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Down for the count: The whole system is contracting
- Text size
Mike Whitney
Online Journal
October 27, 2008
“The great inter-war slumps were not acts of God or of blind forces. They were the sure and certain result of the concentration of too much economic power in the hands of too few men (who) felt no responsibility to the nation.” — From the 1945 UK Labour manifesto, Let Us Face The Future
There are signs that the credit crunch is easing. Interbank lending in dollars has fallen for a ninth straight day. The various indicators of stress in the market — LIBOR, the TED spread, and the LIBOR-OIS spread — are all gradually returning to normal, but the damage to the broader economy has been substantial.
Major corporations have had to stretch their credit lines just to get the money they need to cover routine operating expenses and a lot of retailers have not been able to get funding for their inventories for the holiday season, so they’ll either have to hire fewer workers or simply shut their doors for Christmas. Also, corporate defaults have increased as businesses have been unable to turn over their short-term debt.
According to Fitch Ratings, the “crisis will cut growth in credit this year by 50 percent as financial firms reduce leverage, investors’ appetite for risk declines, and the worldwide economy slows.” When credit is less available, there’s less business activity and the economy slows. Unemployment goes up and quarterly earnings go down. It’s a vicious circle that starts with speculation and ends in panic. The financial system has to reestablish its equilibrium by purging the excessive credit that developed through low interest rates and lax lending standards. Financial institutions everywhere are in the process of deleveraging which is putting downward pressure on the main stock indexes and creating turmoil in the currency markets.
The US Treasury and Federal Reserve are now underwriting the entire financial system. The free market has been abandoned altogether. Everything from commercial paper to money markets is now backed by the “full faith and credit of the United States.” Without that explicit government guarantee, the credit markets would still be frozen and the system would crash.
But government guarantees do not address the real problem, which is toxic assets that must be accounted for and written down. All it does is take hundreds of billions of dollars in mortgage-backed garbage onto the nation’s balance sheet and undermine the creditworthiness of the United States. Eventually, foreign central banks will see the folly of this maneuver and refuse to buy more US debt. When that happens, there will be a run on the dollar and a major dislocation in the bond market. Then, the financial system will grind to a standstill once again.
Secretary of the Treasury Henry Paulson’s $125 billion capital “giveaway” to nine of the country’s largest banks has helped to calm the credit markets, but it won’t last. The “real economy” is beginning to stumble and the stock market is gyrating more wildly than any time in history. Wall Street is consumed with fear and investors are ducking out the exits as fast as their feet will carry them. According to the New York Times, the banks probably won’t even use Paulson’s money to extend loans to consumers and businesses (as intended), but will hoard it to make sure they are sufficiently capitalized when their mortgage-backed assets are downgraded. Even worse, the banks may use the money to gobble up smaller local and regional banks.
On last Tuesday’s Jim Lehrer News Hour, New York Times journalist Andrew Ross Sorkin put it like this: “The other thing that some of them may do with that money is go out and make acquisitions and buy other banks, (which) means that you will not be getting this money into your pocket anytime soon. . . . I think the larger issue is the economy and these banks, in terms of lending, are not going to start lending real money until the economy turns.”
Paulson knows what the banks are up to; after all, these are his friends. The truth is, the $125 billion was not given to the banks to soften the effects of the recession or increase lending. It was given to make the strong banks even stronger so they could monopolize the industry. Paulson’s real plan is “more consolidation” and less competition, or as economist Michael Hudson says, “Big fish eat little fish.” The Treasury secretary is using his authority to reward his friends rather than doing what is best for the country.
In the last few weeks, the broader economy has deteriorated faster than any time in the last 70 years. That’s why Fed chief Ben Bernanke has given the nod to another stimulus package of $150 to $300 billion dollars. The gears are rusting in place and the desperation in Washington is palpable. Calculated Risk web site provided a transcript of a conference call by MSC Industrial Supply (MSC) which summed up the prevailing mood in today’s business world:
MSC: “In the last several weeks, customers’ sentiment has turned dramatically downwards. Here are a few of the things we have recently heard and I’ll quote a few of them. One quote is our new orders are down substantially in the last few weeks. Another is that corporate has told us to reduce inventory. What we have also heard is make due with what you have. And finally, another quote is capital expenditures are on hold. Customers are concerned about the economy and the lack of available credit. They’re reducing inventories, orders, and order size and there has been a trend toward deferring capital expenditures . . .”
