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"Merrill Lynch: U.S. Could Face Global Funding Crisis"

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posted on Jul, 16 2008 @ 06:37 AM
Too little, too late. After eight months of denying any real economic downturns, here is the reason for the President's dog and pony show and Bernanke and Paulsen's stepping and fetching before CONgress:

US faces global funding crisis, warns Merrill Lynch
The US Treasury may have just days to act before foreign patience snaps, writes Ambrose Evans-Pritchard

Merrill Lynch has warned that the United States could face a foreign "financing crisis" within months as the full consequences of the Fannie Mae and Freddie Mac mortgage debacle spread through the world.

Draining away: The US may struggle to plug its capital gap
The country depends on Asian, Russian and Middle Eastern investors to fund much of its $700bn (£350bn) current account deficit, leaving it far more vulnerable to a collapse of confidence than Japan in the early 1990s after the Nikkei bubble burst. Britain and other Anglo-Saxon deficit states could face a similar retreat by foreign investors.

"Japan was able to cut its interest rates to zero," said Alex Patelis, Merrill's head of international economics.

"It would be very difficult for the US to do this. Foreigners will not be willing to supply the capital. Nobody knows where the limit lies."

Brian Bethune, chief financial economist at Global Insight, said the US Treasury had two or three days to put real money behind its rescue plan for Fannie and Freddie or face a dangerous crisis that could spiral out of control.

So it's not so much the economic troubles of U.S. citizens. It's not the failing U.S. Financial system, in dire need of an overhaul and better regulation. No, it's foreign investers. That's who we work for now, the President included.

[edit on 16/7/2008 by kosmicjack]

posted on Jul, 16 2008 @ 07:02 AM
reply to post by kosmicjack

In the words of The Who: "New boss, same as the old boss...." Do the oppressed really care who is doing the oppressing?

Our entire economy seems to be one big scam to screw the middle class and below.

posted on Jul, 16 2008 @ 07:38 AM
Well, one thing the SEC decreed yesterday (most likely with the advice from our Federal Reserve) was that All 'naked shorting' of Financial Stocks
is no longer permitted.

that translates as the big players, aka 'Primary Dealers'/Investment houses/Brokers ....
such as ML, LEH, GS, Freddy & Fanny and the 18 or so others cannot now be 'shorted'...(but these same institutions can 'short' the Japaneese Yen and manipulate the carry-trade!)

Here's another thing to consider with this new 'decree'...
a naked short is when one shorts a stock without having actual stock 'cover' the 'short'...
How can an investor acquire the proper ammount of stocks to accomplish their 'short' position?
by buying & owning that many shares would be near impossible...
so the investor who desires to 'short' a stock (financials are no longer allowed to be targets) will 'borrow' stocks to secure their position.

How can one 'borrow' stocks? One way is to go to a great source...
The SEC has allowed only a handful of Financial Houses/Brokerages
to act as 'custodians' of IRAs, 401Ks, ROTH accounts---

pretty much the same list of ML, LEH, GS, and other prominent bankster elites who make up the cadre of financial & primary dealers the Fed and Treasury have been bailing out since last Aug-Sept of '07.
Once again we see the rules changes, in this case to both protect the banker elites from speculation that has driven down these financial houses market capitalization...and to give these financial houses the opportunity for an unfair advantage in 'Borrowing' stocks to 'short sell'.

How would these institutions be in an advantageous position to make money?
Well. as i noted these financial houses are the few handfull of "
Authorized" Custodians of the millions of IRAs,
lets say i have a
IRA holding 2,000 shares of Intel, sitting there idle 24/7/365
all the 'custodian' has to do is 'borrow' my shares of Intel, every day of the year (because its a retirement account) and make money 'shorting' Intel or using those shares as collateral for a 'long' position...all without my being any the wiser, because on Paper --- my shares are physically in their hands as my custodian...and it will take 15-30 days for my holdings to be monetized and a check presented to me at my retirement.

Once again the SEC, Fed, Treasury, have all colluded to bring wealth opportunity to their favorite class, the inner circle of elite banksters.

The supposed 'naked shorters' have been excluded by the monopolistic money managers. All being technically legal and fakely moralistic in punishing the 'market manipulators' the PTB are trying to demonize as the cause of the current markets & financial turmoil, as i cite Freddy-&-Fannie & the oil futures.... ~Diversion tactic~

posted on Jul, 16 2008 @ 07:42 AM
reply to post by St Udio

I thought naked shorting was illegal? I'm confused.

posted on Jul, 16 2008 @ 11:29 AM

Originally posted by kosmicjack
reply to post by St Udio

I thought naked shorting was illegal? I'm confused.

see: dated, July 15, 10:51 pm ET
"SEC issues emergency rule to curb short sales"

which says in part... referring to unborrowed shares, aka naked shorts
"...if it is done intentionally it is illegal."

