Thread: A note of caution for those with deposits in US Banks

This week may be very, very, ugly for the US financial markets.

There is a cash and liquidity problem now, in the private sector.

Companies like Goodyear and Caterpillar.

I think this week may be very ugly. And Not only for the US.

Here's a quick map of the nations that have banned/suspended shorting, naked shorting.

Interesting that in the US it includes 900 companies:



Copyright The Financial Times Limited 2008


Link: FT.com / Comment & analysis / Analysis - Short shrift

they should banned shorting for every company, not a limited batch like they are doing

it's obviously that speculators are playing the market because the opportunity is there, not a better time that doing short selling when there is a panic, almost too easy

that shit got to stop, they fucked up the oil market, and lost, now they are going after banking,

^ I'd love to see them announce a short ban across the board. The short squeeze would be immense and would be a great trading opportunty.

Stock market down 9%, currency down 6% against the USD. What's up there then?

Bell just gone in NY. Meanwhile, gold up $41 on the day.

Trading suspended in Brazil after 10% fall. Not a square inch of the Earth unaffected now. This is what I mean when I talk about the failure of the global financial system.

Dow testing the 10,000 level now. S&P is 1056.
VIX volatility index is over 51 which is a record. Energy stocks worst hit.
Its interesting to note that gold is up on the same day that the dollar is at record levels against the Euro. Quite extraordinary I think.

^10000 on DOW breached. Intra went to 9994...

Also gold up $45 on the day now.

This is the week of reckoning.

DOW at 9972 and in freefall.

Originally Posted by Texpat

Originally Posted by Butterfly

we will hit bottom when the Dow starts trading at 6,000.

I'm no expert either, but that sounds to me like wishful thinking. Apart from housing and banking, the sub prime crisis has had negligible impact on much else. The price of oil, however, has had a great impact on everything.

If Dow goes sub 10K it's because of oil, not the sub-prime crisis (which I believe will be sorted within two years.)

I cite Black Friday in '87, the S&L bailout and 9-11 as very quick rebounds from what the Chicken Little's of the day were claiming were absolute worst-case scenarios. American economy has proven to be very resiliant. I see nothing different now than I saw then, with the exception of much greater volumes --totals and losses.

After a few of these disasters, it's not even exciting anymore.

Are you still sure of this Tex?

Russian stock market re-opened, lost 19% and closed.

RIP.

DOW down 540 points to 9780.

damn, DOW recovering already

Europe got battered though, about fucking time

as expected, USD going strong now. Wouldn't be surprised if we see the DOW recovering by the end of week !!! it's hilarious

REYKJAVIK, Oct 6 (Reuters) - Facing its greatest economic crisis in modern times, Iceland agreed emergency legislation on Monday aimed at avoiding financial chaos as its banking system faltered and its currency plummeted 30 percent.

The ruling alliance and opposition parties united to approve a bill that gives the state sweeping powers over the island's battered banks.

In an address to the nation, Prime Minister Geir Haarde said the country's top financial regulator will have wide-ranging authority to dictate a bank's operations and could even force it to merge with another firm or declare bankruptcy.

Iceland is an island in the middle of the North Atlantic, home to just 300,000 people. But it has found itself on the fault-line of a global financial crisis after its banks in recent years expanded aggressively overseas and foreign investors have poured money into local projects.

The bill will also allow the government to take over housing loans held by the banks and put them in a government housing fund, an effort to help thousands of islanders who face the loss of their homes amid an ever-widening credit crunch.

Later, addressing parliament, the prime minister raised the spectre of a complete financial collapse if the bill had not been agreed.

"We were faced with the real possibility that the national economy would be sucked into the global banking swell and end in national bankruptcy," Haarde told lawmakers.

"The legislation is necessary to avoid that fate."

BORROWING SPREE

The government held marathon talks through the weekend, with Haarde holding out hope that such drastic measures would not be needed.

"As recently as last night, it looked like the banks could continue operations for a while," Haarde said. "This morning and today, things have totally changed for the worse."

The government ordered trading in all of the island's banks to be halted before the stock exchange opened on Monday.

But as the crown collapsed, the situation for Icelandic banks became dire. During the boom years that came to an abrupt halt late last year, Iceland's banks took on massive foreign debts as they expanded overseas.

The crown's fall means those debts have now become much more expensive to finance.

The crown, a volatile currency at the best of the times, began a descent on Monday that made its previous slides pale in comparison.

