Where is the outrage!
By Greg Hunter 12/01/08
The uneven form the financial bailout has taken is really quite galling to me. The headline: Not a single bank president has been asked to step down or a single plan asked for from the big banks. Chuck Prince did leave on his own last November with a 38 million dollar pay package but I would call that "getting out while the getting was good." Since then, all the major banks in this country have been at the public Fed begging bowl. The big money has come from the many "lending" facilities such as the TAF, TSLF, PDCF and many more that have been created by the Federal Reserve. This money, experts say, is necessary to keep these institutions solvent. Has congress asked the banks for a plan make sure these insolvency problems will not happen again? Contrast that with the big 3. These companies are being asked for detailed plans for recovery before they get somewhere in the neighborhood of 25 billion dollars. It has been reported the CEO’S of the big 3 could be asked to resign as part of the deal!!! We’ve already handed out 150 billion to A I G and recently 325 billion to Citi!!! So far the financial rescue has cost a total 8.5 trillion dollars. The money by and large has gone to any banker with a sad story or stupid investment into derivatives. Today Meredith Whitney said on CNBC that all …"the big banks are going to need more capital!!!! " More Capital and NO PLAN!!!!! WHAT GIVES???? Where is the outrage!!!!!!!!!!!!!
This all gets back to OTC DERIVATIVES… THE REAL UNDERLYING PROBLEM. I am talking about securitized debt. The financial wizards of the world securitized every debt imaginable…mortgages, credit cards, car loans, student loans. You name the debt and it was wrapped up into some sort of security. It is safe to say the size of the problem is somewhere between 500 and 1000 trillion dollars depending on who you talk to. Whatever the amount is the problem is BIG, VERY VERY BIG!!!! The biggest financial problem ever in the history of the world! THERE IS NO PUBLIC MARKET FOR OTC DERIVATIVES and nobody is talking about creating one as part of a solution!!! THERE IS NO WAY THAT THIS FINANCIAL CRISIS WILL EVER BE OVER UNTIL THERE IS A FINANCIAL MARKET FOR THIS CRAP. But of course, if there is a market that would provide a "price discovery" and then we would find out this stuff is worthless or near worthless. So the powers that be are just throwing good money after bad. I think the most outrageous part of the whole story is even though the taxpayer is on the hook for several trillion dollars we do not get to know which banks are getting the money and what "assets" the banks are unloading on the government. I suspect these "assets" are probably akin to candy wrappers and toilet paper. Fed Chairman Ben Bernanke has said the reason they will not disclose this information to the public is that it would not be "helpful". THE SECRECY BEHIND ALL THIS GOVERNMENT ACTION IS OUTRAGEOUS!!!!! What in fact the powers that be are hoping for is that this money printing will "unclog" the credit markets and get things back to "normal." These toxic "securities" or derivatives can then start trading again the way they used to without a public market. No public market means trading would again be done without regulation, guarantee or standards of any kind. I say no way! We do not have a credit problem but a collateral problem and the banks do not trust the collateral. There is going to be a new "normal" and most people are not going to like what that feels and looks like. I guess then there will be OUTRAGE!!!
Jim Sinclair’s Commentary
Alf has been spot on now for a significant time. It might be interesting for the Elliot gang out there to study his work. For that matter, it might be interesting for everyone.
You have to understand that no chart work will tell you what the Exchange Stabilization Fund will do. Today’s action demonstrates short term limitations to TA.
Alf field’s Elliott Wave Chart of Gold Shows Gold To Be In Elliott Wave 3 Up
Monday, 22. October 2007, 21:05:09
The Elliott Wave chart of gold from the article Elliott Wave Gold Update 16 by Alf Field shows gold to be in an Elliott Wave 3 Up.
Jim Sinclair’s Commentary
The only meaningful tool left for the Fed is "Benign Neglect" of the US dollar. That means not referring to it in public addresses with glee and not softening declines via the Exchange Stabilization Fund when it tries to break down out of its recent technical money flow up trend. Basically, this means putting a muzzle on the Media Spin Team as they have no clue that a rising dollar, for any reason, is totally contra-productive to all other methods of anti-deflation employed in central bank moves. The trend in the dollar will become market related. Market related means rejoining its long term down trend.
Gold is a currency and it will be proven once again in the inverse to the dollar very soon.
Gold’s primary excuse for existence is monetary.
Gold priced at $248 reflected its monetary performance.
Gold at $1650 will be a totally monetary event.
The monetary boss spoke today and the equity market regurgitated.
You can be sure it is panic time at the Fed in which every tool, even the tools of last resort will be employed. Today was an example of just that
This headline should be changed to “Dow Plunges 680 Points As The Chairman Of The Federal Reserve Presents His Plans To Avoid An Equity Implosion.”
Dow Plunges 680 Points as Recession Is Declared
The evidence of a recession has been widespread for months: slower production, stagnant wages and hundreds of thousands of lost jobs.
But the nonpartisan National Bureau of Economic Research, charged with making the call for the history books, waited until now to make it official — and the announcement came on a day when the American stock market fell nearly 9 percent in a single session.
The sharp declines on Wall Street — the Dow Jones industrial average dropped 679.95 points or 7.7 percent — appeared more about profit-taking than the economy. Investors have long assumed that the country was in recession, and analysts said that after last week’s gains, including the biggest five-day rally in decades, a sell-off was to be expected.
Still, Monday’s losses were striking, and they reminded investors that nothing can be predicted in today’s environment. The major indexes fell by hundreds of points from the start, led by huge declines in shares of financial firms. Citigroup, Merrill Lynch and Morgan Stanley shares all dropped nearly 20 percent. Most other major Wall Street banks were also in double-digit percentage declines.
Jim Sinclair’s Commentary
This is the understatement of the century
India warns of ‘grave setback’ to Pakistan ties
MUMBAI (AFP) — India warned on Monday that the Mumbai attacks had dealt a "grave setback" to relations with Pakistan, as the United States urged Islamabad to show "absolute" cooperation with India’s probe into the assault.
"What has happened is a grave setback to the process of normalisation of relations and the confidence-building measures with Pakistan," Minister of State for External Affairs Anand Sharma told AFP.
Sharma said the Islamist gunmen who launched their devastating attack on India’s financial capital on Wednesday evening were "all from Pakistan" and stressed that it was time Islamabad delivered on its promise to prevent Pakistani soil being used for attacks on India.
India and Pakistan , both armed with nuclear weapons, have fought three wars and were on the brink of a fourth over a 2001 militant assault on the Indian parliament.
Pakistan has denied any involvement in the latest attacks which left more than 170 dead and threatens to derail a slow-moving peace process launched in 2004. Pakistan President Asif Ali Zardari has urged India not to "over-react."
Jim Sinclair’s Commentary
Pakistan denies TV reports envoy to India summoned
Mon Dec 1, 2008 5:50pm IST
NEW DELHI, Dec 1 (Reuters) – Pakistan denied on Monday Indian TV reports its envoy to India had been summoned, an embassy official in New Delhi said.
"We have not been summoned. It was a pre-planned, routine meeting."