Planetary financial crisis next week around Oct 7? [Archive]

Merlyn

10-03-2008, 06:34 PM

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Notice in the article below it talks about the LIBOR inter bank lending that Jim Sinclair mentions in the post above.

Article from: http://www.theaustralian.news.com.au/story/0,25197,24443093-5014020,00.html

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US government rescue may prove too feeble
Scott Murdoch | October 04, 2008

GLOBAL equities markets are stuck in a rut and there seems little to prompt a reversal in the savage sentiment towards stocks.

The US government rescue package is weak and instead of providing the momentum expected, it seems to be failing.

The response to the $US700 billion ($895 billion) plan shows the fragile state of the markets and that they are prone to over-reaction.

It is easy to chart the financial market's performance through equities and for most investors that is where the importance lies.

But the market carnage extends deep beyond global share markets, with the problems rooted in money and credit markets. As the second leg of the credit crunch appears to be worse than the first, which took the world by storm last year, credit markets are in disrepair.

Macquarie's senior debt is about twice as expensive as it was this time last year and across the board corporate debt has become relatively unattractive to hold.

The credit default swaps are at 697 for the senior debt and 997 for the subordinated tranche.

Before the credit crunch, the senior was priced at 200 and the sub-debt at 400, showing the rates have more than doubled.

In comparison, the major diversified financials are trading at around the 200 mark, showing many in the market are unsure how Macquarie will perform in the near term.

"The Macquarie halo has slipped," a debt trader says. "Not only is it now regarded as just another investment bank, the refusal to give a clear picture of gearing and capital means it will trade at a discount in this market," he says.

But the upshot of this ruction has flowed through to the money markets and while fear grips them, banks are choosing to hoard cash on their balance sheets. Instead of lending it out and financing corporate activity, global banks consider it safer and indeed more logical to hold the money.

This is where the real problems lie: if there is no liquidity and therefore no lending, the effects on the real economy are at risk of being worse than first thought.

At present, the corporate money-raising pipeline is virtually shut and business is being forced to return to the traditional banks for financing.

But around the world, most of those banks are struggling to gain new funding. In Australia, banks have been relatively active in ensuring their capital needs remain well funded.

This week, ANZ completed a $1.03 billion convertible preference share issue that was seized on by institutional investors.

Similarly, Westpac raised $1.48 billion in a domestic bond issue in two tranches. The first part was an $830 million piece of its September 2010 fixed and floating rate, which was bolstered with a further raising of $650 million.

The deal effectively priced both tranches 75 basis points above the swap rate.

The effect of the crunch is being emphasised in the money markets.

In Australia, the funding spread the banks rely on mostly is the difference between the 90-day bank bill rate and the Overnight Index Swap.

That stands at a spread of 65 basis points, almost triple the points it was at when the Reserve Bank of Australia met in September and reduced the official cash rate by 25 basis points.

A widening by that much surely supports the case for the RBA to cut the rate by 50 basis points when it meets on Tuesday.

In the international credit markets, the fear has proved too strong and pushed interbank lending rates up to all-time highs.

The three-month Libor rate is up to 4.21 per cent, which has in turn pushed Libor-OIS spreads to 260 basis points and the TED Spread (the spread between Libor and 90-day Treasuries) is at 360 basis points.

These all indicate that money market rates are through the roof and even with the rescue package expected to be approved by the US House of Representatives, calm will not necessarily result.

"We are again heading into another, no doubt, historic weekend with the US Government in crisis, financial markets convulsing, and corporates gasping for finance," BNP Paribas credit analyst Brett Williams says.

"Stir in some foul US jobs data, and you set in train negative momentum that could overwhelm any government or regulatory help."

There have been some problems identified with the US emergency bailout package, the least being its sheer size.

On the surface, $US700 billion is headline grabbing because it is a big number, but compared with the $US10 trillion mortgage market, it is a mere helping hand.

There are also worries that the legislation has been made too transparent in order for it to progress through Congress. The favouring of a "reverse auction" process means a bid spread will be lodged, and when price discovery is made, the banks could be forced to write down further assets on their books.

The reaction of all asset markets indicates the bailout will not prove as effective as first thought.

There was the expectation the package was the legislative reform that would prove fundamental because, for once, it was not just an injection of cash.

But as the "announcement value" is depleted, the effect of the package is weakening.

"This is turning into a tragedy," one bank boss says.

There is no guarantee any potential relief rally will be sustainable or that the financial system's shakes will be soothed after the policy makers cast their final votes.

Merlyn

10-03-2008, 06:42 PM

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Another article about what Jim Sinclair is warnig regarding the LIBOR rate

Libor Rises, Commercial Paper Slumps as Credit Freeze Deepens

By Bryan Keogh

Oct. 2 (Bloomberg) -- Interest rates on three-month dollar loans rose to a nine-month high, short-term corporate borrowing fell by the most ever and leveraged loans tumbled, exacerbating the credit freeze that's paralyzing businesses around the world.

The London interbank offered rate that banks charge each other for loans rose for a fourth day, driving a gauge of cash scarcity among banks to a record. The biggest drop in financial short-term debt outstanding since at least 2000 caused the U.S. commercial paper market to tumble 5.6 percent to a three-year low, according to the Federal Reserve.

The crisis deepened after the worst month for corporate credit on record. Leveraged loan prices plunged to all-time lows, short-term debt markets seized up and even the safest company bonds suffered the worst losses in at least two decades as investors flocked to Treasuries. Credit markets have frozen and money-market rates keep rising even after central banks pumped an unprecedented $1 trillion into the financial system.

Rest of article at: http://www.bloomberg.com/apps/news?pid=20601087&sid=a0JbUyhTA71Y&refer=home

Merlyn

10-04-2008, 01:39 PM

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Jim Sinclair has posted this at his site:

Posted On: Friday, October 03, 2008, 8:06:00 PM EST
In The News Today
Author: Jim Sinclair

Thought for the weekend:

The entire financial world hangs by the LIBOR rate. It better drop Monday morning and stay down or it has all hit the fan.

LINK: http://www.jsmineset.com/

See also this link that mentions 54,000 billion credit derivatives and Oct 6

Settlement day approaches for derivatives
http://www.ft.com/cms/s/0/6beabcdc-8f51-11dd-946c-0000779fd18c.html

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Noela

10-04-2008, 03:33 PM

I have spent the morning reading "The Guardian" U.K. (4 October). Here are a few snippets -
"Gordon Brown yesterday created a new 19-strong national economic council as he effectively put the government on an econimic war footing. 'the new problems have completely changed, so it is not just what the Treasury does, but also energy, food and housing'
the prime minister said.

"EU commissioner (Peter Mandelson) returns to government as crisis rquires 'all hands to pump'.
Mandelson ....was only asked to return to the cabinet on Thusday." (Other changes to the cabinet include Hilary Benn as Minister for a "new food department")

"Amid fresh signs that the economy is on the brink of recession, the Financial Services Authority said it would increase the security on deposits from £35,000 with effect from TUESDAY (my caps)...."

Heading of article by Nils Pratley - "When the Bank is buying car loans, you know this is a crisis". He continues "We swap US student loans for cash for three months. No, this is not an offer from a Bayswater money-changer. It comes directly from the Bank of England, which is now accepting some eye-catching forms of collateral. Car loans and equipment leases also make the grade........

" (The Bank of England) last week ..provided £40bn to the banks. On TUESDAY, (my caps.) it will offer another £40bn against the wider pool of collateral. Then it will hold another six weekly auctions of undetermined size. Then there is $70bn lent in overnight, six-day and one-week operations. Add it all up and it seems that the Bank has essentially replaced the gummed-up wholesale funding market. It is the only guy in town prepared to lend.

........"There is an understandable tendency to think that the Bank, when it makes big interventions in the money markets, knows that a piece of bad news is coming down the slipway."

Noela

tandiwe

10-04-2008, 08:56 PM

Just for info. Have just watched the BBC 9.40 pm news report in the elections in the US and the presenter actually mentioned an "October surprise"!!!! As something that would change the course of the election. Did anyone else see this?

xt

Powerinourhandsl

10-04-2008, 11:11 PM

Oh sugar!!

