Karl Denninger: 70% probability of Dow dropping 2-3,000 within next few days/weeks
The Stark Choice Now Facing America
http://market-ticker.denninger.net/archives/623-The-Stark-Ch...
America, and Americans face a stark decision - and a choice that must be made now.
Not next month at the polls, not next week.
Today.
I have been writing on this subject, petitioning Congress, and both calling and faxing Congress - and you - for the last year and a half.
We now sit literally days away, with a high probability, of a credit market "dislocation" that will change American finance and decimate the stock market.
That is, worse - far worse - than what has happened thus far.
Try on for size 2-3,000 points down on the Dow from here. 25% more than has been lost thus far, more-or-less "all at once." The probability of this event is now in excess of 70% - within the next few days to two weeks.
The Politicians know this.
They were promised that the market would not blow up if they passed Paulson's and Bernanke's bill.
They were lied to, and the first "blowup" happened.
You, the people, were promised that passing this "stabilization" bill was the right thing to do too.
You were lied to.
Now we are sitting on the edge of the second blowup - "The Big One."
Among other things, today we learned that The Fed has lost control of the Effective Fed Funds Rate - their own overnight lending rate. They were forced to change their interest rate on reserves in order to try to get it back under control - and there is no reason to believe their efforts will be effective.
[Continued...]
http://market-ticker.denninger.net/archives/623-The-Stark-Ch...
and this is why I read
and this is why I read karl's blog daily.
Countdown to the 2009 Presidential Inauguration 89 Days, 02 Hour
Seems curious doesn't it?
"Lead, follow, or get out of the way."
-- Thomas Paine
A Republic, If You Can Keep It
The Dow is not the real problem
The Dow dropping 2000-3000 points is just a symptom. A bond market dislocation is the real problem, because it means that foreigners will stop financing American deficit spending.
Once that happens, there will be no way to fund federal programs like Medicare or Medicaid other than just printing the money. This wouldn't last long, because it would lead to massive inflation.
Like David Walker and the GAO warned many times, this sort of event is inevitable at current spending levels. The surprising part is that due to the recent insanity promoted by the Fed and the US Treasury, this dislocation may happen now, and not 10-20 years into the future.
Here's a prediction for you
The market is going to drop tomorrow morning like a stone. We're going to be hitting the panic button.
The market should hit a bottom sometime before 3pm, and then start to rise. It won't recover the losses of the morning, but it will end the day on the way up.
We will then have a nice Friday, and be up big next week. I know we'll get above 9,000, maybe even 10,000 by Halloween.
The reasons?
1) The Lehmen info will be digested, and people are certain to realize that they were overestimating the amount of pain to come from it. The Fed had 6 months to chew through Lehmen's books, and let them fail when they easily could have bailed them out.
2) A decent Friday will reassure the market and give people a weekend to be rational, and realize that with cheaper oil, the American economy will have almost a billion dollars more per day than this summer.
3) The Libor overnight rate will move a lot lower by Monday, and this will be a strong sign that the immediate credit crunch is over.
I'm not assuming that our problems are behind us, but the market has overreacted to the problem. Keep in mind that the downturn only started after Bush and Paulson started going on TV every night freaking everyone out.
What do you think about the war on drugs?
How about Operation Wall Street?
Shout it today!
http://www.youshouts.com/index.php
Your 2) is put to a test today. So far, not looking good, but
"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
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we'll see.
government of the people, by the people, for the people
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10AM EST, the Dow is up a little over 30. Float in the air stone
"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
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government of the people, by the people, for the people
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9:50AM EST, the Dow is down a little over 90.
"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
---
government of the people, by the people, for the people
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9:33AM EST, so far the Dow is up, so it's not dropping like a
"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
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stone, at this point.
government of the people, by the people, for the people
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"The out of control point of major planetary dislocation
is between 14 and 89 days from now." This is posted on www.jsmineset.com
today - please read all postings
Posted On: Wednesday, October 22, 2008, 1:07:00 PM EST
Insurance On Sale
Author: Jim Sinclair
Dear Friends,
Gold is a currency that you will see perform as the currency of choice. There is no doubt we are headed into a planetary Weimar experience to some degree.
