PANIC!

Elaine Meinel Supkis

Do that many people read this little news page? Suddenly, investors are very shy about handing their money to strangers. I wonder why. The stench of the dying three headed hell hounds evidently reached skunk levels. But hark! I hear Japanese workers overturning the dictatorship of the LDP in Japan! This, my friends, is why so many monetarists are screaming and dying like vampires at sunrise. And what if Asian workers cease eating inflation? And Saudi Arabia cannot pump more oil? And of course, you can't squeeze blood from subprime bankrupts. All that fine money created with the wave of a wand, gone! Poof. Magical. Dow is dropping to the cellar it seems and it isn't even October yet.

NEW YORK (MarketWatch) - Stocks plunged Thursday as anxiety about shaky credit markets and the troubled housing sector swept Wall Street, pushing the Dow Jones Industrial Average down nearly 400 points.

"We're seeing panic in the market today - you can almost cut the level of fear with a knife," said Al Goldman, chief market strategist at AG Edwards.

The Dow Jones industrials ($INDU :13,419.76, -365.31, -2.7% ) fell 395 points to 13,392, with 29 of its 30 components trading lower, just off the days' low of 13,462. The Dow was on track to post its biggest plunge since February.

"But there's nothing new. It's everything the market has been living with, and living beyond, for five months," said Goldman, who chalked up Thursday's slide to a "very normal and nasty pause to reflect" on the recent run-up, which drove the Dow up over 14,000. "

No new news? Are you kidding me or what? The news that China is now #3 in the world's economies, is news. And the fact that the Japanese workers are committing terrorist attacks against nuclear power stations in Japan as well as the worst terror of them all, they are going to vote the corrupt, evil LDP out of power at last: this is all very big news! Not that the average American sees this coming!

The key, all along, is the Bank of Japan and the government of Japan supressing human resource costs in order to have this fake depression whereby they could give Toyota and other high-value exporters super-cheap money so they could use a super-cheap yen to undercut coemptition---THIS IS ALL ENDING. As I predicted.

Japan cannot follow this course any longer. They are at a terminus point. Starving the Japanese workers to death isn't an option. Forcing them into labor similar to under Mao in China is unacceptable. Rebellion is in the air. The new government of Japan will, next month, put in new bank officers at the Bank of Japan and I suppose they won't tar and feather the fascists who ran it before but I would suggest this is a good idea.

In China, the Chinese government is pulling on the reins and they want to cut trade with the US and re-direct it to Africa and South America. On top of this, both Japan and China will now be using their vast FOREX reserves to buy up interesting stuff like working with Russian oil and Putin, just for example.

I will suggest that the status quo is breaking. And a new one is rising. And it isn't one that will feed us endless loans and hold yet another two trillion in trade dollars!

from Market Watch:

Oil-price increases over the past several years were comparable to those of 1970's but didn't derail the economy because the market has been able to adjust, St. Louis Fed president William Poole said Tuesday.

"Market adjustments have been the hero in preventing energy price increases over the past four years from disrupting economic growth," said Poole in a speech prepared for delivery in Wilmington, Del.
While the higher gas prices have put a strain on consumers, "there is not energy crisis and households and firms are adjusting in a sensible way to price increases," Poole said.

Poole estimated that actual spending on energy in 2006 was $150 billion higher than it otherwise would have been because of higher prices. This amounts to 1.6% of disposable personal income.
"From these numbers, I conclude that the impact of energy price increases on consumers has been far less than headlines would lead readers and TV viewers to believe," Poole said.

The 'Market adjustment hero' is code for 'cheap Chinese labor.' I'll explain to Mr. Poole how I 'adjusted' to all this high energy cost: I chop wood all winter long. I have a forest, fortunately, In the earlier oil crisis of 1974, I used to take a Victorian baby buggy into the parks in New York City and with a bow saw, cut up firewood which I burned in my Victorian fireplace. We also wore coats indoors. And this is happening again! Each oil crisis, people adapt by burning the furniture. But this oil crisis isn't just due to Bush's neo nazi wars, this is probably the beginning of It: the Hubbert Oil Peak.

The effects of It will be awful. Stocks will rise only if there is some human labor and human energy to be exploited. Japan just did this by reducing the lives of their workers to the barest minimum. Workers are now throwing themselves out of windows after murdering their children! I hope the stupid Emperor is happy with this. Banzai.

The same thing is happening here; they want to force all of us to eat inflation for corporate America. And this is unacceptable and this is why the financiers are in a panic. How can they make profits if workers once again are on the march? Hell, we could see bigger spasms like in 1790 or 1918.