- A d v e r t i s e m e n t
MSC: “David, we view this time as unprecedented in history. The economy is undergoing a huge change, how that is going to shake out all remains to be seen, but I think what is important to know is it’s a huge change that, frankly, no one had a chance to see coming, so we than specifically in our customer base there is a tremendous amount of fear that is gripping customers and evidenced by what we have seen the last couple of weeks in October, almost buying paralysis, that is really the way that we think about it, and frankly, in speaking with so many customers what we see happening. . . . What is has happened here with the credit crisis is while the economy was by no means booming, it was kind of rolling along and we almost think that what typically would have taken six, seven, eight, 9, 12 months to start to come down happened almost literally overnight.” (Calculated Risk)
Events are now unfolding so quickly, they’re impossible to follow. But this much is clear, the wheels have fallen off the cart. The Fed has lost control of the system. Last Monday, Bernanke announced the creation of the Money Market Investor Funding Facility (MMIFF), which will provide $550 billion in liquidity to U.S. money market investors. It is another in a long list of steps to try to provide liquidity to a system that is burning through trillions of dollars of credit via the deleveraging hedge funds and asset downgrades. Of course, the Fed does not really have the money it has committed. It will have to expand its balance sheet, issue more Treasuries, and hope that foreign central banks do not see that the US financial system is headed for the rocks.
“It is essential we preserve the foundations of democratic capitalism,’’ Bush bellowed last Monday.
All that’s left of the free market is the threadbare rhetoric of our lame duck president. The world’s biggest debtor is now the most ardent defender of market fundamentalism.
Last week, banks borrowed a record $437 billion per day, topping the previous week’s $420 billion per day a week earlier. Hundreds of banks cannot meet their capital requirements without regular low interest loans from the Federal Reserve. The banking system is in shambles. The FDIC needs to determine which banks can be saved and which need to be shut down, otherwise the insolvent banks will use the money they get from the Treasury on risky bets to dig their way out of bankruptcy. Without restrictions on how they can issue credit, many of the banks will engage in the same reckless behavior and speculation that brought on the current calamity.
Ninety-two-year-old Anna Schwartz, who co-authored “A Monetary History of the United States” with Milton Friedman, said in a recent Wall Street Journal interview that Paulson and Bernanke “should not be recapitalizing firms that should be shut down.” Rather, “firms that made wrong decisions should fail. . . . By keeping otherwise insolvent banks afloat, the Federal Reserve and the Treasury have actually prolonged the crisis.” At the same time, they have not alleviated the uncertainty among lenders “that would-be borrowers have the resources to repay them.”
This is the very heart of the matter; the distrust will remain until the bankrupt institutions are shut down and confidence is restored. The good banks have to be strengthened, the bad banks have to be closed, deposits have to be insured, foreclosures have to be reduced (to stabilize home prices), and consumers need immediate stimulus (including food stamps, extended unemployment insurance, infrastructure spending and aid to states) to rev up the economy. All of these have to be done as quickly as possible to avoid further damage to the economy and greater personal suffering.
According to an estimate by the UN’s International Labour Organisation (ILO), “Twenty million jobs will disappear by the end of next year as a result of the impact of the financial crisis on the global economy . . .” Construction, real estate, financial services, and the auto sector are most likely to be hit, according to the ILO’s estimate which is based on International Monetary Fund projections for the world economy. It could be worse if the Bernanke and Paulson botch the rescue.
The FDIC’s Sheila Bair has been the one “bright light” in the present financial train wreck. She has done a first-rate job of closing “sick” banks and renegotiating mortgages. Last week, Bair blasted Paulson for focusing all his attention on the banks and financial institutions instead of homeowners, many of who are now facing foreclosure. In an article in the Wall Street Journal, she said. “We’re attacking it (the crisis) at the institution level as opposed to the borrower level, and it’s the borrowers that are defaulting. That is what’s causing the distress at the institution level . . . So why not tackle the borrower problem?”
