers plan are all answered on his board, and if you can't find it, you can ask him directly (Genesis) or Pika-Steph who might be a tad more gentle with you - lol.)

The people you say should have seen it coming 5 years ago did. These were not blind eyed J6P's, I don't hang around with them, I just have to deal with those on a daily basis. These guys had no control over their accounts (large respectable companies owing 3 figures) losing the ability to pay them, resulting in their own demise. Or just people living normal quiet lives (not excess - no McMansions, SUV's or stupid electronic toys) taking pride in their work and their families.

You've seen worse? How old are you? Because the only people I meet who remember anything worse are in their 90's, lived through the Depression and are saying it feels like it's coming back. Everyone else, 70 somethings on down, says they have lived through all the major ups and downs before, even lost everything and came back from it, never flinched, but they have never seen it this bad, not the financial situation, not the total disregard of their government against them, nothing.

What I see when I look at all of this is "We literally have 24-48 hours before complete Armeggedon world-wide." Pretty much nothing else that is said on that website or by anyone here matters to me. It's that one statement that I will hold anyone to who buys into that bold statement. As far as I'm concerned it has already turned into bunk, but I'll be nice and give the end of the world til the 12th to show it's face. I suspect the only thing that will happen is ruined reps.