Listern to the latest , seems all will hit th efan on Tuesday
http://www.projectavalon.net/forum/showthread.php?t=4166

Jenny

10-04-2008, 11:15 PM

As I understand what Deagle talked about was; The string of events will be unleashed on october 7th.
What that entailes is unclear.

Jenny

Carol

10-04-2008, 11:35 PM

Urgent we need your help now with spiritual intevention...
Please listen to Bill Deagle's interview.

It is about the blood sacrifice of America.

http://projectavalon.net/bill_deagle_4_oct_2008.mp3

Rundeaf

10-05-2008, 12:43 AM

Hi, I'm new to the FPA. I'm totally deaf (severe hearing losses in both ears since I was a tyke) and I would like to know what Bill Deagle was saying from the unedited audio file, if you please provide what he's saying in a summary?

Thanks. :original:

houman

10-05-2008, 12:57 AM

AIG subsidiary parties in style in OC, two weeks after bailout :biggrin2:
http://taxdollars.freedomblogging.com/2008/10/02/after-federal-bailout-aig-fetes-in-style-in-oc/?ref=patrick.net
http://taxdollars.freedomblogging.com/files/2008/09/st-regis-aerial-300x183.jpg

The giant sucking sound :biggrin2:
http://3.bp.blogspot.com/_nSTO-vZpSgc/SORr5XFD40I/AAAAAAAADYc/518upy6oFuI/s1600-h/Giant%20Sucking%20Sound.png

Merlyn

10-05-2008, 03:33 AM

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I am not sure I agree with all of what Bill Deagle said in this Oct 4 phone call.
One thing he said was that the Bank problems would start in Europe and
Jim Sinclair posted the below message and note Jim states "Dear International
Friends" that suggests the problem may start overseas but Jim has also
suggested that people in USA get some cash on hand. I think Jim's advice is
good and not fear based but just practical.

Posted On: Saturday, October 04, 2008, 2:37:00 AM EST
Thoughts For The Weekend
Author: Jim Sinclair

Dear International Friends,

Maybe you should consider a visit to your local bank for their abbreviated Saturday hours.. What do you have to lose? That all depends on how much you have deposited there...

I have no doubt that $1650 will come. My concern is not that it will not happen, but that I am much too conservative in my long-term price objective held since 2000.

If major banks can be torn apart how can we have faith in the small local institutions that hold most of your ready cash?

When I said "This is IT," it is not something that I take lightly. Never in 49 years in finance have I seen a set of circumstances so challenging to the man in the street.

What I am getting at is a simple question. Are you prepared? You have heard us talk repeatedly on removing financial intermediaries between you and your assets, but the time has come for us to recommend going one step further:

Hold enough cash at your household to last you a month or two. It may be largely unnecessary for the majority, but what do you have to lose? If your bank should fail this will save you a lot of grief in the short term. If they do not, you still have all your cash that can easily be deposited back into your account.

Regards,
Jim

From: http://www.jsmineset.com/

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Carol

10-05-2008, 06:14 AM

peaceandlove

10-05-2008, 06:52 AM

Article posted October 2, 2008 at the Charlotte Observer Website:

Wachovia faced a 'silent' bank run
Fearing a loss of funding over the weekend, the FDIC forced the sale.
http://www.charlotteobserver.com/business/story/226799.html

Obviously there is not enough money to cover the deposits probably in any of the banks and if everyone withdraws their funds there will definitely be a crash. Oh, the dangers of counterfeiting money. endthefed.us

As the banks go down and mergers increase we are fueling the NWO with their control of the central banking system.

With Peace and Love in Mind, :wub2:

Merlyn

10-05-2008, 01:17 PM

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The danger to the Banks is not just a run on them by individual depositors but
the LIBOR rate (interbank loan) that they need to keep operations going. The Banks do not trust each other and are holding money back this is why the FED and central banks are pumpimg money into the system.

Yes everyone going to get their money out might be even more problem and if
this goes into hyperinflation holding your money anywhere at bank or at home will be a bad idea.

The FDIC can only insure a small percentage of the deposits right now their fund is around $40 billion and Washington Mutual alone had $188 million in deposits. So the FDIC could not back up Washington Mutual's failure. If only 10% (maybe even less today) of a fractional reserve Bank deposits are taken that Bank will probably fail.

Jim Sinclair is not saying take all of your money out just enough to last a couple months and then you can put it back in your bank if everything is okay.

But if you start to see hyperinflation start then consider converting money
into property, gold, silver, food, etc... again do not fear or panic ... keep a calm and cool head but do your planning and prepare.

It is already happening in Iceland see thread:
http://projectavalon.net/forum/showthread.php?t=4205

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pineal-pilot-in merkabah

10-05-2008, 02:00 PM

if you have been broke and homeless for a year will it make a difference.. i think we still need to prepare.. im homeless and was broke/soon to be broke again lol

Rundeaf

10-05-2008, 02:56 PM

Thank you, Carol. :)

Merlyn

10-06-2008, 03:01 PM

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Have you followed Jim Sinclair's advice above?

Hold enough cash at your household to last you a month or two. It may be largely unnecessary for the majority, but what do you have to lose? If your bank should fail this will save you a lot of grief in the short term. If they do not, you still have all your cash that can easily be deposited back into your account.

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tommy38

10-06-2008, 03:16 PM

From todays (Oct 6, 2008) London Telegraph
Quote – We face extreme danger…we risk a disintegration of global finance within days.
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/3141428/Germany-takes-hot-seat-as-Europe-falls-into-the-abyss.html

Well, well…….

Merlyn

10-06-2008, 03:29 PM

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Europeans and everyone is trying to shore up their Banks.

If depositors start to get nervous they may pull some. most. or all of their
money. FRactional reserve Banks only required to have 10% to cover so if more than that is withdrawn the Bank is gone. The FDIC cannot cover more than 40-50 billion at this time. The FED could step in and probably will.

That is why t be good Jim Sinclair's advice above might be good take some money but not all of it so you have some cash for a month or two.

Europe governments strive to avoid bank meltdown
http://biz.yahoo.com/ap/081006/eu_europe_meltdown.html

Treasury and Fed pledge rapid response to crisis
http://biz.yahoo.com/ap/081006/meltdown_administration.html

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Merlyn

10-06-2008, 04:40 PM

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Notice how they are all rushing to convince people to keep money in the Banks by "guarantees all savings" recall in the $700 billion bailout that now appears to be failing they boosted FDIC to $250,000.

Look at Jim Sinclair's advice above.

Global markets in meltdown as shares in London AND New York plunge to four-year low
By Nicola Boden
Last updated at 4:50 PM on 06th October 2008

* FTSE dips by staggering 8% as Dow plunges
* Utter confusion after Germany guarantees all savings
* Austria, Denmark and Sweden decide to follow suit
* Iceland forced to suspend trading for six major banks
* Economic 'war cabinet' meets to discuss crisis

More at link: http://www.dailymail.co.uk/news/article-1069374/Global-markets-meltdown-shares-London-AND-New-York-plunge-year-low.html

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Merlyn

10-06-2008, 04:47 PM

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This extract from: http://www.timesonline.co.uk/tol/news/world/us_and_americas/article4888292.ece

Even after the bailout announcement, there was renewed speculation that National City, one of the biggest mortgage lenders in Ohio [a key swing state], may be next. Fifteen banks in America have gone bust since the beginning of the year, rapidly depleting the federal insurance fund, which has just $45 billion assets but insures more than $1 trillion worth of deposits.

More and more people are learning about just how much the FDIC has and that it is not enough. The "silent run" on banks right now is by those who know. Do not fear or panic but Protect yourself.

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zorgon

10-06-2008, 05:02 PM

Sooo If we all head over to the bank right now and pull our money...

Will that not GUARANTEE that tomorrow they close?

:mfr_omg:

Wamu went through the transition to new owners with not even a 'hiccup' to service.

But keeping some cash on hand, if you can afford to... is never a bad idea.

While Gold and Silver may be of use if you have a lot of cash on hand, it is really useless for the average person.. what are you going to do... carry a file, a scale and your gold in your pouch? How much gold for a loaf of bread?