Unlike Paulson, Bair seems to grasp that the hemorrhaging in the financial sector cannot be stopped unless the rate of foreclosures is slowed and housing prices stabilize. The FDIC chief has taken a sensible approach to the crisis by writing down the face value of mortgages and putting homeowners in conventional 30-year fixed rate loans that make it possible for them to avoid foreclosure.
According to Bloomberg, “[Bair] now has the authority to offer loan guarantees that could encourage modifications by mortgage-servicing companies in an effort to avert foreclosures. The new financial rescue plan “allows the government to set standards for mortgage changes and offer guarantees for loans that meet the standards.” This gets to the root of the larger problem which is stopping the slide in housing prices so that the mortgage-backed securities market can normalize.
The actions of the Fed, the Treasury and the FDIC are likely to cost in excess of $2 trillion. That does not include the trillions in market capitalization that are wiped out by plummeting home and stock prices. Nor does it include the incalculable suffering from rising unemployment, falling living standards, or personal hardship. Eventually, the Fed’s emergency measures will result in higher taxes, soaring deficits and slower growth. As America’s “consumer-based” economy flags and the recession deepens, capital will flee US Treasuries and securities and create a funding crisis. This may be hard to imagine, now that the dollar is strengthening and US Treasuries appear to be in great demand, but the handwriting is already on the wall.
Brad Setser explains the dollar’s surprising reversal in his latest blog-entry: “The dollar’s rise since July is part of a reversal in longstanding investment trends that prevailed during years of plentiful borrowing, strong growth and low financial-market volatility. ‘Essentially, every large trade that built up a head of steam in the go-go years has blown up or is in the process of blowing up,’ wrote Alan Ruskin, chief international strategist at RBS Greenwich Capital, in a report to clients. ‘That goes for almost every asset class.’”(Brad Setsers Blog)
The recent surge in US Treasuries is also misleading, much of it having to do with terrified investors that are dumping their shares in stocks, mutual funds and hedge funds for the perceived safety of US debt. Foreign investors, however, seem to be losing their enthusiasm for Treasuries as America’s future continues to darken.
The net foreign purchases of long-term securities in August was a mere $14 billion following an even more dismal $8.6 billion in July; not nearly enough to meet $55 billion per month the US needs to balance its consumption of foreign goods. Even worse, the purchases of long-term US securities “went negative” for foreign private investors (by $8.8 billion), which means that the dollar is being artificially propped up by foreign central banks to avert a disorderly unwinding of the currency.
Foreign investors and central banks are no longer providing the capital to support the US $700 billion current account deficit. They have lost confidence in America’s ability to bounce back from the credit crisis which has swept through the financial system and is now hammering away at the broader economy. That means the demand for US debt will fall and the prospect of hyperinflation will grow. Even if the dollar is able to weather the storm ahead (and the nation can avoid a funding crisis) the massive deficits brought on by Bernanke’s “emergency” spending spree will force interest rates upwards and tighten credit even more.
As Michael Panzner, author of “Financial Armageddon” says, “While the U.S. may not suffer from a funding crisis in the immediate future, the voracious money-raising appetite will make life much more difficult for the private sector, in the sense that, they will be ‘crowding out’ increasingly desperate borrowers who will find their options are more and more limited.”
The Fed now faces the daunting task of trying to maintain America’s dominant place in the global system while the economy contracts, deficits skyrocket and the pillars of US-style capitalism come crashing to earth.
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October 27th, 2008 at 1:54 pm
LET ER FALL. “BABYLON IS FALLEN” REV. 18
October 27th, 2008 at 2:43 pm
*
| Strike another match, start a new; It’s all over now – bably blue.
