I have seen a comet tonight,

the last time I saw one the wife left shortly afterwards.

They are supposed to bring bad luck

Suppose its all BS but did not seem like it when the wife went.

PS I like Cgnaos posts, they are entertaining.

I too am sure something is very wrong in the financial system, I suspect the banks and govenment are playing it down, I am no expert but

+HPI is crazy
+NR is not normal, and it looks like more banks could be in trouble including the biggest US bank Citi
+More than one person I know has received loans they definately IMO will never be able to repay indeed so rediculous that nearly anyone could predict they will default.
+Seems like a credit bubble to me
+Credit bubbles when they burst lead to serious long lasting problems.
+American debt

[quote name='Compounded' date='Nov 5 2007, 12:25 AM' post='836617']
I have seen a comet tonight,

I haven't seen a comet tonight , too much fog/smoke from all the fireworks, but I know what you mean about that feeling of something bad about to happen.
I've felt it for some time, everyone obsessed with housing, buying stuff, what they own, how bling and flash they are . It will all end in tears before bedtime.
Cg's posts scare me a little sometime, eveyone thought Noah was a nutter too, till it started raining.

For what it's worth, I think somethings about to go pear shaped too. I don't understand high finance... I sometimes think financiers don't understand high finance. I do have an inkling of common sense though, and things just aren't right, partly for the reasons you have highlighted. I think a bit of financial pain will do the world good. It will bring people back to what's important.... family, friends, responsible freedom, individuality and, dare I say it without being branded a happy clapper, God... ok, let's say spirituallity instead.

It will all come out in the wash. I for one will not be upset to see this current materialistic fervour, with city barrow boys posing as financial whizz kids, and the selfish 'me me' attitudes stomped on.

No pain, no gain

You have no idea how much I hope you're right, I wouldn't mind going through anything if I thought it would leave a less materialistic and kinder world for my kids .
It would be really nice if I could see it im my lifetime , I'm not that great an optimist though.

Actually, the tesco value beer is useful - having a 7 week old baby in the house means that you can't drink much alcohol (it disrupts what sleep you do get), but that stuff is too weak to have that effect.. so you can still have a beer. Perhaps someone in marketing should call it 'New Dad Beer' and quadruple the price.

Tesco value sausages, though.. at least you can say that there are no living rats anywhere near the factory where they come from..

I was devastated when my wife left.
She only went out to get a pint of milk and never returned.
It was really terrible - I had to use that powered milk in the end

I was beggining to think I was the only one who felt like this. Much like the current belief on the street ATM that everything is rosy, with the sheeple, I mostly see behind the facade of beauty in people there is a real ugliness in their nature. Maybe a big slice of humble-pie could make people once again grateful, and appreciate how fortunate they are.

Don't pick on him or his mum will switch off his internet connection for a couple of weeks again...she doesn't like it when he comes downstairs all sulky after playing on the interweb

Any thread that manages to combine pictures of mushroom clouds and Tesco's value beer is destined to become an HPC Classic

This seems like as good a place as any to dump this quote from Bloomberg:#

Treasury Secretary Henry Paulson says the U.S. is examining the subprime mortgage crisis to ensure that ``yesterday's excesses'' aren't repeated. He could be talking about himself and his former firm, Goldman Sachs Group Inc.

Paulson, 61, doesn't mention that Goldman still has on the market some $13 billion of almost $37 billion in bonds backed by subprime loans or second mortgages that it created while he was chief executive officer. Those bonds have an average delinquency rate of almost 22 percent, higher than the average of other subprime bonds from the period, according to data compiled by Bloomberg.

Goldman, the most profitable investment bank, was one of 14 primary dealers of U.S. Treasuries who contributed to a three- year binge as $1 trillion of subprime mortgages were packaged and sold to investors. The value of its remaining subprime bonds trails Lehman Brothers Holdings Inc.'s $33 billion, out of $106.8 billion created during Paulson's years at Goldman, and Morgan Stanley's $28.8 billion, out of $82.5 billion.

``He should admit to having been involved in creating the problem that we have now,'' said Representative Brad Miller, a North Carolina Democrat, who introduced a bill Oct. 22 to make firms packaging subprime mortgages liable for bad loans in some circumstances.