Can you even buy gold now? I hear the dealers are out... they are giving you paper instead... so if all collapses... how will you convert that paper into gold?

Hehe Go buy some gemstones instead... not as heavy, just as valuable.

Has everyone seen this film yet? There are so many threads its hard to get them all:biggrin2:

http://www.brasschecktv.com/page/135.html

Merlyn

10-06-2008, 05:08 PM

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Jim Sinclairs's advice (quoted below) was NOT to pull all of your money out of the Bank but enough cash for 1 -2 months. It probably would be good idea to buy a few things food etc... Do not fear or panic just think what makes good sense to do.

Hold enough cash at your household to last you a month or two. It may be largely unnecessary for the majority, but what do you have to lose? If your bank should fail this will save you a lot of grief in the short term. If they do not, you still have all your cash that can easily be deposited back into your account.

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zorgon

10-06-2008, 05:17 PM

Well no worries here... I have no problem going 'medieval' for a few months... :biggrin2:

Merlyn

10-06-2008, 08:07 PM

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The Fed keeps on wasting time while the mother of all bank runs is underway
Nouriel Roubini | Oct 6, 2008

Last Friday I pointed out in my “Financial and Corporate System is in Cardiac Arrest: The Risk of the Mother of All Bank Runs” that we were at the point of a risk of a systemic financial meltdown with the beginning of the mother of all bank runs: stock markets gave a vote of no confidence to the Senate passage of the TARP legislation (equities down 4% on Thursday) and to the House passage of the legislation on Friday (equities down 3% after the passage of the bill in the House). At the same time last week money markets, interbank markets, credit markets were all imploding with all interbank spread at new all time highs, credit spreads going up through the roof and the roll-off of the financing – via commercial paper – of the corporate system. As I put it last week we were facing:

- a silent run on the huge mass of uninsured deposits of the banking system and even a run on some insured deposits are small depositors are scared;

- a run on most of the shadow banking system: over 300 non bank mortgage lenders are now bust; the SIVs and conduits are now all bust; the five major brokers dealers are now bust (Bear and Lehman) or still under severe stress even after they have been converted into banks (Merrill, Morgan, Goldman); a run on money market funds restrained only by a blanket government guarantee; a serious run on hedge funds; a looming refinancing crisis for private equity firms and LBOs);

- a run on the short term liabilities of the corporate sector as the commercial paper market has totally frozen (and experiencing a roll-off) while access to medium terms and long term financings for corporations is frozen at a time when hundreds of billions of dollars of maturing debts need to be rolled over;

- a total seizure of the interbank and money markets.

This is indeed a cardiac arrest for the shadow and non-shadow banking system and for the system of financing of the corporate sector. The shutdown of financing for the corporate system is particularly scary: solvent but illiquid corporations that cannot roll over their maturing debt may now face massive defaults due to this illiquidity. And if the financing of the corporate sectors shuts down and remains shut down the risk of an economic collapse similar to the Great Depression becomes highly likely.

Indeed by last week a mother of all bank and non-bank runs was underway and even a well designed and well implemented TARP (let alone the poorly designed one passed by Congress) could not address the problem of a short term liquidity panic and run.

And with the liquidity and credit and banking crisis hitting European financial institutions this severe crisis was becoming global last week. I then suggested that only radical and urgent action could stop this mother of all runs such as the following ones:

LINK:
http://www.rgemonitor.com/roubini-monitor/253907/the_fed_keeps_on_wasting_time_while_the_mother_of_ all_bank_runs_is_underway

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Merlyn

10-07-2008, 12:02 AM

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Fed Boosts Cash Auctions to $900 Billion, May Do More (Update4)

By Scott Lanman and Craig Torres

Oct. 6 (Bloomberg) -- The Federal Reserve will double its auctions of cash to banks to as much as $900 billion and is considering further steps to unfreeze short-term lending markets as the credit crunch deepens.

``The Federal Reserve stands ready to take additional measures as necessary to foster liquid money-market conditions,'' the central bank said in a statement released in Washington today. The Fed and Treasury are ``consulting with market participants on ways to provide additional support for term unsecured funding markets,'' including short-term corporate financing called commercial paper, the statement said.

Today's steps follow a hoarding of cash by banks that sent the premium on the three-month London interbank offered rate over the Fed's benchmark interest rate to a record. Industrial companies are also finding it harder to raise cash after the market for commercial paper shrank to a three-year low as investors flee even borrowers with few links to mortgages.

Rest of story at: http://www.bloomberg.com/apps/news?pid=20601103&sid=ad_vdapfkxao&refer=us

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Rocky_Shorz

10-07-2008, 01:59 AM

The Libor-OIS spread hit its seventh consecutive record at 2.94 percentage points Monday before retreating slightly to 2.87 points, after climbing from 2.86 points Friday...

What did you say the breaking point will be?

How low should it be for things to start rolling again?

Merlyn

10-07-2008, 02:24 PM

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The Libor-OIS spread hit its seventh consecutive record at 2.94 percentage points Monday before retreating slightly to 2.87 points, after climbing from 2.86 points Friday...

What did you say the breaking point will be?

How low should it be for things to start rolling again?

Rocky_Shorz,

I did not say a breaking point and it was Jim Sinclair warning about the LIBOR rate (he did not state what you are asking for). You may want to check his website at http://www.jsmineset.com and today Jim has this posted this morning.

Posted On: Tuesday, October 07, 2008, 9:54:00 AM EST
Fed Enters Off Balance Sheet Credit Default Market
Author: Jim Sinclair

Dear CIGAs,

Today the Fed entered the off balance sheet credit default market and plans to buy unsecured debt instruments in order to cure the problems caused by off balance sheet credit default derivative buying in the form of non-performing failed counterparty credit default derivatives. This appropriately named toxic paper will be purchased to an infinite degree.

The Fed does the same to cure the same.

The Fed actions today declare the bailout bill a non-functioning pile of pork. This infinite production of paper dollars will kill the dollar

Gold will trade at or above $1650.

The Dow is thumbing its nose at the infinite amount of money being dropped by rising 150 points and coming back to even.

Modern day Weimar here we come!

Jim

Weimar refers to thew Germany monetary collapse which was apparently caused by printing and printing money. Thus if the FED continues to pump out money then we might be in a Weimar "hyperinflationary" situation like Zimbawe is in.

So when we look back this action today by the FED might be seen as a big domino falling. Wait and see.

Second Source:
Fed to buy massive amounts of short-term debt
Tuesday October 7, 9:51 am ET
http://biz.yahoo.com/ap/081007/financial_meltdown.html

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Merlyn

10-07-2008, 03:05 PM

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More signs they are very worried about keeping people
from a Run on the Banks. People may lose faith in money (really debt)
and realize the value "could" go to zero. Do not fear or panic
but take common sense precautions to protect yourself.

Since Gold and Silver are getting very hard to buy then
consider other things of value -IF- the inflation goes hyperinflationary.

EU raises banking guarantee to euro50,000
Tuesday October 7, 9:28 am ET
EU sets guidelines on how governments can save failing banks

LUXEMBOURG (AP) -- The European Union said Tuesday it will raise its minimum bank deposit guarantee to euro50,000 (US$68,160) as they agreed on guidelines to deal with banks in danger of collapse amid the global financial crisis.

Rest of story at: http://biz.yahoo.com/ap/081007/eu_eu_meltdown.html

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Merlyn

10-07-2008, 04:43 PM

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Rocky_Shorz and everyone,

I looked around about the LIBOR rate that Jim Sinclair warned about and found the following:

LIBOR OIS Spread Signals Credit Crisis Earthquake

The Money Morning team has continued to watch this important risk indicator, and has regularly reported our findings to you. Each time, we've preached caution, even though the pundits were telling the masses that the bailout plan was a panacea for what's actually a financial mess whose fallout continues to spread.

So what is LIBOR telling us now?

Unfortunately, the worst is still yet to come. That's it. No sugar coating. No rose-colored glasses.

Yesterday (Monday), the spread between Overnight Indexed Swaps (OIS) and the three-month LIBOR rose to an all time high of 2.94%. The LIBOR/OIS spread measures the amount of cash available for interbank lending and is used by banks to determine interest rates. The wider the spread, the less cash there is to go around. This is telling us that banks, despite billions of central-bank support in recent months, are still cash-strapped and are disinclined to lend money either to each other or to consumers.