~ Bob Dylan
October 27th, 2008 at 3:07 pm
let’s see, the fed and treasury bail out banks whic need no cash like jp morgan, and they want to bail out the car makers. perhaps they can bail out the american people and we’ll never have to work again, we’ll just keep getting bailed out !!!!!!!!!!!!!!!!!
youtube.com/goldieshome
goldieshouse.piczo.com
October 27th, 2008 at 3:12 pm
This is exactly what the fed and nwo scum want … they have and are manipulating the ‘crash’ so the American dollar is no longer the world standard , it’s my belief they want a communist currency China to be the new standard … in other words they want the west to bend and eventually become like a China ( rockyfeller thinks the Chinese style of govt. is ideal , he is a fucking ahole and just painted a big target on his forhead ! ) , where the common people are brutaly oppresed if they speak out in any way against the ‘govt’ … by now we all know the names of the traitors and bankster manipulators … taking em out might be necessary for survival of America …
October 27th, 2008 at 3:24 pm
HELLO???????? “No one had a chance to see this coming…”
If that is the truth (and I know it’s not for a significant number of corporate fascist’s on goverment welfare), then this fellow — who is some chief honcho in a financial strategy firm — doesn’t know what I knew fucking years ago, FROM SIMPLE F*** 2 + 2 COMMON FARMERS DAUGHTER SENSE.
Hmmm that idiot should think about the following….
“This is a phony economy. There’s only one thing to do and that’s tear it down completely and build a new one from scratch.” – Peter Schiff
That debt is bondage is a profound moral truth. But it is an important shaper of political and economic consciousness as well. The more you are in debt, the less likely you are to rock the boat.
Last week’s issue of the Jesuit weekly America had a portrait of Luther on its cover; inside, an article notes that it is now the consensus of Catholic theologians that “Luther was a profoundly spiritual thinker who was driven to revolt by worldly and incompetent Popes.”
Appears not only religious Pope’s may be incompetent, but financial and political one’s too!
Would there were a world with a few more Luthers!!
October 27th, 2008 at 3:34 pm
Although the FED bailout money may be fiat(smoke and numbers) the payback will still come from the labor of the US citizen and be forced unpon us by the very same GVT who screwed the pooch. The IRS will do their part tomake sure the US GVT and the FED get their payment for the debt they created.
I found this sight with some eye opening, well researched and documented information. I prefer such resources as compared to the “shock and react” type stuff. When I read this guy’s summaries of history with resources he took the time to find. The situation we are in has been before our eyes all along. we just denied it was real. It is free, no gimmicks, and unless we all get on the same page.. things will continue as usual. The NWO has a plan and the US GVT in their pockets. We will have to rough it.
http://www.freedomforceinterna.....issues#fic
Part 1: The Chasm
Part 2: Secret Organizations and Hidden Agendas
Part 3: Days of Infamy
Part 4: The War on Terrorism
Part 5: An Idea Whose Hour Has Come
This is not yet in written form but may be viewed here on YouTube.
October 27th, 2008 at 3:39 pm
The NWO is not about moeny.. they are about CONTROL for the “good of humanity”. They are collectivists..
Although the FED bailout money may be fiat(smoke and numbers) the payback will still come from the labor of the US citizen and be forced unpon us by the very same GVT who screwed the pooch. The IRS will do their part tomake sure the US GVT and the FED get their payment for the debt they created.
I found this sight with some eye opening, well researched and documented information. I prefer such resources as compared to the “shock and react” type stuff. When I read this guy’s summaries of history with resources he took the time to find. The situation we are in has been before our eyes all along. we just denied it was real. It is free, no gimmicks, and unless we all get on the same page.. things will continue as usual. The NWO has a plan and the US GVT in their pockets. We will have to rough it.
http://www.freedomforceinterna.....issues#fic
Part 1: The Chasm
Part 2: Secret Organizations and Hidden Agendas
Part 3: Days of Infamy
Part 4: The War on Terrorism
Part 5: An Idea Whose Hour Has Come
This is not yet in written form but may be viewed here on YouTube.
October 27th, 2008 at 4:13 pm
1776- Thats exactly what i am talking about,we need to take them out before they take us all out.
Many would say that thats what they want, for us to riot and try to overthrow them with violence so they can use martial law but i have not seen anyone come up with a better solution,all this talking and flag waving is not doing anything yet and may not do anything.
I would rather go down fighting for what i believe than just sitting there hoping when we all know time is running out.
October 27th, 2008 at 5:37 pm
Well we may very well have a communist country come January 2009, so I guess a communist currency would be expected.