The subprime crisis developed earlier this year when falling home prices triggered defaults by homeowners who wouldn't have normally qualified for a mortgage. Many were unable or unwilling to make adjustable-rate payments that were due to rise. Home foreclosures doubled in the third quarter from a year earlier to 635,159, RealtyTrac reported Nov. 1.

`Largely Contained'

Starting in March, Paulson said the damage was ``largely contained'' and was no risk to the larger economy. When other credit markets began to be affected, he and others began pushing for solutions.

``I can't help but notice that when middle-class homeowners were losing their homes to foreclosure, he was pretty nonchalant about it,'' Miller said of Paulson. ``But when Wall Street CEOs start seeing trouble in their absurdly complicated financial instruments built on the mortgages of middle-class homeowners, he feels their pain.''

Self-serving and crass, why am I not srprised?

http://www.larouchepac.com/news/2007/11/04...ial-system.html
Citigroup Problem Radiates Through The Financial System

November 4, 2007 (LPAC)--The Nov 4 New York Times reports that "Citigroup's board is highly likely to nominate Robert E. Rubin,... as its interim chairman," at its emergency Sunday board meeting. Rubin would replace Citigroup CEO Charles Prince III, who reportedly has been forced to resign. Prince's resignation, if confirmed, would be the second resignation, within the past 96 hours, of a CEO at a major U.S. financial institution, following that of Merrill Lynch CEO Stanley O'Neal.

The Citigroup shake-up follows a deepening melt-down at the world's either first or second largest financial institution. Under Prince and his mentor, the previous Citigroup CEO, Sandy Weil, Citigroup wildly expanded, increasing its total assets from $1.09 trillion in 2002, to $2.35 trillion at the end of the third quarter of 2007, a doubling in less than five years. Often, Citigroup invested heavily in financial markets shaped by and under the domination of the City of London financiers.

Citigroup has the following speculative investments:

* $80 billion in radioactive, off-balance sheet Structured Investment Vehicles (SIVs). Altogether, Citigroup has 7 SIVs, with names like Dorada and Sedna Finance, 4 of which, EIR has discovered, were created in and are steered from the Cayman Islands.
* $60 billion in off-balance sheet Conduits, which are also speculative vehicles, operating under slightly different rules.
* At least $20 billion in Collaterialized Debt Obligations (CDO).
* More than $70 billion in assets-backed securities, based on credit card cash flows.

All of these markets are either outright catering, or facing serious problems. The most problematic are the SIVs. An SIV must by law have sufficient paid-in equity (the value of the stock that it sold), such that the equity represents "stored funds" which could cover those losses/writedowns suffered on the SIV's senior debt. To state it simply, were the losses on the SIV's senior debt to exceed the value of the SIV's paid-in equity, the SIV must effectively be shut down. It appears that some of Citibank's SIVs, are headed toward or may have crossed the danger line, had strict accounting principles been in force.

On Thursday Nov. 1, Canadian Imperial Bank of Commerce analyst Meredith Whitney stated that Citigroup would have to increase its capital by $30 billion to cover problems. The statement, which is true, caused tremors throughout the international financial system, and there was a mass dumping of Citigroup stock, which led to the Dow Jones average dropping by 362 points.

This precipitated widespread fear, and prompted the U.S. Federal Reserve, through three separate interventions, to inject $41 billion in short term liquidity into the U.S. banking system--all on Nov. 1, the largest one-day intervention since September 2001, after the 9/11 attacks.

The Citigroup situation is made more dangerous by two further problems. First, were there ruptures at Citigroup, this could detonate its derivatives holdings of $34.9 trillion in notional value, which would bring down the world's $750 trillion-plus derivatives market, and the entire world monetary system. Second, Citigroup is America's largest bank, and thus at the heart of the world's dollar-based system. A melt-down here would have many other far-reaching consequences.

Cgnao,

I always thought you were a bit of a nut, but was fascinated by your posts nonetheless.

Though your recent post, linking to the Naomi Wolf lecture on you tube has made me think otherwise.

You present a unique and inspired perspective that is greatly appreciated.

Thanks,

Commercial property could be the next 'subprime' crisis see the cmbx index:

http://www.markit.com/information/products/cmbx.html

They want to save the system, but they can't.