By late Monday, it had shed some 30 percent on the day to a record low of close to 230 per euro. In the wake of the currency fall, inflation in the country, which is heavily dependent on imports, is set to rocket.

Iceland's biggest bank, Kaupthing (KAUP.IC: Quote, Profile, Research, Stock Buzz), said only on Sunday that it was in healthy shape. But markets were wary as authorities and bankers for months had said the financial sector was sound and yet only last week Iceland's then-number three bank, Glitnir (GLB.IC: Quote, Profile, Research, Stock Buzz), had to be rescued.

Part of Iceland's plan has been to persuade pension funds to repatriate cash. Local media reported over the weekend that the Icelandic Pension Funds Association had agreed to the idea, with pension funds being asked to transfer 200 billion Icelandic crowns ($1.8 billion) to the state.

The pension fund association issued a statement on Monday confirming it had encouraged its members to bring back capital. It said total assets of the funds amounted to 1.8 trillion Icelandic crowns, with about 500 billion in foreign securities.

The association has asked members to sell up to 50 percent of their foreign securities.

^The highlighted legislation cannot and will not work. This weekend coming is when Iceland and their over-leveraged banks go bust.

Originally Posted by Butterfly

damn, DOW recovering already

Europe got battered though, about fucking time

as expected, USD going strong now. Wouldn't be surprised if we see the DOW recovering by the end of week !!! it's hilarious

You do have a strange sense of humour...

VALUE9,955.50
CHANGE-369.88%
CHANGE-3.58
TIME16:09
TOTAL MEMBERS30
UP1
DOWN29
UNCHANGED0

Bloomberg.com: Movers by Index

Originally Posted by Butterfly

the US is old news, it has probably bottomed out already, US investors will start looking at fundamentals again,

I was wondering if yesterday may have been the bottom for the US. The bounce from 800 points under to less than 400 was interesting given that there was no news to drive it. The VIX index was off the scale at 56 and volume was huge. Maybe capitulation occurred yesterday?
I think there will be a bit more chaos when the short selling ban of financials ends tomorrow (i think) but it will be interesting to see how the end pf the week shapes up.

Originally Posted by Butterfly

Iceland is certainly an interesting case, surprised they have their own banking and currency

I heard something yesterday on the news. Iceland is seriously looking into adopting the Euro because their economy is too small to support a national currency.

Originally Posted by Spin

Originally Posted by Butterfly

the US is old news, it has probably bottomed out already, US investors will start looking at fundamentals again,

I was wondering if yesterday may have been the bottom for the US. The bounce from 800 points under to less than 400 was interesting given that there was no news to drive it. The VIX index was off the scale at 56 and volume was huge. Maybe capitulation occurred yesterday?
I think there will be a bit more chaos when the short selling ban of financials ends tomorrow (i think) but it will be interesting to see how the end pf the week shapes up.

No, to coin slightly more famous words, we are now near the end of the beginning. The middle phase of financial collapse is next. This will be the middle and main phase of this crisis.

Originally Posted by Norton

Originally Posted by Butterfly

Iceland is certainly an interesting case, surprised they have their own banking and currency

I heard something yesterday on the news. Iceland is seriously looking into adopting the Euro because their economy is too small to support a national currency.

Iceland are looking at every option right now, they have sought bailout from the nordic countries, they have ordered repatriation of all Icelandic assets worldwide and yesterday sought to 'reassure' they citizens by saying that they had enough foreign currency reserves for 8-9 months of food supplies (which they wholly import). Their priorities are being reshaped.

If you could see the horror on the face of an Icelandic journolist interviewee on BBC News 24 yesterday. I suspect she had just been told her debit and credit cards were about to cease working, which be a problem for her as she worked in London, where you tend to need funds to live.

Originally Posted by Butterfly

the crisis is now in Europe, the US is old news, it has probably bottomed out already, US investors will start looking at fundamentals again,

Alas, once US investors start looking at fundamentals again, they will discover an insolvent banking sector and an economy in freefall, with companies such as Goodyear, Ford, Boeing and GM having to manage their cash on a day-to-day basis, unable to sell their CP.

This discovery will make them agree with you and me, namely that the DOW will fall to around 6000.

Serious rumour that RBS (Royal Bank of Scotland, Natwest, Ulster Bank et al) are about to go under and are seeking a BoE bailout. They were down 19% yesterday and a further 20% in the first hour of trading today.

If you have money in there and have online banking, transfer it NOW.