August 17, 2008
Elaine Meinel Supkis
First, we go back in time to exactly one month ago, August 16th and 17th of 2007. I assure all readers here that rereading these older articles in their entirety is totally worthwhile. Since our media lies nonstop, knowing exactly what happened in the past is very useful. Also, bad news continues to pile up: Fannie Mae and Freddie Mac are BANKRUPT. And if the government is forced by our foreign creditors to pay up, this will DOUBLE our gigantic Federal Deficit!!!! Damn. And Lehman, who has a huge hunk of the $600 trillion Derivatives Beast, is going under, fast.
August 16, 2007: Plunge Protection Team Gets A Japanese Helping Hand
Wow. In the last few minutes of today's markets as the Plunge Protection Team schemed hard to stop the slide into hell, they pulled a few rabbits out of a very expensive hat. I figure we are approaching a trillion in the attempt at propping up the status quo here. The Stock Market board of directors imposed a slow down today to stop things in their tracks so they could figure out how to stop this crash landing. The deal was finished at about 3pm. One thing about natural forces: you can't command the sea go back when the tide is roaring in. And time to examine the main character who was saved today: Countrywide.
I was primed and ready to go when the markets suddenly fell apart last August. This is the first effort at restarting the Japanese carry trade which began dying on 7/17/7 when China decided the yen was too weak.
August 16, 2007: More Market Mayhem: Magnus MGIC Morgtage Mess
As the US injects more money into le toilette, $17 billion today, the stock markets fall and more and more lending or investment trusts go belly up or keel over dead and so we will look at the latest, 'Magnus' which is named in honor of all good wand waving magicians! I managed to pull up some pictures of their website which they have terminated but forgot the Google back door that let's us go have some fun. I examine what destroyed them.
Actually, this posting is chock full of funny stuff. For the head of MGIC Mortgage was voted the smartest desperado in real estate just two months earlier. Then he went belly up. Shows us how gullible and stupid some publications are, eh? There are many links and I managed to get into the MGIC online site and heist some of the web pages. They are amusing to look at, in a sardonic and sneering way.
Countrywide is filled with jerks who quickly sold off over half a billion in stock options during the last year even as they knew perfectly well, their bank was floundering and they had made disastrous loans with reckless abandon. So they abandoned ship and dumped these on unsuspecting investors and into pension funds! I say, investigate these clones of Miliken and Boesky or Enron! Lawyers shouldn't be chasing after me, the crooks are the guys with millions and milions in dishonest stock deals!
*snip*
I sat down with a calculator and ran through the sales of stocks by the top officers of Countrywide starting with January, 2007. The real big sell-offs took place starting about that time. As I ran along the numbers, my hair stood on end. Just from the last 8 months of selling, these guys sold...hold onto your hats, everyone....$410 million in share values. That is nearly half a billion bucks. Yes, it isn't a typo. Add them up as we can see on the SEC charts. My god.
From the same day: Helicopter Bernanke Saves Dead Beats!Last night this helicopter flew around and around my house. Pflappp, pflapp, pflapp. It was very annoying and very late. I wondered why it circled my house twice and then flew south in a beeline. Well, it was probably Helicopter Bernanke. He was told to drop $38 billion on my mountain but when I went outside and yelled, he got skitterish and flew off to Wall Street to dump the loot. Boy, are they happy today. This is Xmas and Happy Birthday rolled all up in one big wad as interest rates are dropped so they can spend, spend, spend and leverage, leverage, leverage. Gads.
*snip*
Both the US and Japan said, 'Fuck Europe, dump our junk there!' and off both went, reassembling the smashed, broken mega-robot mecha of the Present Trade Status Quo. This little business must go on no matter what, no matter how badly this destroys the US industries and drives us into debt or how badly it burns the Japanese people. This machine, being without heart or soul, will keep marching forwards. Causing inflation, eating up world resources and spreading worthless money all over the place. As well as worthless CDO's. Europe can't afford to have the euro double in value vis a vis the US dollar and the yen. Even if this makes oil cheaper, the oil pumping nations will sell oil to Europe and buy Japanese! This is very one-way and Europe will be strangled to death by such trade. But Europe has virtually no FOREX reserves so they can't fight this.
And thus began the great climb in the value of the euro! As I expected. Japan didn't mind this at all. But the unwinding of the Japanese carry trade hammered Europe. The dollar couldn't strengthen because China was forcing up the value of the yen versus the dollar. Japan was forcing up the value of the euro because the US was going off the economic cliff. Housing was contracting rapidly.
Yet another story that long, long day: I Was Right: This Is All About Strengthening Yen!