Dollars are being created faster now than in any other period in history. The Fed and treasury are guaranteeing everything from money market funds to large corporate entities in one way or another.
The first valuation of worthless OTC derivatives via a public sale of these at .0875 to .02 cents shocked anyone with a brain. Now the downturn in business is hitting financial entities and shortly litigation will smoke whatever is left.
The FDIC is already yelling for additional and significant funding from congress as their capital contracts on every Friday’s bailout.
People expect things to return to normal in 2010. That is a fairy tale.
The Fed has only started creating money for bailouts. You saw what happened when they stepped away from Lehman. If you say you didn't look out the window.
All these bailouts and Federal guarantees on credit items constitute a white wash on a falling economic structure going out of control and soon.
The out of control point of major planetary dislocation is between 14 and 89 days from now.
INSURANCE ON SALE
Gold is the only viable insurance. The US dollar is not viable
Lysa, Let me know if Sinclair starts to warn about DEFLATION.
"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
---
government of the people, by the people, for the people
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Sinclair skips a BIG piece of the picture
He's right when he claims that "Dollars are being created faster now than in any other period in history."
What he's neglecting to tell you, probably intentionally, is "Dollars are being destroyed faster now than in any other period in history".
The "worthless" OTC derivatives in question are only worthless because the market is so uncertain, that no one wants to be the first to buy.
To assume that debt based derivatives are worthless is to assume that homes in the US are worthless. They are backed by the desire of people in the US to own homes.
Sinclair is really getting desperate to explain why gold is falling, but the reason is the dollar is rising.
What do you think about the war on drugs?
How about Operation Wall Street?
Shout it today!
http://www.youshouts.com/index.php
How are dollars being
How are dollars being destroyed? Derivatives are not dollars, they are derivatives. An investment asset that is priced in terms of USD.
What if these derivatives were priced in gold? Would that mean when someone loses value in their derivatives investment that gold is destroyed? Of course not.
The people who sold the derivatives still have the dollars that were paid for the investment. Even if the derivatives go all the way down to zero, the $$$ paid for them is still in someone's pocket.
I will sell you 100% of the stock in my company for a billion dollars. Then tomorrow I will ruin it, burn it down to being worth zero. Was the money destroyed? Nope. Poor sucker lost his money in a bad investment, but the guy who sold his stock in time made out like a bandit.
...
I didn't explain what I was saying fully
No, the value of derivatives has nothing to do with the dollar's destruction. Commodity price increase or decrease does not have any effect on the amount of dollars in circulation.
What is causing the dollar destruction is one of the results of the devaluations of the mortgage market, the reduction in size of a bank's balance sheet...it's called a write down. A write down is a bank saying today, "We have 250 billion dollars in assets" and tomorrow saying "We have 230 billion dollars in assets".
While it may seem like only a loss on paper...that's where most of the money in this country is...on a bank's balance sheet.
Destruction of money from a bank's balance sheet is as palpable in our economy as actually burning hundred dollar bills.
We've basically burned 500 billion dollars in currency since this time last year, and we're expected to burn about 2 trillion more before this crisis has passed us.
What do you think about the war on drugs?
How about Operation Wall Street?
Shout it today!
http://www.youshouts.com/index.php
You should read all his postings today
they are quite serious and he talks about the US$ not being viable. I never get the sense that he is desperate - I do get that sense that our great country is desperate.
Not being viable?
He's been talking about the dollar's imminent destruction since I've started reading his stuff, and the dollar has only strengthened against almost everything since.
What do you think about the war on drugs?
How about Operation Wall Street?
Shout it today!
http://www.youshouts.com/index.php
I'm not sure if this
I'm not sure if this explains it, but I've read that what we are seeing is people around the world running to the USD for "safety" because it is perceived/believed to be a less risky currency than most others around the world.