From Bloomberg:

The euro's increase and rising oil prices are threatening to cool the German economy, which last year powered the 13-nation euro area's fastest economic expansion since 2000. Growth in the region's manufacturing and service industries slowed in July, and Italian business confidence fell to the lowest in 17 months.

``We've crossed the high point in growth and we'll now see a slight slowdown, but nothing dramatic,'' said Matthias Rubisch, an economist at Commerzbank AG in Frankfurt. ``The strong euro, energy prices and rising interest rates were negative influences.''

They all hope it will be slight. A little bump in the petro/chemical road. A slight adjustment with the workers doing all the adjusting. But the energy is flowing the other way: workers in Germany are getting somewhat annoyed. Imagine if they wanted to have children! The concept of having children is fading all over the place as the Great Powers forced workers to eat all the oil inflation.

From Euro Business:

THE HAGUE - A majority in Dutch parliament backs a return of so-called golden shares held by the government to protect strategic industries against foreign takeovers.

Although the Dutch parliament is in recess, a roundup by the ANP news agency of the most important parties showed a majority supports the idea of giving the Dutch government special golden shares.

The measure would give the holder veto rights in certain circumstances and can be used to protect a company from possible takeover.

Like the Japanese, the Dutch are worried about take overs. This might be a last gasp. The take overs are being overtaken by events: if the Chinese use a trillion $ to take over stuff, do they want everything? Or just a portion? I would suggest a portion. They want to have say, have control, without the headache of owning. The Japanese are bemused. They would love to control but if you lose control of your BASE you either get your head chopped off or you go into exile and fade away. As my ancestors said, 'Keep the peasants happy or they will make you very unhappy.'

From Bloomberg:

Deutsche Bank AG, JPMorgan Chase & Co. and six more banks are stuck with 5 billion pounds ($10 billion) of loans for Kohlberg Kravis Roberts & Co.'s purchase of Alliance Boots Plc.

The banks will keep the senior loans after failing to find investors to buy them, said four people with direct knowledge of the deal, who declined to be identified because the information is private. The banks will sell 1.75 billion pounds of junior ranking loans, after increasing the interest rate and using their underwriting fees to discount the price by as much as 5 percent.

I hope they enjoy eating shit. They made us eat it all the time and told us, it was good for us. This is another reason stocks are collapsing. These monsters hate eating shit so they tried to eat...their investors! HAHAHA. No way they can do this for more than a month. The assurances that the collapse of the hedge doggies many trachey CDOs would have zero effect is all a lie. HAHAHA. And more: all the investors were told that Bear Strearns would be paid FIRST in the collapse of their poorly built dog house and the investors would get the dog's left overs which is, ta-da: a bone!

Mother Hubbard would be proud.

Just to show you how insane our stupid Republican government is, look at this really asinine 'Nafta' report they filed this week!

Not a peep about imports! Not a peep about our trade deficits with both Mexico and Canada and how much of that is oil and gas related! Such levels of insanity makes me itch to get out a straight jacket and go visit the Treasury Department as well as Condi in her high heel super-power bitch boots. Are they guys looney? HAHAHA. Gads.

From Bloomberg:

Absolute Capital Group Ltd., an Australian hedge fund that invests in collateralized debt obligations, suspended withdrawals from two of its funds after forecasting losses amid a rout in U.S. subprime mortgages.

The firm froze its Yield Strategies Fund and Yield Strategies Fund NZD, which together have about A$200 million ($177 million) under management, Chief Investment Officer Bill Entwistle said in an interview today. The Sydney-based company is 50 percent owned by ABN Amro Holding NV's Australian unit

Absolute Capital, which says it doesn't invest in the riskiest portion of CDOs, is suffering from the widening impact of delinquencies on U.S. home loans to people with poor credit. Basis Capital Fund Management Ltd., another Australian hedge fund battered in the North American market, has hired Blackstone Group LP to negotiate with bankers to help it limit losses.

The howls of the dying dogs at the Gates of Death echo in the canyons of lower Manhattan and the portals to the Bank of Japan. It is all getting terribly unhinged. All the investors in these funds wanted to get super-rich without breaking a sweat! Now they are pissing in their pants.

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Comments

[bruceleh]

Due to the stress and volume today, there were many street-side and institutional system meltdowns today, especially in equities market data.

[Elaine Meinel Supkis]

As with all market crashes, I was on a roof all day advising a friend, how to rebuild a chimney. I am always up high when the market tanks.

And what happened to equities? Any data?