Then there's LIBOR itself, the rate that banks charge each other for overnight dollar loans, which rose to 2.37% yesterday, the British Bankers' Association said. The three-month LIBOR rate has retreated only slightly from a nine-month high of 4.33%, set last January.

LIBOR actually is a set of rates, and is calculated for several currencies based on periods ranging from overnight to 12 months. That, in turn, determines prices for financial contracts valued at $393 trillion as of Dec. 31, or $60,000 for every person in the world, and helps set consumer interest rates on everything from home loans to credit cards, Bloomberg News reported. The BBA compiles the dollar rate every day from data submitted by 16 banks, including Deutsche Bank AG ( DB ) and Royal Bank of Scotland Group PLC (ADR: RBS ). There are also rates for the euro, Japanese yen, British pound, Swiss franc, and Australian and Canadian dollars.

During the past week, as U.S. lawmakers tussled over a bailout plan and governments in Europe were forced to intercede to rescue five banks , the cost of one-month bank loans in euros and overnight dollar loans soared to records. That basically means banks are hoarding cash, a reality that raises borrowing costs and causes economies worldwide to slow. Yesterday's three-month LIBOR for loans in dollars jumped to 4.33%, Bloomberg reported.
Meanwhile the so-called TED spread or the difference between three-month LIBOR and what the U.S. Treasury pays for a three-month loan hit an all-time high of 3.93%, before pulling back slightly. The TED spread provides a gauge of how likely banks are to lend to each other, rather than to the Federal Government.

LINK: http://www.marketoracle.co.uk/Article6666.html

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Merlyn

10-07-2008, 05:03 PM

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Another article that helps understand the problem and the LIBOR rate the
following is just an extract see rest of it at link below.

Blocked pipes
Oct 2nd 2008 | LONDON AND NEW YORK
From The Economist print edition
When banks find it hard to borrow, so do the rest of us

First, the problem. It is widely assumed that central banks set the level of interest rates in their domestic markets. But the rate they announce is the one at which they will lend to the banking system. When banks borrow from anyone else (including other banks), they pay more. Every day, this rate is calculated through a poll of participating banks and published as Libor (London interbank offered rate) or Euribor (Euro interbank offered rate).

Normally, these are only a fraction of a percentage point above the official interest rates. But that has changed dramatically in recent weeks (see chart 1). Take the cost of borrowing dollars. On October 1st banks had to pay 4.15% for three-month money, more than two percentage points above the fed funds target rate. In theory, three-month rates could be that high because markets are expecting a sharp rise in official rates. But that is hardly likely, given the depth of the crisis.

SEE THE WHOLE ARTICLE AT:
http://www.economist.com/displaystory.cfm?story_id=12342237

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Carol

10-07-2008, 06:37 PM

This is from CoasttoCoast last night.

Economic Meltdown
In the first hour, financial advisors Don McAlvany, and Catherine Austin Fitts commented on the economic meltdown. McAlvany, who appeared first, said the problem is much bigger than anyone realizes, with the falling apart of an $800 trillion derivatives pyramid. Fitts noted that some financiers are currently making money by "cannibalizing" the downside of the market.

Don is talking about an inflationary depression where the dollar will collapse. Wall Street made 100 of billions of profit with no regulation. The bail out won't even touch what is owed. As a result there is a global financial meltdown.

Link to his site is: http://www.mcalvany.com/

Link to Fitts site: http://solari.com/

Federal registry yesterday folks: http://edocket.access.gpo.gov/2008/E8-23547.htm (see www.urbansurvival.com for more)

Merlyn

10-07-2008, 06:57 PM

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Note that Jim Sinclair has posted (see below) where he states: "If the Fed hadn't taken the rather strange action they took today by becoming OTC derivative dealers themselves this would have been the day the USA banking system imploded."

Posted On: Tuesday, October 07, 2008, 2:02:00 PM EST
The Federal OTC Derivative Dealers
Author: Jim Sinclair

Dear Friends,

Please understand that the Fed reacts to circumstances rather than acting before potential problems happen.

If the Fed hadn't taken the rather strange action they took today by becoming OTC derivative dealers themselves this would have been the day the USA banking system imploded.

Watch Libor rates to signal the point of detonation.

Circumstances appear as if there were many problem Angels dancing on top of a pin that is being balanced on the nose of just those people who created the problem in the first place.

An implosion of the banking system is coming, which means a bank holiday will occur.

You now must have enough cash in hand to last a month or two.

If you have not distanced yourself from financial agents then you have a financial death wish.

If you have NOT made absolutely sure that your custodian account is a real custodial- ship you are probably in for a surprise.

I took a call yesterday from a mature lady who told me she feels her money market fund that is only in Treasuries will not pay her out. They did tell her they intend to in seven days. I asked her to call me back in eight days. How does she know that this money market fund is not in OTC derivatives based on the movement of Treasuries?

I do not want you to make that call to me.

If you can retire from your retirement program at some reasonable discount do it NOW.

This is it and it is NOW. Gold is going to $1200 and $1650. The US dollar rally has NO fundamental legs.

Why are so many of you sitting there like a deer caught in the headlights? Protect yourself and do it TODAY!

Respectfully,
Jim

LINK: http://www.jsmineset.com/

Note: keep vigilant and protect yourself.

SEE CAROL"S POST JUST ABOVE TO SEE WHY JIM SINCLAIR SAID
If the Fed hadn't taken the rather strange action they took today by becoming OTC derivative dealers themselves this would have been the day the USA banking system imploded.

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Dominic

10-07-2008, 07:27 PM

http://www.rense.com/1.imagesH/bail_dees.jpg

Bank of America today

down 22.32% as of this post

Let the light in

Feel the love

yotta

10-07-2008, 07:28 PM

Did anyone stop to consider that precious metals investors may have something to gain by creating fear in the equity markets?

Merlyn

10-07-2008, 07:48 PM

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Look at the LIBOR connections that people are starting to connect to dots
notice the Fannie Mae and Freddie Mac connection and they have things
coming up this month Oct 10 which I think is first with 2 more dates to follow.

Libor Rise to Boost Subprime ARM Defaults 10%, Citigroup Says
By Jody Shenn

Oct. 7 (Bloomberg) -- Increases in benchmark London interbank offered rates may boost homeowner defaults on resetting adjustable-rate mortgages, contributing to a ``vicious cycle'' in the credit crunch, according to Citigroup Inc.

Among subprime loans, defaults may climb by 10 percent, analysts Rahul Parulekar, Udairam Bishnoi, Sumeet Kapur and Tanuj Garg wrote in a report yesterday. About $23.7 billion, or 87 percent, of the ARMs underlying bonds whose interest rates begin adjusting next month track Libor rates. Six-month dollar Libor has climbed to 4.02 percent, from 3 percent on Sept. 15.

The deepening of the credit crisis that started last year amid record defaults on subprime mortgages, contributing to $593 billion in writedowns and losses at banks worldwide, may end up causing more borrowers to fail to make their monthly payments. Libor rates, which track how much banks charge each other for loans, help set the cost of everything from credit cards to corporate loans.

``America's homeowners are going to get uncomfortably familiar with 'LIBOR' starting next month,'' the New York-based Citigroup analysts wrote.

Libor rates have soared since the bankruptcy of Lehman Brothers Holdings Inc. last month as financial companies hoard cash.

The average subprime borrower facing an adjustable payment for the first time next month would face a monthly payment increase of about 18 percent based on Libor rates as of Sept. 30, rather than the 10 percent that would have occurred based on the rates on Sept. 15, the analysts wrote. The payment would be $1,951, instead of $1,807, they said. Fannie Mae and Freddie Mac loans would be boosted to $1,021 on average, instead of $904.

`Payment Shock'

Their report didn't quantify the effect of higher Libor rates on any of the $361 billion of mortgages underlying bonds whose rates have already begun tracking benchmarks, changing monthly, semi-annually or annually. The report also didn't address whether higher potential ``payment shock'' may lead to increased efforts to rework mortgages by loan servicers, even though mortgage modifications are rising amid record foreclosures.