This is 100% correct, guaranteed.

http://www.ft.com/cms/s/0/00a946ba-8bd2-11...?nclick_check=1
Fears for prolonged turmoil intensify

By FT Reporters

Published: November 5 2007 19:13 | Last updated: November 5 2007 19:13

Fears are rising in the credit markets that the turbulence could last for months as big US and European banks come under pressure due to losses on US mortgage securities.

Shares in banks and insurance groups continued to tumble on Monday as analysts warned that losses from mortgage securities could force some institutions to shore up their capital bases. The turmoil has already claimed the jobs of two of the biggest names on Wall Street and prices in the US money markets on Monday suggest the climate of mistrust will last well into next year.

...

Frederic Mishkin, a Federal Reserve governor, admitted that although the central bank could use monetary policy to offset the macroeconomic risk arising from the credit squeeze, it was “powerless” to deal with “valuation risk” – the difficulty assessing the value of complex or opaque securities.

Clearly the next step to follow a meltdown in the credit risk derivative group’s pounding of the commercial paper market would be a meltdown in the credit default derivative wherein trillions of dollars are involved yet the dealership in this structured product is an incredibly small number.

Those people, according to a Wall Street Journal article a year ago, are Merrill, Citicorp, Lehman, Goldman and Bear. These products, when purchased ostensive, protect the buyer from credit rating reduction and defaults be they in the market place (slashing of value) or the bond issuing entity itself.

The world class oxymoron is the credit default derivative that the financial integrity, as defined as the special performance contract actually performing, depends on the balance sheet capability of the loser on the arrangement. I would suggest to you that the outstanding commitments on the credit default derivatives exceeds the total cash and near cash assets of all the dealers involved. There is another outstanding question which is how many credit default derivatives have been written by the few participants on each other?

Friends, this is all coming down much faster than anyone could have anticipated. It is still too complex for most of the public and professionals to understand. That is the only reason that there isn't a panic attitude roaring through markets. That is a positive for the best interest of the readers who have not acted. According to the assistance given to me by CIGAs emailing me this weekend, less than 15% of you have moved to certification of your investments and the removal of financial intermediaries between you and your finances.

Look, if I prevent you from being mauled by the incoming tide, I have made you money. Please consider what I have told you because I am right and I care.


--- jsmineset.com

Just pause and think about the problem.

Hundred of banks and institutions around the world were conned by the scum bags to invest in CDOs, ABCPs etc. allegedly worth a global value of US$20 trillion (marked to model, and triple-A rated and as explained by the Economist). Some analysts have given a higher figure in – in hundreds of US$ trillions. Whatever is the figure, your average Joe six-packs will not be able to visualize or fathom the meaning of all these zeros! It is obscene that when half a billion people are surviving on less than US$2 a day, the looters are gambling and plundering in the US$ trillions.

When Bear Stearns’ two Hedge Funds collapsed after these “securities” were shown to be worthless in June/July 2007, those banks and financial institutions that were left holding papers (supposedly worth in the US$ trillions) whose values are now debatable or of zero value, had a massive heart attack! These banks are all in the financial ICUs and receiving massive amount of blood transfusions.

If these banks were to right off these “investments” they would be insolvent, there will be runs on these banks. This is the nightmare scenario and that is why the scum bags are trying to cover up this global fraud – the biggest fraud in history.

We are talking about banks such as JP Morgan Chase, Goldman Sachs, Citi Group, Merrill Lynch, Lehman Bros, Wachovia etc. Then there are the big European Banks, such as Barclays, UBS, Deustche. HSBC etc.

EXECUTIVE SUMMARY OF THE US DERIVATIVES MARKET

Executive summary

http://www.jsmineset.com/

I have a nasty feeling this is going to turn out to be far far worse than I can imagine. Reading about hyperinflation and watching re-runs of the World at War give an inkling of what could happen, but Jesus, this is all starting to sound awful.

If I understand it, There are 750Trillion of Credit Derivatives out there and by some awful scenario were facing a situation were they might all be called in, well, not all, but enough to make the entire monetary system of the world collapse (well, the western world).

Has anything on the scale of what we're seeing ever happened before? I mean, it was pretty big when Spain’s bid to unite Europe under the Hapsburgs failed in the 17C, it only let to 400 years of Spain playing catch-up to the rest of Europe... the south sea bubble, pretty big, but kinda contained, I mean.. Have we got any comparisons to what may be occurring here?