[cato]

First, we were assured that any problems were limited to sub prime tranches. Then the whole mortgage pool became suspect. CDOs under the microscope; asset-backed too.

While mortgage securities are in public view junk bonds and the funds that hold them are collapsing. Corporates! What do they have to do with mortgages? The funds themselves are stuffed to the gills with them. Even without this the increased carrying costs, widening spreads, the carry trade sputtering - they are the harbinger of financial seizure.

Freefall -

Aegis High Yield - AHYFX
AllianceBernstein High Yield Adv - AHYYX
AllianceBernstein High Yield I - AHHIX
Bear Stearns High Yield Index - BSIX
BlackRock Corporate High Yield Fund III - CYE
BlackRock Corporate High Yield Fund VI HYT
BlackRock Corporate High Yield Fund COY
BlackRock High Yield Trust BHY
Calamos High Yield A CHYDX
Calamos High Yield B CAHBX
Calamos High Yield C CCHYX
CSFB High Yield II Index CSHY
Dreyfus High Yield Strategies Fund DHF
Excelsior High Yield UMHYX
High Yield Income Fund HYI
Janus High-Yield JAHYX
JHancock High-Yield A JHHBX
LeggMason Partners High Income-A SHIAX
Lehman US Agg TR IX AGG
MFS High Yield Municipal Trust CMU
Morgan Stanley High Yield Fund Inc. MSY
Putnam High Yield Municipal Trust PYM
Summit High Yield Bond SAPHX
The High Yield Plus Fund HYP
Vanguard High Yield Corporate/29 VWEHX

[Elaine Meinel Supkis]

Wow..thanks for the list, Cato. I will try to research it a tad tonight if I can. So many things are crashing here.

[cato]

Elaine, It might be worth speculating on the next phase of this sell off. The public watches the equity markets, the Dow particularly, for an "all is well" barometer reading. Technical studies are worth considering at this juncture because it's fair to say that something has changed. The charts become useful at turning points.

Since the Fed is intent on keeping the printing press cranked up price inflation will almost certainly find its way into equity prices. Whether the fake liquidity is sufficient (and for how long) to offset the bearish forces let loose is unknown. Market observers like Marc Faber believe it's altogether possible that this - the only real tool left to the Fed could drive the Dow, for instance, to 100,000. At what point will you need a wheelbarrow to buy a wheelbarrow at Home Depot?

I doubt we see a free fall right here. The bankers will probably get the market stabilized in a few days for a sizzling rally. That move could be the one that forms the right shoulder of the broad "head and shoulders" top formation that’s already two-thirds complete. Then, a failure and a break through the neckline and it’s really over.

W.D. Gann said time was as important as price in tracking chart potentialities. Price or distance will square with time over the long run and significant pivot points frequently coincide with Gann or Fibonacci sequences. Today we are at the 53rd month since the January 2003 low on the Dow. September marks the 55th month since that low - a Fibonacci number.

[Elaine Meinel Supkis]

ONLY IF CHINA LETS US! And this is why I concentrate on Asian news so much: the battle of the Japanese Super Geisha Girl, Miz Japan versus Godzilla, the Chinese Dragon From Hell. They are in a death match and we are the mat.

[Elaine Meinel Supkis]

And markets never crash totally in summer, the nature of Wall Street is, in October, the cold winds suddenly veer and blow with terrific force through Manhattan which is built with the short ends of blocks facing north and south but the long sides face east and west: right into the wind.

This causes shivers and fear of winter and all the grasshoppers curl up and die while the ants build bigger gold reserves.

[cato]

Sounds like the title of a successful manga series for unemployed Wall Streeters. "Super Geisha Girl", "Miz Japan" versus Godzilla, the "Chinese Dragon from Hell".

I wonder if Asia gets a reprieve from this mess. Their saving grace may only be the fact that they are so resourceful. But so were we prior to 1929. They know and are close to much humbler beginnings, but so were we. Most of the population is engaged in agriculture, but so were we. They hoard gold and so did we.

Who is relatively better off in a depression will be about who controls the oil fields. This is the Hail Mary gambit. I read lots of analogies comparing the US to the Roman Empire or to England after WW1. I think we look more like Spain in the 17th century forced by indebtedness to retreat from the world.

[Elaine Meinel Supkis]

I often harken to the fall of the Spanish Empire. The 30 Years war ravaged Germany and the Netherlands. Germany took 200 years to heal and reunite while the Netherlands wiped Spain's power out nearly totally. Spain was very deep in debt due to war costs by 1700.

[JSmith]

"PANIC!"

Why? Is the sky falling? (Or was that a walnut?)