The seizure in global credit markets, sparked by the U.S. housing downturn, has been deepening on speculation central bank attempts to revive lending between financial institutions won't work, resulting in more failures. The Libor rate for overnight loans in dollars between banks rose 1.57 percentage point today to 3.94 percent, the British Bankers' Association said.

Mortgages Reset

About 121,000 mortgages will reset for the first time next month, according to the Citigroup report, which looked at only securitized mortgages. About 1.8 million loans have already begun adjusting based on benchmark rates, the report said, while 3.7 million face resets scheduled for after next month.

``Almost all'' subprime and Alt-A ARMs with a few years of fixed rates, about 60 percent of those prime-jumbo mortgages and about 75 percent of such loans in Fannie Mae, Freddie Mac and Ginnie Mae bonds are linked to Libor, the report said. The loans most often are pegged to six-month Libor.

Subprime loans are given to borrowers with poor credit or high debt. Alt-A loans were made to borrowers who wanted atypical terms such as proof-of-income waivers, delayed principal repayment or investment-property collateral, without sufficient compensating attributes.

Prime-jumbo loans are made to the best borrowers seeking loans larger than Fannie and Freddie can finance. Fannie and Freddie are government-chartered mortgage-finance companies; Ginnie Mae is a federal agency.

LINK: http://www.bloomberg.com/apps/news?pid=20601009&sid=aFLqcpe0qGRc&refer=bond

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Merlyn

10-08-2008, 01:16 AM

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Keep watching the LIBOR rate note what this article is saying:

Credit barely eases after Fed plans to buy paper
Tuesday October 7, 6:01 pm ET
By Madlen Read, AP Business Writer
Credit markets show scant relief on Fed plan to buy commercial paper; bank lending rates jump

The London Interbank Offered Rate, or LIBOR, for overnight dollar loans jumped to 3.94 percent on Tuesday from 2.25 percent Monday. LIBOR for three-month dollar loans rose at 4.32 percent, near its nearly nine-month high.

Both rates are well above the Fed's target rate for overnight loans of 2 percent. LIBOR is important not only because it indicates how willing banks are to lend, but also because many consumer rates are tied to it, including adjustable-rate mortgages.

In a sign of how much financial institutions have pulled back their lending, consumer borrowing fell in August for the first time in more than a decade.

On Monday, to address the rise in LIBOR, the Federal Reserve doubled its one-month loan and three-month loan offerings. Those moves and others brought the total amount of credit potentially outstanding through year end to $900 billion, the Fed said.

Complete article at:
http://biz.yahoo.com/ap/081007/credit_markets.html

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Merlyn

10-08-2008, 01:36 PM

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The LIBOR problem is apparently still there....

Libor for Overnight Dollar Loans Jumps as Credit Freeze Deepens

By Lukanyo Mnyanda and Andrew MacAskill

Oct. 7 (Bloomberg) -- The cost of borrowing in dollars overnight in London jumped as U.K. lenders held talks with the government on emergency funding and Iceland nationalized its second-biggest bank amid an unprecedented credit squeeze.

The London interbank offered rate, or Libor, that banks charge each other for such loans rose 157 basis points to 3.94 percent today, the British Bankers' Association said. The corresponding rate for euros climbed 22 basis points to 4.27 percent, the highest in four days. The Tokyo interbank rate stayed at the highest level this year and the Libor-OIS spread, a gauge of cash scarcity among banks, widened to a record.

``There's still a massive lack of confidence in this market and the more we talk about it, the more it becomes a self- fulfilling prophecy,'' said Jan Misch, a money-market trader in Stuttgart, Germany, at Landesbank Baden-Wuerttemberg. ``Sentiment hasn't improved much and rates remain at elevated levels.''

The seizure in global credit markets is deepening on speculation central bank attempts to revive lending between financial institutions won't work, resulting in more bank failures. The Federal Reserve Board, invoking emergency powers, said today it will create a special fund to buy U.S. commercial paper to support the financing needs of corporations.

``This is a major step in freeing up capital at least to flow through to corporates,'' said Brian Edmonds, head of interest rates at Cantor Fitzgerald LP in New York. ``I don't know if it is a watershed event but the Fed is providing tremendous amounts of liquidity and now they are hitting where the problems lie.''

Three-Month Bill

Government bonds fell after the Fed's announcement. The yield on the three-month Treasury bill climbed 41 basis points to 0.87 percent. Yields on top-rated overnight U.S. commercial paper dropped 0.74 percentage point to 2.94 percent, according to data compiled by Bloomberg.

Earlier, Iceland said it was negotiating a 4 billion-euro ($5.44 billion) loan from Russia and took control of Landsbanki Islands hf, its second-largest lender, to stem a collapse of the nation's financial system. The U.K. government may invest $79 billion in some of the nation's banks to bolster their capital, two people familiar with the matter said.

The Libor-OIS spread, the difference between the three-month dollar rate and the overnight indexed swap rate, dropped 11 basis points to 277 basis points. Earlier, it rose as high as 292 basis points. The average was 8 basis points in the 12 months to July 31, 2007, before the credit squeeze began.

`Government-Led Injection'

``It's shocking to see that the money market is still in the condition that it's in, despite measures by central banks to unfreeze it,'' said Vincent Chaigneau, head of foreign exchange and interest rate strategy Societe Generale SA in London. ``A global government-led capital injection into banks may be needed.''

The major banks may need $675 billion in fresh capital over the next several years to recover from the credit crisis, the International Monetary Fund said. Losses tied to U.S. loans and securitized assets may amount to $1.4 trillion, the Washington- based lender said in its annual report on the financial system. Its estimate two weeks ago was $1.3 trillion.

Libor, set every morning in London, determines prices for financial contracts valued at $393 trillion as of Dec. 31, 2007, or $60,000 for every person in the world, and helps set consumer interest rates on everything from home loans to credit cards.

Banks yesterday lodged 42.6 billion euros in the European Central Bank's overnight deposit facility, up from 38.9 billion on Oct. 3. They also borrowed 13.6 billion euros from the ECB at the emergency overnight marginal rate. The ECB's deposit rate is 3.25 percent and the marginal lending rate is 5.25 percent.

Australian Rate Cut

Japan and Australia's central banks pumped more than $11 billion into markets in an attempt to revive lending. The Reserve Bank of Australia also slashed its benchmark interest rate by a whole percentage point, twice as much as economists forecast, raising speculation policy makers around the world may act together to cut borrowing costs.

There is ``speculation the Federal Reserve could announce new measures and that we could see coordinated rate cuts,'' Christoph Rieger, a fixed-income strategist at Dresdner Kleinwort in Frankfurt, said before the Fed announcement. ``I don't think the cuts will happen as quickly as some people are expecting.''

The TED spread, or the difference between what banks and the Treasury pay to borrow money for three months, dropped to 344 basis points today, from 382 basis points yesterday and a record 391 points earlier.

Iceland Measures

Iceland, which had its credit ratings reduced by Standard & Poor's yesterday, today pegged its currency to a trade-weighted index as it sought to contain a crisis that's pushed the krona down as much as 31 percent against the dollar in the past 30 days. The central bank also gave a 500 million-euro loan to Kaupthing Bank hf, the nation's largest lender.

Financial institutions have incurred $585 billion in writedowns and losses since the collapse of the U.S. subprime- mortgage market in early 2007. Governments in Europe and the U.S. arranged rescues for six financial institutions in the past two weeks.

The Tokyo three-month interbank rate held at 0.87 percent today, the highest since last year, and the corresponding rate in Singapore rose 1 basis point to 4.24 percent, near the highest since January. Taiwan's overnight lending rate increased 8 basis points to 2.11 percent.

LINK: http://www.bloomberg.com/apps/news?pid=20601102&refer=uk&sid=aGzJJXWj4wnw

Yesterday Oct 7 and this week will likely be looked back upon
as a point in time when the financial dam started opening up.

Thus title of this thread:

Planetary financial crisis next week aroundOct 7?