Real quick story today: I was right! I was right! The engine of this month's banking collapse was from China because the yen is now growing stronger and all central banks but China are frantically trying to reset the situation so that it goes back to the previous status quo but this is impossible because China is retaliating against the G7 for trying to force the yuan up while keeping the yen artificially low. Just look at these headlines!From Forbes:Not one story is about how the Bank of China is trying to prop up the present system. I noted from day one, last week, China's total silence, China not dumping tons of FOREX reserves into the system. China has made it abundantly clear that the yen is too weak and at the beginning of August the IMF joined the G7 in insisting the yen is just fine and Japan can do whatever it wants. Suddenly, we have a banking crisis across the entire planet except for...CHINA AND RUSSIA. Bingo. The dog that didn't bark, as Sherlock Holmes noted, is the clue.It is official. The much-celebrated global carry trade, revolving around the low cost of borrowing in yen (at interest rates barely above zero), is coming unwound in response to the global credit crisis.
The money wheel is spinning in reverse, as the rise in the low-yielding yen is accompanied by sudden falls in various regional high-yielding currencies: the New Zealand dollar, the Australian dollar and, to a lesser degree, the Korean won.“The flushing out of [the] carry trade has been dramatic for the past two days, particularly today,” said Irene Cheung, a Singapore-based currency strategist at ABN Amro. “We’ll have to see fluctuations, a quick breakdown before the market stabilizes. People are not going to come back so soon.”
From Forbes:The yen appreciated sharply Friday against the greenback as the unwinding of the carry trade accelerated. Other Asian currencies plunged, prompting intervention by a number of central banks across the region.
The Japanese currency was trading at 112.54 to the dollar at 2:50 p.m. in Tokyo, following a rise to 112.01 in New York overnight, putting it at its strongest in 14 months.
The Bank of Japan working in concert with the exporters and powerhouses of Japan, moved heaven and earth to weaken the yen yesterday. They shoved it down a tiny bit but as I predicted...with stunning accuracy (I have to boast, I am the only person on earth to foresee this correctly) the Chinese countermanded that move and forced the yen up again. I would like to say to everyone, trying to reinstate the 'carry trade' that is killing the US industrial base and putting us deep in debt is important and we should thank the Chinese for doing this!
Just WOW. Look at the numbers! The yen was at 112 to the dollar and this was bad news because the yen was STRENGTHENING. Today, the Japanese strain and struggle to get the yen to be 110 to the dollar. They hate this. They need to flood the US with Japanese manufactured goods! So they will make it at least 120 to the dollar and then settle back to let that money roll into Tokyo. This, of course, will destroy the US. After I posted this story last summer, the yen continued to rapidly climb until it reached 96 to the dollar. Since then, Japan has been increasingly cooperative with China and the G7 no longer can yell at China about currency values since Japan is silent. Last summer, before August, Japan openly sneered at China because the G7 attacked only China for 'currency manipulations.'
My last story that long day: China Sly Winner In Market Turmoil
I have to go to bed! But so much is happening. Looks like the clever Chinese dragon poked his head in the door at Wall Street and he remarked that he would just LOOOVE to buy Bear Stearns. This is why BS rose suddenly today, dragging the down market up! The Bank of Japan had to suddenly infuse their market system with yen and they are steamed at the rising value of the yen. The world is swiftly changing and our rich idiots who made all this possible just can't wait to sell us up the Yangzte River. Swing low, sweet chariot! Coming to take me home!From Market Watch:*snip*Banks and brokers rebounded strongly from earlier losses on Thursday. Bear Stearns led the recovery, surging 13% after an analyst said the company may sell a big stake to Chinese banks.
Shares of both Countrywide Financial and E-Trade Financial fell more than 20% earlier in the day as investors grew increasingly nervous about the firms' ability to keep operating in the face of tough conditions in the mortgage markets. Still, those stocks also rebounded strongly, ending with losses of 11% and 2.6%, respectively.Bear Stearns (BSC:116.44, +13.29, +12.9%) shares ended up $13.29 at $116.44 after hitting a low of $101.23 earlier on Thursday. The bank has been talking with potential investors, including Chinese banks about new funding, such as selling as much as a 20% stake in the company, analyst Richard Bove of Punk Ziegel & Co. said in a report. Bove said Bear may be seeking a convertible debt investment.
Congratulations to the Chinese for pulling off yet another big coup if this news is true. And stocks rose out of a pure panic because the bank of China offered help to ALL of the top 5 biggies? Let's start placing bets for when these organizations which control our Treasury and our Federal Reserve, end up speaking Mandarin and talk about a Manchurian Candidate! HAHAHA. My god. Just finish the sell-out you guys. Let's forget talk about Canada and Mexico merging with us, we are going to merge with China! Ha! Someone better alert the Japanese. Maybe we can split the nation in two?
