Cool!! Youll be happy you did. Dow up $200.00 now by end of day up ??$100.00,or lower....   

I never heard that before "a dead cat bounce" great call.

The derivative issue goes mainstream. The banking system dies now.



[link to www.marketwatch.com]

PAUL B. FARRELL
Derivatives the new 'ticking bomb'

Buffett and Gross warn: $516 trillion bubble is a disaster waiting to happen

By Paul B. Farrell, MarketWatch
Last update: 7:31 p.m. EDT March 10, 2008
ARROYO GRANDE, Calif. (MarketWatch) --


"Charlie and I believe Berkshire should be a fortress of financial strength" wrote Warren Buffet. That was five years before the subprime-credit meltdown.

"We try to be alert to any sort of mega-catastrophe risk, and that posture may make us unduly appreciative about the burgeoning quantities of long-term derivatives contracts and the massive amount of uncollateralized receivables that are growing alongside. In our view, however, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal."

That warning was in Buffett's 2002 letter to Berkshire shareholders. He saw a future that many others chose to ignore. The Iraq war build-up was at a fever-pitch. The imagery of WMDs and a mushroom cloud fresh in his mind.
Also fresh on Buffett's mind: His acquisition of General Re four years earlier, about the time the Long-Term Capital Management hedge fund almost killed the global monetary system. How? This is crucial: LTCM nearly killed the system with a relatively small $5 billion trading loss. Peanuts compared with the hundreds of billions of dollars of subprime-credit write-offs now making Wall Street's big shots look like amateurs.
Buffett tried to sell off Gen Re's derivatives group. No buyers. Unwinding it was costly, but led to his warning that derivatives are a "financial weapon of mass destruction." That was 2002.
Derivatives bubble explodes five times bigger in five year.

Wall Street didn't listen to Buffett. Derivatives grew into a massive bubble, from about $100 trillion to $516 trillion by 2007. The new derivatives bubble was fueled by five key economic and political trends:

1.
Sarbanes-Oxley increased corporate disclosures and government oversight
2.
Federal Reserve's cheap money policies created the subprime-housing boom
3.
War budgets burdened the U.S. Treasury and future entitlements programs
4.
Trade deficits with China and others destroyed the value of the U.S. dollar
5.
Oil and commodity rich nations demanding equity payments rather than debt

In short, despite Buffett's clear warnings, a massive new derivatives bubble is driving the domestic and global economies, a bubble that continues growing today parallel with the subprime-credit meltdown triggering a bear-recession.

Data on the five-fold growth of derivatives to $516 trillion in five years comes from the most recent survey by the Bank of International Settlements, the world's clearinghouse for central banks in Basel, Switzerland. The BIS is like the cashier's window at a racetrack or casino, where you'd place a bet or cash in chips, except on a massive scale: BIS is where the U.S. settles trade imbalances with Saudi Arabia for all that oil we guzzle and gives China IOUs for the tainted drugs and lead-based toys we buy.
To grasp how significant this five-fold bubble increase is, let's put that $516 trillion in the context of some other domestic and international monetary data:

*
U.S. annual gross domestic product is about $15 trillion
*
U.S. money supply is also about $15 trillion
*
Current proposed U.S. federal budget is $3 trillion
*
U.S. government's maximum legal debt is $9 trillion
*
U.S. mutual fund companies manage about $12 trillion
*
World's GDPs for all nations is approximately $50 trillion
*
Unfunded Social Security and Medicare benefits $50 trillion to $65 trillion
*
Total value of the world's real estate is estimated at about $75 trillion
*
Total value of world's stock and bond markets is more than $100 trillion
*
BIS valuation of world's derivatives back in 2002 was about $100 trillion
*
BIS 2007 valuation of the world's derivatives is now a whopping $516 trillion

Moreover, the folks at BIS tell me their estimate of $516 trillion only includes "transactions in which a major private dealer (bank) is involved on at least one side of the transaction," but doesn't include private deals between two "non-reporting entities." They did, however, add that their reporting central banks estimate that the coverage of the survey is around 95% on average.
Also, keep in mind that while the $516 trillion "notional" value (maximum in case of a meltdown) of the deals is a good measure of the market's size, the 2007 BIS study notes that the $11 trillion "gross market values provides a more accurate measure of the scale of financial risk transfer taking place in derivatives markets."

Bubbles, domino effects and the 'bad 2%'
However, while that may be true as far as the parties to an individual deal, there are broader risks to the world's economies. Remember back in 1998 when LTCM's little $5 billion loss nearly brought down the world's banking system. That "domino effect" is now repeating many times over, straining the world's monetary, economic and political system as the subprime housing mess metastasizes, taking the U.S. stock market and the world economy down with it.
This cascading "domino effect" was brilliantly described in "The $300 Trillion Time Bomb: If Buffett can't figure out derivatives, can anybody?" published early last year in Portfolio magazine, a couple months before the subprime meltdown. Columnist Jesse Eisinger's $300 trillion figure came from an earlier study of the derivatives market as it was growing from $100 trillion to $516 trillion over five years. Eisinger concluded:

"There's nothing intrinsically scary about derivatives, except when the bad 2% blow up." Unfortunately, that "bad 2%" did blow up a few months afterwards, even as Bernanke and Paulson were assuring America that the subprime mess was "contained."