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Merlyn

10-08-2008, 05:23 PM

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The events and financial turmoil right now may be leading to the following warning by Roger Wiegand who I do not follow but he has informant giving this info to him:

Roger Wiegand states: I have word from a high-level official the dollar and our currency systems are going to breakdown before January 15th. I hope it doesn't happen, but that's my contact's prognosis has been correct 99 times out of 100. That's pretty scary.

Link: http://www.marketoracle.co.uk/Article6678.html

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mysticphoebos

10-08-2008, 05:43 PM

The illuminati puppet PM here in Australia has been running around like there is a remote control hand grenade up his ring pleading on the gov propaganda media (TV) for everyone basically not to do a run on the banks.

I took every cent out today, when a PM - President, etc, tells you to do something, do the opposite and you will be right on the money,

pardon the pun... :original:

PTTurboe

10-08-2008, 05:58 PM

I think that this might be the supernova!!!

The swaps by Freddie and Fannie went for 92%.

These might be .60 and that means TRILLIONS in losses!!!

Trouble Ahead: Massive Credit Default Swap Payments Come Due

http://www.marketwatch.com/news/story/trouble-ahead-massive-credit-default/story.aspx?guid=%7B9F86B14D-12F4-46DD-8C9E-FB4610D8817F%7D&dist=hppr

Emman

10-08-2008, 06:49 PM

Good posts Merlyn. I've been catching up on all the posts in this thread.

Your posts are very pragmatic regarding getting enough cash to last for a month or two. I have done that very thing. In my savings I have about $3000 that is normally earmarked for my Roth IRA. I took it all out and stuffed it in my mattress so to speak.

I have a question:

I have access to credit. In fact, I have access to over $10000 in my line of credit. Should I take a cash advance, say around $1000-2000 right now?? I try to avoid dipping into credit, but I'm also thinking that if I can get some cash right now I should do so because I'm thinking that if stuff goes down soon, then I may not have access to my credit and other cash at all. Thoughts?

Thanks....

TAXMASTER

10-08-2008, 07:42 PM

I have been telling my clients since last year this was going to happen and last night I was so depressed and sick that I had to go to bed at 7:30 pm. I should have been glad that I was right however now I wish that I was wrong.

Namaste'

Merlyn

10-08-2008, 08:19 PM

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Emman ... I am sorry I cannot help with financial advice you should find someone you trust to help with that or trust your own inner guidance system.

TAXMASTER ... yes it is mixed feeling about being right and that tells me your heart is in the right place. You might be able to help others in the coming weeks.

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bikeguy

10-08-2008, 09:28 PM

plans have been in place for years to crash the world economy - the PTB will now assure that resources and world population is rebalanced

given the current state of technology the 'carrying capacity' of planet earth is around 2 billion souls - expect to shed about 4.5 billion in the next couple of years

my best advice is to try to look indispensable

-bikeguy

Molly

10-09-2008, 01:39 AM

Housing sub-prime mortgages, 700 billion dollars, george soros, nancy pelosi...all in a 'banned' SNL skit. With Anne Hathaway as guest star.

I didn't see this around, so wanted to make sure it gets seen. It's brave comedy, imo.

http://patdollard.com/2008/10/it-is-here-the-banned-snl-skit-cannot-hide-from-louie/

Merlyn

10-09-2008, 02:04 AM

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Latest posting by Jim Sinclair and I have bolded some key points like
"Bank holidays are on the way."

Posted On: Wednesday, October 08, 2008, 8:56:00 PM EST
Gold and Dollar Market Summary
Author: Jim Sinclair and Dan Norcini

Dear Friends,

The Big Gun was rolled out today. The equity market had steadied from its recent drastic action and Paulson picked up the baton and ran with it. He is considered to be the best public speaker of the Money Men.

The Bloomberg ladies were in total glee as the market was up about 125 points. As Paulson said that not all financial failures would be bailed out (now a major fib) the equity gang lost their instructions. In the blink of an eye what was up 125 points was then down almost 200.

I imagine being a good public speaker does not carry much weight in a situation that can be described as "OUT OF CONTROL."

If the Washington gang really does not want the financial calamity now in progress, statements that suggest another major financial entity could go bankrupt without a bailout should be avoided. If all powerful Money Man persists in bringing up thoughts of Lehman's Chapter 11, the equity market will have no bottom. Letting Lehman go after instituting bailouts of others is the event that has given way to this "Out of Control" condition.

Out of Control means just what it says. If things were under control the equity market would not have given a Brooklyn Cheer to the President of the USA and the Chairman of the Federal Reserve and there would not have been an unprecedented drop of interest rates today.

Bank holidays are on the way.

Every major retirement fund is stone broke.

Most money management entities are full of treasury OTC derivatives, not treasury instruments, and are therefore also broke.

The local banks are in the web of the Money Center banks and are therefore in trouble they do not even know about yet.

The paperwork behind OTC mortgages is a total disaster, adding more mess to an already major financial planetary killer.

I am sorry to say that there is no way to make this process go away. The downward spiral will make its way to the bottom.

Gold will be the tool that finally stops the plague in the form of the Federal Reserve Gold Certificate Ratio, revitalized and modernized, but not until the public is in such a condition that it cries out to God to stop the carnage. That will happen sometime before January 14th 2011.

Protect yourself, this is out of control!

Respectfully yours,
Jim

Link: http://www.jsmineset.com/

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Merlyn

10-09-2008, 02:46 PM

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The article below states "US government may take ownership stakes in banks"

What is the FDIC doing?

This appears to be result of LIBOR rate and also the Banks/Financial institutions do NOT trust one another. So dump the risk on the taxpayer
slave.

US government may take ownership stakes in banks
Thursday October 9, 9:27 am ET
By Martin Crutsinger and Jeannine Aversa, AP Economics Writers
White House mulling ownership stakes in banks; global financial markets steady

WASHINGTON (AP) -- News that the Bush administration is considering taking ownership stakes in a number of U.S. banks helped restore a relative calm over global financial markets Thursday.

The aim of such a move would be to thaw the lending freeze that threatens to push the world's economy into recession. It comes after rampant fear about the global economy sent investors scurrying on Tuesday for safety in U.S. government securities despite an orchestrated round of rate cuts by the world's central banks.

Rest of story: http://biz.yahoo.com/ap/081009/financial_meltdown.html

OTHERS DOING THE SAME

Belgium, France, Luxembourg guarantee Dexia bank
Thursday October 9, 7:18 am ET
By Aoife White, AP Business Writer
Belgium, France, Luxembourg pledge yearlong guarantee covering new Dexia loans.

BRUSSELS, Belgium (AP) -- The governments of France, Belgium and Luxembourg announced Thursday they will give struggling lender Dexia SA a yearlong guarantee on its new loans and deposits, sending the company's shares soaring.

Link: http://biz.yahoo.com/ap/081009/eu_belgium_dexia_aid.html

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Merlyn

10-09-2008, 06:24 PM

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More LIBOR News...

Libor Holds Central Banks Hostage as Credit Freezes (Update2)
By Gavin Finch and Ben Sills

Oct. 9 (Bloomberg) -- Danilo Coronacion oversees 15 percent of global coconut oil production at CIIF Oil Mills Group in the Philippines. These days, he spends a lot of time worrying about events half a world away in London. The name of his pain? Libor.

CIIF has more than $60 million of debt, or 70 percent of its working capital, linked to London interbank offered rates that have soared since Lehman Brothers Holdings Inc. collapsed on Sept. 15. The cost of borrowing in dollars for three-months in London jumped 23 basis points today to 4.75 percent, the highest level since December.

Rising Libor, set each day in the center of international finance, means higher payments on financial contracts valued at $360 trillion -- or $53,500 for each person worldwide --including mortgages in Britain, student loans in the U.S. and the debt of companies like CIIF in Makati City, the Philippines.

``You can't afford to be caught in the wrong position at any given time,'' said Coronacion, chief executive officer of CIIF, which generally pays 1 to 2 percentage points more than Libor.

Central banks from the U.S. to England and China cut interest rates yesterday in an attempt to restart the flow of credit and prevent a global recession. The moves came after they had funneled trillions of dollars into money markets in a failed bid to end the blockage. South Korea, Taiwan and Hong Kong lowered their benchmark rates today.