The US hoped to palm off Bear Strearns to the Chinese. Then, the Saudis. Both parties are now totally fed up with this game. They are picking up commodity production points and systems instead. So all our financial houses are now going to follow Bear Stearns off the old cliff. Now that we have covered last year's news, time to go to this weekend's news:
Analysts expecting large loss from Lehman: report
(Reuters) - Some analysts are girding for a third-quarter loss of $1.8 billion or more from U.S. investment bank Lehman Brothers Holdings Inc (LEH.N: Quote, Profile, Research, Stock Buzz), instead of the modest profit they had previously expected, the Wall Street Journal reported on Sunday.If losses keep piling up, Lehman could need to raise additional capital beyond the $6 billion it got in June, the paper said.
Lehman is considering pre-announcing its earnings this month, the paper said, citing a person familiar with the matter. The end of Lehman's fiscal third quarter is less than two weeks away, and the bank typically announces its third-quarter earnings in mid-September.
In my China/Bears Stearns story last August, note that the stocks of that dead organization was well over $100 a share. So was Lehman Brothers. Now, even Goldman Sachs is in trouble. This, after all the efforts to pump up shares, jimmy the markets and manipulate the currencies. The main focus is on restarting the Japanese carry trade. Then, all will seemingly be well....for the hucksters and shylocks screwing up our economy.
Lehman Brothers has an awesome level of exposure to the interest rate derivatives markets. Since the Beast is now moving about, eating wealth, Lehman will be devoured by it. The $6 billion the OPEC Arabs granted this organization has been eaten by the Derivatives Beast. The Arabs charged a lot more than 2% interest on this money. It was basically a LOAN. And this is the point: in the past, Lehman could trot off to Tokyo and get nifty, cheap loans. Now, they can't. I didn't expect Bears Stearns to last the year last August and I can say pretty securely, neither will Lehman Brothers.
U.S. likely to recapitalize Fannie, Freddie
(Reuters) - The U.S. Treasury is growing increasingly likely to recapitalize Fannie Mae and Freddie Mac in the months ahead on the taxpayer's dime, Barron's reported in its August 18 edition.The weekly financial newspaper said that such a move could wipe out existing holders of the agencies' common stock, with preferred shareholders and even holders of the two entities' $19 billion of subordinated debt also suffering losses.
An insider in the Bush administration told Barron's that Fannie and Freddie "are being jawboned" by the Treasury Department and their new regulator, the Federal Housing Finance Agency (FHFA), to raise more equity.
But government officials don't expect the agencies to succeed, Barron's reported.
*snip*
The report called an equity injection by the government a quasi-nationalization -- without having to put the agencies' liabilities on the U.S. balance sheet, and thus doubling the U.S. debt.After accounting for deferred tax assets and generous asset marks, Fannie and Freddie each may have a negative $50 billion in asset value, and little prospect of digging themselves out of the hole, Barron's reported.
Fannie Mae and Freddie Mac have only three places to go to get more money: OPEC, Russia and China. Russia is in a very foul mood today. China will gladly save us if we give them some real estate. Such as Taiwan and shutting up about Tibet and human rights, etc. Yes, surrender. And to leave Iran alone so China can buy their oil. Yes, they will bail us out! This also means the Pentagon can't buy a host of very expensive F22 jets and other Cold War toys. Oh, and we have to learn Mandarin so we can communicate better.
The Chinese told me long, long ago, their plan was to have us be obligated to them. They would then have us quietly disarm and surrender. 'I be bank,' announced a top official in Shanghai. Yes, they were most charming, years ago. Not like today where they know how to please us and keep us thinking they had no plans to 'Be bank.' Nope. And no mention of the 50 year plan. Which, I assure everyone, is running far ahead of schedule.
China mulls first offshore currency market
Buoyed by the growing influence of the Chinese economy and strength of the Yuan, the government is set to establish an offshore currency market with Hong Kong and Shanghai in the race with Tianjin, the front-runner as a possible location.The Chinese currency, Yuan, though still not fully convertible, will be traded among foreign companies and institutions as well as domestic players, who will be guaranteed tax benefits.
Though Chinese policymakers have not yet decided on the location of the offshore currency market, Tianjin, a booming northern port city is reportedly the top choice.
But given its advanced financial infrastructure, Shanghai could be the ultimate winner, China Daily reported.
Somehow, I don't find it at all surprising that Shanghai will 'Be Bank.' None whatsoever. I thought China would do this in about 5 years. But thanks to US military stupidity and wild lending under the Greenspan 1% regime, we destroyed our credit much faster than even I, a pessimist, expected.
Comments