October 27th, 2008 at 6:09 pm
Birth pangs for the New World Order……These are the contractions they are speaking of.
The CENTRAL BANKS must go. GET RID OF THE FEDERAL RESERVE……..NOW!!!!!!!!!
October 27th, 2008 at 7:54 pm
THAT DUDE FROM THE ZEITGEIST MOVIE SAID THE SAME THING RIGHT? the largest contraction in world history!
October 27th, 2008 at 8:06 pm
they stole Christmas, every present, all the stockings, every ornament and even the Christmas tree, but don’t look in the closet, that would be greedy. -River Tam – Firefly.
October 28th, 2008 at 1:01 am
HEAD GAMES, IT’S ALL I GET FROM YOU, HEAD GAMES………………..
October 28th, 2008 at 3:20 am
Now’s the perfect time to releese all the mutated viruses weve developed to kill off the rest of the planet!!! Then our banker utpoia can begin! HAHAHAHAHAHAHAHA you liddle sheeple will know learn the awesum power of this fully operasional central bank!
October 28th, 2008 at 4:15 am
.
” Strike another match, start a new; it’s all over now – baby blue. ”
~ Bob Dylan
October 28th, 2008 at 5:25 am
This is a planned facist/elite/illuminati takeover so remember Germany and do not go down quietly or passively. They have stolen all that we own and all that our future was to be. Fight, insist on truth and warn other fellow citizens globally as well as in the US. Whatdoesitmean.com has very scary international news that affects us all. They are about done with their rule over us as it has been announced to them that pentecost 2012, The God of Abraham will deal them a final blow. Their future ends and ours begins” read Ronald Weinlands free books, prepare and know that our future is beautiful. Love, one of the remnant of Yahwey/Elohim
October 28th, 2008 at 7:11 am
Seriously sick of hearing lame terminology like “Toxic Debt”, “Write downs”, “Toxic Assets”.
These and many others we are hearing stand for one truthful word. “FRAUD”. Nothing more, nothing less. Write downs are WRITE OFFS.. as in bad debt as in fraudulent business. As in not good throw it in the trash no matter how many people it harms. We have a wonderful government. We do, Our fearless (fearful more the word) leaders believe that this fraud has value and have been kind enough to purchase the fraud and take it off the fraudulent speculators hands. That’s right. No scolding or prison time for the speculators and fraudsters that ruined the country, oh no.. the American people have been forced to inherit the FRAUD they deem toxic assets.
Well I don’t know about you. I am just an average joe American. But I don’t go to the store and ask for a box of Toxic Assets or Toxic Sludge. I have no intentions of purchasing someones debt. But yet, the US government has FORCED the American people to do so. To take part in the purchase of Fraud.
You think 911 was bad, our government now charges the American people for the losses of the corporations at gun point. That is what it is. The people of the United States have been held up and mugged. Forced into the purchase of FRAUD at no cost to the FRAUDSTERS. They keep the huge bonuses for their fraud, we get to pay for it.
I have a feeling that many Americans don’t feel it will affect them. But it already has. In grocery bills, in gasoline, in wars of agression against sovereign nations with nothing but lies and propaganda backing up the whole fraudulent system.
Yes. This is what huge oversize fat drunk on self government will get you. When it falls, it cannot get back up.
October 28th, 2008 at 7:45 am
Yup, we are heading into a big deflationary swing. For those of you still wishing to make a profit by investing in gold, you missed the window a long time ago. Time to invest in t-bills and fed reserve notes
Guns may be a wise investment in the near future too. Get your shit straight- cash hoarding is just on the horizon.
October 28th, 2008 at 7:52 am
There’s only 7 days left until the elections!
Make a wise decision at the voting booths!
Vote Chuck Baldwin in 2008!
NOBama! McCain is nearly exactly like Bush!
http://www.baldwin08.com
Information provided by,
-Freedom Forever-
Tyranny, NEVER!
October 28th, 2008 at 9:41 am
so the bushtard pubtard ponsee scheme is falling apart faster than w can get out of town , just leave now go ahead resign and take that dick with you , dont go away mad just go away , dont let the door hit you in the ass on the way out , adios muchachos , believe me America will be better off without the both of you
October 28th, 2008 at 10:35 am
My opinion that the G20 should identify and
prosecute the guilty before taking any reformatory actions. Clear out
the mud before the waters will run clear again!