`Fear and Panic'

The process of setting Libor is overseen by the British Bankers' Association, putting it outside the domain of central bank policymakers. The overnight dollar rate fell 29 basis points to 5.09 percent. That's still 359 basis points more than the U.S. Federal Reserve's benchmark rate.

Libor, a gauge of bank funding costs, continued to rise even after Spain and the U.K. acted to strengthen their banking systems and the U.S. Congress approved a $700 billion financial bailout. Even the Fed's decision Monday to double emergency cash auctions failed to unlock short-term lending. The European Central Bank today offered banks as much cash as they need for six days at its benchmark rate of 3.75 percent, bringing forward new measures to soothe money markets.

``You get to a situation where fear and panic take hold,'' said Peter Dixon, a London-based economist at Commerzbank AG, Germany's second-biggest bank. ``This is the eye of the storm.''

Mysterious Acronym

Still, the jargony acronym Libor mystifies most people. While U.S. presidential candidates John McCain and Barack Obama have sparred over the economy and the mortgage crisis in America, neither has braved a public discussion of Libor.

Banks aren't lending because they're worried any borrower may become the next victim and they'll be left with losses as the credit freeze deepens.

Rest of Article at Link: http://www.bloomberg.com/apps/news?pid=20601109&sid=au_WEzP8yYzY&refer=home

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Merlyn

10-09-2008, 08:33 PM

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The LIBOR continues to be a problem and all this week during a escalating Planetary financial crisis...

Libor Dollar Rate Jumps to Highest in Year; Credit Stays Frozen
By Anchalee Worrachate and Gavin Finch

Oct. 9 (Bloomberg) -- The cost of borrowing in dollars for three months in London soared to the highest level this year as coordinated interest-rate reductions worldwide failed to revive lending among banks for any longer than a day.

Attempts by policy makers to restore confidence to money markets are being stymied by almost daily crises among financial institutions. Iceland's government took over the nation's biggest lender today to keep the country's banking system working. American International Group Inc., the insurer taken over by the U.S. government, may need $37.8 billion of extra funds, the Federal Reserve Bank of New York said yesterday.

``To see little or no reaction in the fixings is very disappointing and reinforces the fact that Libor is broken and the transmission mechanism from central banks isn't working,'' said Barry Moran, a currency trader in Dublin at Bank of Ireland, the country's second-biggest bank. ``Things are still very stressed and we don't know what's going to fix it.''

The London interbank offered rate, or Libor, for three-month loans rose to 4.75 percent today, the highest level since Dec. 28. The Libor-OIS spread, a measure of cash scarcity, widened to a record. The overnight rate fell to 5.09 percent, still 359 basis points more than the Fed's 1.5 percent target rate.

The European Central Bank today offered banks as much cash as they need for six days at its benchmark rate of 3.75 percent, bringing forward new measures to soothe money markets. It also loaned banks a record $100 billion in overnight dollar funds, allotting most of the cash at 5 percent, down from 9.5 percent yesterday.

`Holding Cash'

South Korea, Taiwan and Hong Kong cut interest rates today, a day after reductions by central banks including the Federal Reserve and European Central Bank that were designed to stem damage from the global financial crisis. The U.K. government pledged yesterday to spend 50 billion pounds ($87 billion) to stave off a collapse of the British banking system.

``I don't see a wave of liquidity coming into the market,'' said Alessandro Tentori, an interest-rate strategist in London at BNP Paribas SA. ``People are still holding on to their cash because there's still a great deal of uncertainty out there.''

There were signs of a thaw in short-term markets. Overnight borrowing costs for companies dropped to the lowest in almost two weeks after yesterday's rate cuts and the Fed committed to buying commercial paper. Yields on the highest-rated one-day commercial paper placed by dealers declined 1.15 percentage points to 2.35 percent, according to data compiled by Bloomberg. Rates from Sears Holdings Corp. and HSBC Holdings Plc fell, the data show.

Iceland, AIG

Interbank lending rates have climbed as financial institutions stockpile cash to meet funding expectations and remain skeptical that central bank efforts to unblock markets will work. The three-month rate in euros held at a record high of 5.39 percent today.

Iceland's government today seized control of Reykjavik-based Kaupthing Bank hf, completing the takeover of a banking industry that has collapsed under the weight of its foreign debt. Late yesterday, the Fed said New York-based AIG can swap as much as $37.8 billion of its ``investment-grade, fixed-income securities'' for cash to ``replenish liquidity.''

Money-market rates rose today in Hong Kong, Singapore and Japan to the highest levels in at least nine months. Hong Kong's three-month interbank offered rate jumped to 4.4 percent, a one- year high. Singapore's comparable rate for dollar loans increased to 4.51 percent, the highest level since Jan. 8.

`Of Little Help'

The Libor-OIS spread, the difference between the three-month dollar Libor and the overnight indexed swap rate, climbed 23 basis points to an all-time high of 348 basis points. The average was 8 basis points in the 12 months to July 31, 2007, before the credit squeeze began. The difference between what banks and the Treasury pay to borrow money for three months, the so-called TED spread, exceeded 400 basis points for a second day.

``Libor spreads are still wide, which suggest offshore banks are not willing to take more risks lending to other banks,'' said Cezar Bayonito, a liquidity trader at Allied Banking Corp. in the Philippines. ``Interest-rate cuts will be of little help in the near term because the issue is trust, not rates.''

Libor, set by 16 banks in a daily survey by the British Bankers' Association at about noon in London, determines rates on $360 trillion of financial products worldwide, from home loans to derivatives. Member banks provide estimates on how much it would cost to borrow in 10 currencies for periods ranging from a day to a year.

Sears' commercial paper rate declined by 1 percentage point to 3 percent, according to Bloomberg data. The rate for HSBC fell by 25 basis points to 2 percent. Companies sell commercial paper, which matures in nine months or less, to help pay for day-to-day expenses such as payroll and rent.

Yields on three-month Treasury bills were unchanged at 0.62 percent.

Link: http://www.bloomberg.com/apps/news?pid=20601087&sid=aehUoX3Gbap8&refer=home

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izz

10-09-2008, 08:45 PM

my best advice is to try to look indispensable

-bikeguy

:lol3::roll1::roll1:

how do we do that ... :biggrin2::bleh:

Dr. D

10-09-2008, 09:07 PM

There is no stopping the meltdown.It was and is fatally flawed and it was just a matter of time.I know the boys in Washington and New York no this.What do you think the chances of a major false flag to keep people from seeing the inevetable is?

izz

10-09-2008, 09:11 PM

Brinty

10-09-2008, 09:24 PM

:lol3::roll1::roll1:

how do we do that ... :biggrin2::bleh:

Walk around with a clip board and a worried look on your face. :sad:

It helps to break into a trot now and then and to keep looking from side to side. :dog:

If nothing nasty eventally happens, you will have at least gotten some exercise, lost weight, and be fitter. :D

Merlyn

10-09-2008, 11:22 PM

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More bad news on the Libor rate with this statement:

"Libor, the bank lending benchmark, for three-month dollar loans rose to 4.75 percent
from 4.52 percent on Wednesday. That signals that banks remain hesitant to make loans
for fear they won't be paid back."

In this article:

Dow plunges 679 to fall to lowest level in 5 years
Thursday October 9, 7:03 pm ET
By Tim Paradis, AP Business Writer

Dow plunges 679 points to trade below 9,000 for the first time in 5 years in afternoon sell-off

NEW YORK (AP) -- Stocks plunged Thursday, sending the Dow Jones industrial average down 679 points -- more than 7 percent -- to its lowest level in five years. Stocks took a nosedive after a major credit-rating agency said it might cut its rating on General Motors and Ford, further rattling investors already fretting over the impact of tight credit on the economy.

The Standard & Poor's 500 index also fell more than 7 percent.

The declines came on the one-year anniversary of the closing highs of the Dow and the S&P. The Dow has lost 5,585 points, or 39.4 percent, since closing at 14,164.53 on Oct. 9, 2007. It's the worst run for the Dow since the nearly two-year bear market that ended in December 1974 when the Dow lost 45 percent. The S&P 500, meanwhile, is off 655 points, or 41.9 percent, since recording its high of 1,565.15.