I mean, the HPC of 89/90 was pretty poor, recession followed, but this?? What was one of those post, some important financial type said "an unprecedented period of financial turmoil", unprecedented? How unprecedented exactly? Living memory? Since the inception of the banking system? Since roman times? I mean.. What the hell's going on here?

I worked in finance for 7 years. I watched the techboom and bust. I remember the feeling as the stock went up and thinking this was unbelievable, there were companies that had never made a profit valued in the hundreds of millions of dollars/pounds. Two years later, the same companies were trading as penny shares. Some investors got burned. A few start-up companies closed. Even the motly fool had to get rid of some staff writers. But now? I had the same feeling watching the housing market rise and have been convinced for years it would go down again (for all the reasons posted here over the last few years).. But this??

This is starting to get me seriously worried. Worried like, I might pop down tescos and buy a whole lot of that tesco value food and store it up along with some water cleansing tablets.

If this goes wrong.. ie, tesco's are a bank.. sainsburys are a bank.. they've got investment arms.. What happens to the food supply if any of these credit derivatives blow up and tank out part of the food distribution system? how many tesco's checkout girls will turn up to work if there's no pay because tescos' is bankrupt? Take your money out. have an escape route. Good advice. Buy gold. Good advice too, except I’ve debt from student years still outstanding and no real money or assets. Aw... poor me. But hey. I’ve got my health. So.. What to do? Carry on with all the other sheeple I guess. I am one, no way out of the system I’m in.

Few.. Apparently this turned into more of a rant than I intended. Sorry about that.

So. My thought was, have we got any kind of refecence historically to whats happening here or are the amounts involved simply so large that nothing in history has over looked like this?

/unexpected rant.

Never, in the history of humanity, credit was made accessible to millions of borrowers clearly unable to repay.

The root of this irresponsible credit expansion is the abandonment of gold convertibility on 15 August 1971.

This is the worst monetary crisis in recorded human history, it is global, it can't be stopped, it will cause untold sufference and it will eventually result in the collapse of the international monetary and banking sytem.

The only way to protect yourself from the onrushing global hyperinflationary monetary holocaust is to get (or stay) out of debt and own some gold and silver.

Assuming we manage to avoid a world war, when the rubble settles after the collapse people will not trust anything else as money for a long, long time. And the world will be a much better and more honest place.

This is 100% correct, guaranteed.

That reminds me about meeting a drunken multi-millionaire in an Edinburgh pub. He told me that "the secret was to buy premium bonds" - he seemed to be stumped when I pointed out that my available funds to do this were negative several thousand pounds... He didn't seem to grasp the concept that I owed money at that stage in my life.

I don't think you should be worried, however... I just think you should do the things that would always have been sensible. Pay down debt whenever possible; avoid over-stretching yourself; concentrate on skills you can market in future; avoid risky speculation and gambling.

Pretty simple... I'm concentrating on one focus - "buy (invest in) what I want/need in the future" - which, I have to admit, is proving a lot more difficult than saving ever was.

Who started this easy credit culture and why? How could the banks not see that this was going to result in serious problems long term?

Yes. This is deliberate.

Is NS&I classified as a financial intermediary?

If the financial institute did melt down, are investments in NS&I still secure? By the sounds of it, they would not but I wanted to ask to confirm since I'm still trying to take in all this info before making a decision on what to do.

No doubt but I'm wondering who started the ball rolling and who will benefit from this if the system collapses.

I imagine that would be the people who have the gold. :-)

NS&I is not 'secure' in the sense that it is in Sterling. But as HPI goes, so will Sterling. (-> toast)

I was really intrigued by your posts when I first came onto this board and welcomed the advice but I can't help think now that you are nothing but an unashamed gold ramper. Tone it down a bit or even you most rabid followers will turn away.

Do you really expect civilization to just stop at the drop of a hat? Even in the event of a meteor bringing about a nuclear winter we're not going to run around carrying bags of gold to pay for things.

Gold was historically used as a bargaining chip yes. Past results do not guarantee future returns.

Not forgetting those planes flown into the heart of America's (and the world's) financial system in 2001. The objective presumably being to destabilise the US economy. With the help of the FED, a small bunch of unbelievably greedy investment bankers, and psychotic neo-con politicians they've pretty much succeeded even if it has taken a few years to fully hit home.