the SEC and others turn a blind eye when the financial houses, brokers etc, are shorting to make themselves profits... ((which may include the 19 financial institutions mentioned in the article, which are now getting special 'shorting' protection by the SEC finance governors)) [which now includes the Fed with the new powers yet to be ratified]

most of the intentional 'naked shorts' were done or are allegedly done by offshore brokers where the practice is not illegal.

all of this sunshine on the un-ethical dealings that is prevelant in the finance sectors is also going to hurt the US ability to garner any further Global funding... such as Soverign Wealth Funds which have another $3+ Trillion available in USA funny-money.

the system as it is broken, so here comes the fascism model to save us from economic collapse


note that at the 12:30 market report, 'Financials' are up 6.1%,
why is that?... could the SEC (with the Fed encouragement) emergency announcement
of rules changes which includes protecting the financials from shorting (naked or otherwise) also protecting the almost 'nationalized' Fannie Mae & Freddie Mac mortgage GSEs??
but still turning a blind eye to these same financials mining my/our retirement holdings for the required 'borrowed' stocks to cover their Short positions? (any any extra 'shorts' being accidentaly naked shorts)
or continually shorting the carry trade/ Japanese Yen for some profits.

no, the money industry sees where this new rule thing is going.. its there to protect the money making cartel, the elite banksters/oligarchs...
and thats why the 20 primary finance institutions market caps are rising significantly....

[edit on 16-7-2008 by St Udio]

posted on Jul, 16 2008 @ 11:33 PM
Cripes, another sobering assessment. The entire blog is worth a read:

With the death of the IndyMac Bank last week, and the GSEs Fannie Mae and Freddie Mac laying side-by-side in the EMT van on IV drips, headed for the Federal Reserve's ever more crowded intensive care unit, there was a sense of the American Dream having passed through the event horizon that denotes the opening of a black hole…

What would happen if the US Government acted to bail out these feckless enterprises (and what if they don't)? Either way, it's not a pretty picture. If Mr. Bernanke does start shoveling loans into the GSE black hole, he'll further undermine the soundness of his own outfit and do nothing, really, to repair Fannie and Freddie's structural problem of having securitized too many loans that will never be paid back. If instead Fannie and Freddie are flat-out taken over entirely by the US government (and remember the Federal Reserve is not the government), then the national debt will roughly double overnight -- which will pound the US dollar down a rat-hole.

Meanwhile, the foreign holders of those decrepitating dollars might not rush to the redemption window, but they certainly would use them to buy up every oil futures contract on God's not-so-green Earth as fast as possible -- they'd be dumb not to -- which would leave American Happy Motorists with gasoline prices north of $5 a gallon, and possibly north of $10. (In that case, say goodbye to the airlines. In fact, say goodbye to what passes for the rest of the US economy, including especially the vaunted retail sector that supposedly counts for 70 percent of the action.)

If Fannie and Freddie are left to die out on the desert floor, say goodbye to the housing market, the major investment banks, countless regional banks, the retirement accounts of virtually everyone in America, the viability of all fifty states' governments, and the day-to-day operating ability of all their municipalities -- and very likely the current incarnation of the world banking system.

This process is really out of control now. The bottom line is the comprehensive bankruptcy of the United States. The Republican Party under George Bush will be known as the party that wrecked America (release 2.0). Painful as it is, Americans had better get a new "Dream" and fast. It better be a dream based on the way the universe actually works, which is to say an operating procedure run on earnest effort and truthfulness rather than merely trying to get something for nothing and wishing on stars. We might begin symbolically by evacuating Las Vegas and calling in an air strike on the loathsome place -- to register our new reality-based attitude adjustment.

posted on Aug, 6 2008 @ 07:16 AM
One way to protect shares from being borrowed for short-selling, would be to ask for written confirmation from the trust agent that the IRA assets are being held in traditional 'custodial' form, the retirement account opposed to the custodian's name...or the 'street' name as an asset on the brokers balance sheet.

An alternative would be to register the securities as a book entry using the DRS (a free service). As of 2008, all publicly traded securities are eligible for Direct Registration. In this manner, the shares can be registered with the company's transfer agent under both the retirement account name..and..the custodians name. This renders the assets untouchable...without the owners foreknowledge and signature.

Wall Street war: A win for Utahn
Byrne's battle helps bring curbs on naked short-selling practices

Extend ban: Byrne said he wants the ban on naked short-selling extended to all publicly held companies. He may be successful. SEC Chairman Christopher Cox told Congress last week that a proposal expanding the order to cover all public companies will be introduced soon. Full Text

For me, the NS issue is getting kinda personal. Hold two issues on the current SHO-List...Overstock isn't one of them. Reappears on the Regulation SHO Threshold List

[edit on 6-8-2008 by OBE1]

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