...
LOL
Is that like all of the countries that were bailing out of the dollar earlier this year for fear of hyperinflation?
That's not true, while it is true that the status of the dollar has increased, it's the effect of a stronger dollar, not the cause of the stronger dollar in the first place.
People started to panic in late September. The dollar was on a tear long before that happened.
What do you think about the war on drugs?
How about Operation Wall Street?
Shout it today!
http://www.youshouts.com/index.php
Not being viable?
He's been talking about the dollar's imminent destruction since I've started reading his stuff, and the dollar has only strengthened against almost everything since.
What do you think about the war on drugs?
How about Operation Wall Street?
Shout it today!
http://www.youshouts.com/index.php
Shocking, but entirely
Shocking, but entirely possible. I heard a bottom of 7200, but people are positioned to sell at certain numbers and this could set off a chain reaction. If you're not in the stock market, this still affects you. People will be flipping out and hoarding food.
Who cares?
I, and most sane people, left the stock market a long time ago.
_________________
Want Ron Paul? Register Republican Now
News for you ...
The stock market already crashed. Down 20% in October alone.
Stop Crying "Wolf"
I am tired of the " The Stock Market is Going to Crash on [insert date or time frame here]" predictions on here. For the past month and a half, I have a new thread every day claiming that the stock market was going to crash "in the next few days". Anyone else remember that stock market was supposed to crash on October 7th? Or that the derivatives market was going to crash on October 21st? The predictions also said we were supposed to have had several bank holidays by now.
I swear people keep making up predictions just in case the market actually DOES crash so they can say "I told you so!"
Now I'm not trying to claim all is well with our economy and I fully believe that there will be an economic depression sometime in my lifetime, but the predictions I described above are damaging. The longer we scream about how "the market is going to crash tomorrow", the less people will take our warnings seriously. And it's not only damaging to our movement, but it's damaging to our psyche. Constantly trying to pinpoint when the market will crash is stressful and depressing. Personally, I had to take a few days break from the Daily Paul because being bombarded with bad news was just too much. After a few days of clarity, I realize how silly it was getting worked up over these predictions based on NOTHING.
actually, this guys has been
actually, this guys has been almost dead on about everything so far and usually tends to be more cautious with time frames than others.
He originally said this whole process would take years, but reality has proved him wrong. SO he changed his opinion to reflect.
I have been thinking 5800 by
I have been thinking 5800 by april.. but this would not surprise me... I'm ready for it! the sooner the slate is wiped clean the sooner we can get the rats out of DC and start over!
"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson
I am more concerned about the return of my money than the return on my money. --Mark Twain
“A prudent man foreseeth the evil, and hideth himself: but the simple pass on, and are punished.” (Prov. 22:3; 27:12 KJV)
Hey McCain-----┌П┐(◣_◢)┌П┐
do you realize how many people will be starving and cold this
winter if that happens ? I hope it comes back up for a while.
~Mikael / Peace, love, Light and unity ~
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Stop the NWO....It's just illumi..Naughty !
how are the two related?
ps its not that cold in april. plus we have already dropped something like 6000 in the last year.
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if you build it he will come..........Ron Paul 2012.
digg http://digg.com/autos/First_Genuine_Chevy_Volt_to_be_Complet...
April ? it's october man !
~Mikael / Peace, love, Light and unity ~
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Stop the NWO....It's just illumi..Naughty !
bump for my brother Tim
bump for my brother
Tim
GOLD
http://www.rxforliberty.com/10/
Cedar Park, Texas
5 Aug 2007
Tim GOLD
Tim
GOLD
http://www.rxforliberty.com/10/
Cedar Park, Texas
5 Aug 2007
Sounds pretty intense
Sounds pretty intense... Almost unrealistic. But with the way the markets have been on a roller coaster lately, and factoring in the long term damage done since 1913, I wouldn't be surprised one bit if the markets swing down this quickly.
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