Anyone with two brain cells could see that it was going to result in serious problems in the long term; easy credit always does.

But why do you think the people responsible care about the long term? If they can loot the profits today through fat stock options and bonuses, what does it matter if the bank collapses a few years from now?

Almost no-one cares about the 'long term' anymore, and a bank is not an entity, it's a collection of employees all with their own goals and motives.

No need to ramp it. Just wait and see.

Meanwhile losses at Citi, the biggest bank in the world, are spiralling exponentially.

This is the mark of the derivative beast.

The sacrificial central bank liquidity injections this monster requires are hyperinflationary fuel for the gold rocket.

This is 100% correct, guaranteed.

Protect yourselves.

http://www.bloomberg.com/apps/news?pid=206...refer=worldwide
Citigroup May Face $13.7 Billion in Total Writedowns (Update3)

By John Glover

Nov. 6 (Bloomberg) -- Citigroup Inc., the world's biggest bank, may have losses from asset-backed bonds of as much as $13.7 billion, roughly equal to the company's profit so far this year. It shares fell for a sixth straight day.

The bank may have to write down an additional $2.7 billion of subprime mortgage-backed and related securities, CreditSights Inc. said today. Citigroup said on Nov. 4 that securities it holds may have lost $11 billion of value, prompting rating companies to downgrade its credit and precipitating the ouster of Chief Executive Officer Charles O. ``Chuck'' Prince III.

Additional writedowns may balloon to $21.1 billion if off- balance-sheet units are included, according to analysts David Hendler, Richard Hoffman and Pri de Silva in New York. That compares with potential losses of $5.4 billion for Bank of America Corp. in Charlotte, North Carolina, the third-biggest U.S. bank, and $4.1 billion for New York-based JPMorgan Chase & Co., the second-biggest, CreditSights said.

``Citigroup causes us the most concern of the big banks,'' the analysts said in a report today. ``Citi's risk is further amplified by its relatively weak capital position,'' reducing its flexibility in responding to crises.

Citigroup fell 96 cents, or 2.7 percent, to $34.94 as of 3:41 p.m. in trading on the New York Stock Exchange. The shares have fallen 17 percent in a week, and reached a four-year low today.

Potential Losses

The analysts cited New York-based Citigroup's business structuring collateralized debt obligations and its leading position in setting up off-balance-sheet units that it now may have to take back on its books.

With the exception of Merrill Lynch & Co., which last month reported $8.4 billion of writedowns in the third quarter and may be on the hook for another $9.4 billion, the potential losses related to CDOs at the three major banks in absolute terms dwarf those of the largest brokers.

Lehman Brothers Holdings Inc., Bear Stearns Cos., Goldman Sachs Group Inc. and Morgan Stanley, all based in New York, stand to lose as much as a quarter of their equity, according to CreditSights.

The announcement of Citigroup's potential losses and the exit of its CEO prompted Fitch Ratings to cut the largest U.S. bank by assets to AA, three levels below the top, and say it may reduce the rating again. Standard & Poor's said it may lower its AA grade.

Emergency SIV Financing

Citigroup reported $5 billion in net income in the first quarter, $6.2 billion in the second quarter and $2.4 billion in the third quarter, for a total of $13.6 billion. Writedowns of $21.1 billion would be equal to about 17 percent of the bank's reported shareholders' equity of $120 billion in 2006.

Citigroup Inc. said yesterday that it provided $7.6 billion of emergency financing to the seven structured investment vehicles it runs after they were unable to repay maturing debt. The SIVs drew on the $10 billion of so-called committed liquidity provided by Citigroup, according to a Securities and Exchange Commission filing.

``This company, if it were any other company, would probably be considered to be operating in an unsafe and unsound condition,'' said Josh Rosner, managing director at New York- based investment research firm Graham Fisher & Co.

SIVs sell commercial paper to buy longer term assets such as mortgage or bank bonds. Citigroup SIVs have no direct investments in subprime assets and $70 million of ``indirect exposure'' through collateralized debt obligations, or bonds that package debt, according to the filing, based on figures as of Oct. 31.