U.S. stock market paper losses totaled $872 billion Thursday and the value of shares over all has tumbled a stunning $8.33 trillion since last year's high. That's based on figures measured by the Dow Jones Wilshire 5000 Composite Index, which tracks 5,000 U.S.-based companies' stocks and represents almost all stocks traded in America.

Thursday's sell-off came as Standard & Poor's Ratings Services put General Motors Corp. and its finance affiliate GMAC LLC under review to see if its rating should be cut. The action means there is a 50 percent chance that S&P will lower GM's and GMAC's ratings in the next three months. GM has been struggling with weak car sales in North America.

S&P also put Ford Motor Co. on credit watch negative. The ratings agency said that GM and Ford have adequate liquidity now, but that could change in 2009.

GM, one of the 30 stocks that make up the Dow industrials, fell $2.15, or 31 percent, to $4.76, while Ford fell 58 cents, or 22 percent, to $2.08.

"The story is getting to be like that movie 'Groundhog Day,'" said Arthur Hogan, chief market analyst at Jefferies & Co. He pointed to the still-frozen credit markets, and Libor, the bank-to-bank lending rate that remains stubbornly high despite interest rate cuts this week by the Federal Reserve and other major central banks.

"Until that starts coming down, you'll be hard-pressed to find anyone getting excited about stocks," Hogan said. "Everything we're seeing is historic. The problem is historic, the solutions are historic, and unfortunately, the sell-off is historic. It's not the kind of history you want to be making."

The Dow ended the day at its lows, finishing down 678.91, or 7.3 percent, at 8,579.19. The blue chips hadn't closed below the 9,000 level since the June 30, 2003.

The Dow's tumble in the last seven sessions is its steepest ever in terms of points and the worst percentage decline since a downturn ending Oct. 26, 1987, when the Dow lost 23.8 percent. That sell-off included Black Monday, the Oct. 19, 1987 market crash that saw the Dow fall nearly 23 percent in a single day.

Broader stock indicators also tumbled Thursday. The S&P 500 fell 75.02, or 7.6 percent, to 909.92, while the Nasdaq composite index fell 95.21, or 5.5 percent, to 1,645.12.

The Russell 2000 index of smaller companies fell 47.37, or 8.7 percent, to 499.20.

A wave of fear about the economy sent stocks lower in the final two hours of trading after a volatile morning in which major indicators like the Dow and the S&P 500 index bobbed up and down. The Nasdaq, with a bevy of tech stocks, spent much of the session higher but eventually declined as the sell-off intensified. Still, its losses were less severe because of the relatively modest drops in names like Intel Corp. and Microsoft Corp.

On the New York Stock Exchange, declining issues came to nearly 3,000, while fewer than 250 advanced.

The sluggishness in the credit markets that triggered much of the heavy selling in markets around the world since mid-September appeared little changed Thursday following days of efforts by the Federal Reserve and other central banks to resuscitate lending.

Libor, the bank lending benchmark, for three-month dollar loans rose to 4.75 percent from 4.52 percent on Wednesday. That signals that banks remain hesitant to make loans for fear they won't be paid back.

More at: http://biz.yahoo.com/ap/081009/wall_street.html

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Merlyn

10-10-2008, 02:54 AM

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Central Banks Fail to Alleviate `Logjam' in Libor

By Mark Gilbert and Gavin Finch

Oct. 9 (Bloomberg) -- Central-bank efforts to drive down money-market borrowing costs with coordinated interest-rate cuts are failing, according to Nick Stamenkovic, a fixed-income strategist at RIA Capital Markets in Edinburgh.

``Central banks have pulled out all the stops and there's no sign whatsoever that money-market strains are easing,'' Stamenkovic said. ``The logjam is going to remain in place for some time to come. Three-month rates and beyond are actually deteriorating.''

The CHART OF THE DAY shows the divergence between the policy rates set by the Federal Reserve, the European Central Bank and the Bank of England, and the three-month cost of dollars, euros and pounds. The dollar London interbank offered rate climbed to its highest this year today, at 4.75 percent. The euro rate of 5.39 percent is up from 4.96 percent a month ago, while the pound rate has risen 43 basis points in the past three months to stand at 6.28 percent.

The Fed, the ECB and the Bank of England all reduced their key lending rates by half a point yesterday, with the central banks of Canada, Sweden, Switzerland and China also implementing cuts.

Link: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=afUtOwmLw3vQ

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Merlyn

10-10-2008, 04:49 PM

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Berlusconi Says Leaders May Close World's Markets (Update1)

By Steve Scherer

Oct. 10 (Bloomberg) -- Italian Prime Minister Silvio Berlusconi said political leaders are discussing the idea of closing the world's financial markets while they ``rewrite the rules of international finance.''

``The idea of suspending the markets for the time it takes to rewrite the rules is being discussed,'' Berlusconi said today after a Cabinet meeting in Naples, Italy. A solution to the financial crisis ``can't just be for one country, or even just for Europe, but global.''

The Dow Jones Industrial Average fell as much 8.1 percent in early trading and pared most of those losses after Berlusconi's remarks. The Dow was down 0.5 percent to 8540.52 at 10:10 in New York.

Group of Seven finance ministers and central bankers are meeting in Washington today, and will stay in town for the International Monetary Fund and World Bank meetings this weekend. European Union leaders may gather in Paris on Oct. 12, three days before a scheduled summit in Brussels, Berlusconi said today, while Group of Eight leaders may hold a meeting on the crisis ``in coming days,'' he said.

Berlusconi didn't give any details about what kind of rules leaders were looking to change, except to say that leaders are ``talking about a new Bretton Woods.''

The Bretton Woods Agreements were adopted to rebuild the international economic system after World War II in a hotel in Bretton Woods, New Hampshire. The aim of the agreements was to establish a monetary management system, initially by pegging currencies to gold. The IMF was set up later to help manage the international financial system.

LINK: http://www.bloomberg.com/apps/news?pid=20601087&sid=aP5mpMUORBWM

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Merlyn

10-10-2008, 05:27 PM

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See this comment in below article:
"the crisis is not in localized regions, but in the entire global structure”

Title of this thread:
Planetary financial crisis next week around Oct 7?

The Stock Market Flees to London
World stock markets have been hit with a wave of selloffs. Russia’s RTC and MICEX indexes were among the loss leaders falling 11.25-14.35 percent. As a result, the exchanges have been closed and trading in Russian stock has been moved to London. The Russian markets were completely under the influence of outside forces before they closed down. U.S. Federal Reserve Board chairman Ben Bernanke was unable to calm sales-bent investors with the announcement that the board may raise the prime rate by 0.5 percent.

American indexes lost more than 5 percent on Tuesday, setting off a worldwide reaction. Yesterday, the Japanese Nikkei 225 lost 7.04 percent and the Topix index lost 8 percent, the most since 1987. Indonesian markets were closed indefinitely after its index lost 10 percent. “The world community has experience solving local crises, but the crisis is not in localized regions, but in the entire global structure,” commented Citibank chief economist for Russia Elina Rybakova.

The MICEX fell 13 percent on opening yesterday, which mounted to 14.35 percent (637.87 points) within half an hour. Trading was closed until Friday or until an order was received from the Federal Financial Markets to resume trading. By that time, the RTS index had fallen 11.25 percent to 761.63 points. Trading there was stopped for an hour but not resumed after 12:00. Now it too will wait for an order from the markets service. The spot market continued to operate and REPO and pre-negotiated deals were resumed after 4:00.

Trading in Russian stocks – depository notes on those stocks – was moved to London. The London Stock Exchange had lost an average of 15-20 percent at opening at 12:00 Moscow time. It began to recover gradually after 3:00, when the European Central Bank and U.S. Federal Reserve Board announced coordinated efforts to lower interest rates. Long-term investors, particularly the Capital and Dreyfuss funds began buying as speculators sold. The recovery was short-lived, however. Trading in Russian reached $1.96 billion. Trade in Russian stocks did not pick up yesterday. Investors are concerned about the behavior of the markets and possible future decisions of regulators.

Link: http://www.kommersant.com/p1037973/r_528/Russian_stock_market_world_financial_crisis/

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