“Rob Kirby, writing in LeMetropoleCafe on September 9, observed that
there are laws and stiff penalties against market collusion. The U.S.
antitrust laws impose fines of up to $10 million and jail terms of up
to 3 years for unfair practices that inhibit competition or monopolize
markets in restraint of trade. “I admire [Coxe's] candor,” said Kirby,
“but my take on this is that all the perpetrators should face a firing
squad, or worse, for treason.”8″
Link: http://www.webofdebt.com/articles/manipulation.php
THE NOT-SO-INVISIBLE HAND:
HOW THE PLUNGE PROTECTION TEAM
KILLED THE FREE MARKET
Ellen Brown, October 25th, 2008
http://www.webofdebt.com/articles/manipulation.php
October 28th, 2008 at 1:44 pm
Thank you for running this piece, and thank you all for your insights. It is not a question of “liquidity” or “lack of credit” , it is a matter of trust – trust which has been broken, and the one message we give to the people who are doing everything in their power to make the situation even worse (have you folks noticed YET that your “solutions” are NOT working??) is that trust will not be restored until all of you resign. For once, the solution is fairly straightforward!
October 28th, 2008 at 3:16 pm
http://www.moneyasdebt.net
and you can watch it online..
think about this, if one source makes all the actual money, lets say $100
and then ask you to give them back, 105… where would the 5 come from? i.e. one source makes the 100…. so, its impossible for all to pay the debt back, since the 5 does not exist anywhere…
i.e. a central bank that charges interest causes the business-cycle and wipes out the middle-class….
watch ‘money as debt’ , only 40 minutes along and it explains it
contactable on stevenbatman AT gmail.com
October 28th, 2008 at 5:30 pm
http://WWW.SAVEAMERICANOW.COM
October 28th, 2008 at 5:32 pm
http://WWW.SAVEAMERICANOW.COM READ JEFFERSON QUOTE
October 28th, 2008 at 6:35 pm
Lets see if these devils have robbed the United States out of the largest sum of money that mankind has ever seen or even heard of!! Lets see if they will keep their word and make it benefit us all !!??
October 28th, 2008 at 10:39 pm
morpheus #27 – What is the “Let’s see?”.
It is painfully obvuious. That money was forfeited by the US GVt against the will of the US Citizen with no conditions by Paulson. There is no legal condition to either make them loan it out or repay it back to the US citizen. It is up to the banks to do as they please.
I could be wrong. I have looked like hell for a condition. If you know of one..please post the reference.
TY.
October 29th, 2008 at 12:03 am
I think that people expect that once everything start rolling again, all the money lost will come back. I got news for you, it ain’t coming back. The government has it.
October 29th, 2008 at 1:03 am
This reminds me of what happen to the cotton farmers in 1914
October 29th, 2008 at 6:52 am
I love the Hemingway quote “COURAGE IS GRACE UNDER PRESSURE.” until the day demon creeps…..believers never, ever give up. God has given us mighty tools. Read Enoch on line. They hid it from us for a reason. In Grace, Pamela
October 29th, 2008 at 6:54 am
look up pnac folks, hmmmm it was written 11 years ago. Yawn, how predictable. Love, Pamela
October 29th, 2008 at 7:01 am
interesting numbers are involved in this spiritual warfare, isn’t America 232 years old? Add that and get 7. mankind has had 6000 years of self rule and the next 1000 are for Christs Theocratic government/the millineal kingdom. Israel and Scientology are 60 years old. PNAC was written 11 years ago. Earth was created in 6 days, the the 7th was set aside for the sabbath………read the free book 2008 God’s Final Witness………Blessings, Pamela oh no do not look for how many 11s and in 911 hmmmmmmmmmm
October 29th, 2008 at 12:46 pm
Old article concerning who now holds the money… It is an ugly truth.
http://ming.tv/flemming2.php/_.....000923.htm
October 29th, 2008 at 12:47 pm
This Post might be off topic, but it concerns the massive theft going on right now of your
wealth, via the bank Bailout. Consider these ideas:
I lived in California from 2003 to mid 2005. I was amazed at how high real estate was getting. For example, a small nice home in Austin might go for between, say $100,000 to $150,000, whereas in California it would be from $400,000 to $700,000. And if it were in a more desirable area, even more, of the order $900,000 and up.