Richard Stuckey

Citigroup named Richard Stuckey, 51, to manage most of its $43 billion of subprime mortgage assets, the same executive who helped unwind hedge fund Long-Term Capital Management LP's bad bets nine years ago.

Stuckey, who has been with the company since 1983, will oversee most of the bank's securities linked to homeowners with poor credit, according to a memo to employees. Rescuing the bank's subprime holdings may be a harder challenge than Long-Term Capital, said Lawrence White, professor of economics at New York University's Stern School of Business.

``The opaqueness as well as the stinkiness are greater,'' White said.

Nostrodamus 2007-2012. The end of the world is coming.

Forget Nostradamus.

This is the real thing.

The world will not end.

The international monetary system in its present form will, soon.

This is 100% correct, guaranteed.

and the only thing to fear is fear itself?

Citigroup Fighting For Its Financial Life
Mike Mish Shedlock Nov 05, 2007 4:40 pm

Those focusing on the dividend picture at Citigroup are sure focusing on the wrong picture...

In a quarterly regulatory filing Monday Citigroup reported $134.8 billion in 'level 3' assets:

Level 3 assets are holdings that are so illiquid, or trade so infrequently, that they have no reliable price, so their valuations are based on management's best guess. The investment bank said its total liabilities related to level 3 assets at quarter-end were $40.36 billion, according to the Form 10-Q. Citigroup said it often hedges its level 3 positions.

Citigroup Uses These Descriptions

Level 1: Quoted prices for identical instruments in active markets.
This is usually known as marked to market.

Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.
This is usually known as marked to matrix.

Level 3: Model derived valuations in which one or more significant inputs or significant value drivers are unobservable.
This is usually known as marked to model.

MarketWatch called it "Best Guess" accounting. Another terms frequently associated with Level 3 accounting is "Marked to Fantasy".

I agree and unfortunately most people out there have no clue what lies ahead.

The potential for economic meltdown has never ever been greater. Not on the 30's, the 70's or 80's. This is Big Time.

the only things to fear are

1) derivatives.
2) unbacked paper currency which allowed 1) to proliferate.
3) central bankers who forced 2) on us.

Given this is the world's largest bank, how can the Dow rally more than 100 points today?!!!

Because it means a rate cut is more likely, and therefore there'll be more easy credit around to pump up the stock market?

We live in Wacko World today, where bad financial news pushes up the stock market (rate cuts! woo hoo!) and good news pushes it down (oh no, hold or raise!).

That would be an anticipation of heightened inflation.

Ok I understand that bit, but surely this outweighs the inflation effects?

The stock market is completely detatched from economic reality. Ignore it and concentrate on what you can see with your own eyes.

Petrol prices increasing
Cost of living rising.
Wages not increasing.

Happy times.

What most people forget is that the DOW Jones is the price in USD of a basket of 30 shares.

So if the dollar sinks more than the DOW goes up, shares are really falling.

In terms of real money the DOW has been collapsing for the last couple of months.

If you don't believe me, see 3-year chart of the number of ounces of gold required to buy the DOW Jones. It is now close to major support and threatening to violate it.

Cheers that's very helpful

Plus traders need to earn a living. Just because Citi gets hit it doesn't mean other stocks can't rise. People are making money by range-trading. If you take a good look at any index, even on a very bad or good news day it is very unusual to have straight up or down price movements. So you might have gold, miners, oil rising and financials falling and so on. Also, to a degree, the more write-downs and bad news that comes out the happier the markets will be that it is in the open. Markets don't like unknowns as we saw in August.

seems to me those tier 3 things aren't known at all

An alternative view would be that gold and/or dollar are about to counter-trend, or that the DOW will rebound towards its summer high. I think Dr. Bubb's view is dollar may rebound, at least in the short-term, which would likely see a gold correction. (unless he meant only cable).

Value definately not no. Scope - broadly. Unless they've all been lying about the scope as well.

cgnao, I find some of your posts - like this one - very enlightening and others downright terrifying. Can you - and anyone else - give me an opinion on a simple question.

Assuming someone doesn't want to only invest in gold (because in the event that we really need it I can't cope with the idea of the tin hat and gun needed to protect it), if hyperinflation is on the cards isn't it better to be invested in property than holding cash? I'm concerned that my happy STR proceeds will rapidly become worthless.