I would deal with the general public, there, and found out that they were not generally very rich, yet loans were offered with terms such as zero down, and very low [to start] teaser interest rates. I knew that this real estate bubble was a house of cards
I thought to myself how can all these professional bankers be this stupid, loaning money that they will probably never get back? Why would they do this? This was only answered later, that I will reveal here, down below.
To recap, I knew that the California Real Estate Market was a house of cards, that as soon as Interest Rates rose significantly, and other costs rose, then this house of cards would tumble.
[Note: A Put option is a contract that allows one to sell 100 shares of stock for a specified strike price, for a given period of time. For example, on the stock of the Airline Builder Boeing, trading at say $100 per share, a December 2008 Put Option with a $100 strike price might be trading at $4 {this is quoted on a per share basis} or $400 for one contract that gives you the right to sell 100 shares of Boeing for $100 dollars per share from now {October 28 to December 20, 2008} until expiration. If in a month or so the Shares plunge to $80 per share on Boeing, then this put option would be worth about $2,300 [Intrinsically it is worth $2,000 [100-80]*100 Shares, the additional value is time value.
In the [b]James Bond Movie “Casino Royale”[/b] 2006, Mr. Evil Le Cheffe {It means Cypher, or is it Lou-Cypher (Lucifer?). Is this a hint back to the Satanic Elite, or the rigged Casino for the Royals?}receives $100 Million Dollars Cash from some Africans for the purchase of weapons. Le Cheffe takes the money, and instead of first buying the weapons for the Africans, he buys $100 Million Dollars of Put options in an Airplane Manufacterer. From the movie, it seems that he buys the short term contracts that are out of the money, so he gets more “Bang for the Buck,” if the Stock were trading at,say $120 per share, and he buys contracts good for one month with a $100 strike price, these would sell for probably $25 per contract. His $100 Million would buy 4 million contracts. These contracts will expire worthless, if in the next 30 days the Company never trades below $100 [the Strike price] per share. Mr. Evil Le Cheffe, in the Movie plans to cause this stock to plunge. He sends his agent to destroy their New Prototype JetPlane, this would send the stock plunging, from $120 to maybe $80 per share or lower. Mr. Le Cheffe’s 4 million puts [that he bought for $25 each] would be worth $2,000 {[100 Strike Price-80 Stock Price]*100 Shares} per contract, or $8 Billion Dollars!!! We know James Bond stops him, but the movie sets the scheme for what is happening now with all the bad mortgage loans. Create massive quantities of bad Mortgage Loans, have compromised rating agenies rate them as triple A [were the raters photographed with the DC Madame's hookers, and blackmailed in doing what the elite needed doing? Is this one reason why Deborah Jeane Palfrey was killed, since too many of these threads would reveal this scheme?], bundle them and sell them off to unsuspecting fools [Merrill {got}Lynch{ed}] and other banks, and buy Credit Default Swaps on all this Garbage. The timer has been set for this junk to explode and the Swaps to go from $20 each to $1,000 each. Trillions will be needed to pay off the lucky [they created their own disaster like Le Cheffe wanted to do] holders of the swaps. The new Billionaires created out of this created disaster need to be brought to justice. Who are the owners of the Credit Default Swaps?
As this manufactured crisis grew Treasury Secretary Paulsen pleaded for his $700 Billion Bailout. When Congress voted no, the stock market, curiously plunged -777.68 points down DJIA. This would scare the Senate into passing it and Congress later. When you go to a Casino and hit the Jackpot you get “7″ s or 7,7,7; but remember there was one more “7″, the $700 Billion Bailout. This is another example of the market being rigged, with codes for those in the know. One year after 9.11.01 on 9.11.02 the S&P 500 closed at 911; was this another one of their codes revealing an elite connection?
October 29th, 2008 at 5:10 pm
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