Bottom line: Little things leverage a heck of a big wallop. It only takes a little spark from a "bad 2% deal" to ignite this $516 trillion weapon of mass destruction. Think of this entire unregulated derivatives market like an unsecured, unpredictable nuclear bomb in a Pakistan stockpile. It's only a matter of time.

World's newest and biggest 'black market'

The fact is, derivatives have become the world's biggest "black market," exceeding the illicit traffic in stuff like arms, drugs, alcohol, gambling, cigarettes, stolen art and pirated movies. Why? Because like all black markets, derivatives are a perfect way of getting rich while avoiding taxes and government regulations. And in today's slowdown, plus a volatile global market, Wall Street knows derivatives remain a lucrative business.

Recently Pimco's bond fund king Bill Gross said "What we are witnessing is essentially the breakdown of our modern-day banking system, a complex of leveraged lending so hard to understand that Federal Reserve Chairman Ben Bernanke required a face-to-face refresher course from hedge fund managers in mid-August." In short, not only Warren Buffett, but Bond King Bill Gross, our Fed Chairman Ben Bernanke, the Treasury Secretary Henry Paulson and the rest of America's leaders can't "figure out" the world's $516 trillion derivatives.

Why? Gross says we are creating a new "shadow banking system." Derivatives are now not just risk management tools. As Gross and others see it, the real problem is that derivatives are now a new way of creating money outside the normal central bank liquidity rules. How? Because they're private contracts between two companies or institutions.

BIS is primarily a records-keeper, a toothless tiger that merely collects data giving a legitimacy and false sense of security to this chaotic "shadow banking system" that has become the world's biggest "black market."

That's crucial, folks. Why? Because central banks require reserves like stock brokers require margins, something backing up the transaction. Derivatives don't. They're not "real money." They're paper promises closer to "Monopoly" money than real U.S. dollars.
And it takes place outside normal business channels, out there in the "free market." That's the wonderful world of derivatives, and it's creating a massive bubble that could soon implode.

10th Worst Stock Market Crash:
Date Started: 6/17/1901
Date Ended: 11/9/1903
Total Days: 875
Starting DJIA: 57.33
Ending DJIA: 30.88
Total Loss: -46.1%

9th Worst Stock Market Crash:
Date Started: 11/21/1916
Date Ended: 12/19/1917
Total Days: 393
Starting DJIA: 110.15
Ending DJIA: 65.95
Total Loss: -40.1%

8th Worst Stock Market Crash:
Date Started: 9/12/1939
Date Ended: 4/28/1942
Total Days: 959
Starting DJIA: 155.92
Ending DJIA: 92.92
Total Loss: -40.4%

7th Worst Stock Market Crash:
Date Started: 1/11/1973
Date Ended: 12/06/1974
Total Days: 694
Starting DJIA: 1051.70
Ending DJIA: 577.60
Total Loss: -45.1%

6th Worst Stock Market Crash:
Date Started: 6/17/1901
Date Ended: 11/9/1903
Total Days: 875
Starting DJIA: 57.33
Ending DJIA: 30.88
Total Loss: -46.1%

5th Worst Stock Market Crash:
Date Started: 11/3/1919
Date Ended: 8/24/1921
Total Days: 660
Starting DJIA: 119.62
Ending DJIA: 63.9
Total Loss: -46.6%

4th Worst Stock Market Crash :
Date Started: 9/3/1929
Date Ended: 11/13/1929
Total Days: 71
Starting DJIA: 381.17
Ending DJIA: 198.69
Total Loss: -47.9%

3rd Worst Stock Market Crash:
Date Started: 1/19/1906
Date Ended: 11/15/1907
Total Days: 665
Starting DJIA: 75.45
Ending DJIA: 38.83
Total Loss: -48.5%

2nd Worst Stock Market Crash:
Date Started: 3/10/1937
Date Ended: 3/31/1938
Total Days: 386
Starting DJIA: 194.40
Ending DJIA: 98.95
Total Loss: -49.1%

Worst Stock Market Crash Ever:
Date Started: 4/17/1930
Date Ended: 7/8/1932
Total Days: 813
Starting DJIA: 294.07
Ending DJIA: 41.22
Total Loss: -86.0%


From About.com - Dustin Woodard

I found this interesting, looks like we have not had the big fall yet. But if you look at the total picture the stock market always comes back.

They did not include the Market after 911 because it was a "special event" but we even came back from that.

We came out of the 1973-1974 crash it took us about 20 years but we came back. Some people did ok in the 80's but we did not come out of it really until the early 90's. It was not a Republican or Democrat that got us out of it.

We got ourselvess out of it by producing products,consuming the products and getting in debt by purchasing the products.

Yes the banks helped us by giving us credit cards and home loans that we can't afford. But we signed on for the debt now we have to pay the piper.

Yes stocks will go down but, in at least 2.5 years it will go back up again. Look at history!

It is not just the Fed that cures this, it is a lot of people we do not even know that will keep this country afloat. If you think the govenment can do a media black out on BF think about what they can do to control our economy without our knowledge.

I still say, "Get out of debt, pay off your house ASAP, and keep your job the best you can."

PAPER: Fed takes boldest action since the Depression to rescue mortgage industry...

Gold hits $1,000 record high...

Stock Futures Sink Ahead of Opening...

Retail Sales Plunge...

Oil Prices Set New Highs...

...Dollar Down

STOCK ROLLERCOASTER ON CASH FEAR...
BEAR STEARNS Bailed Out by Fed, JPMORGAN CHASE...
*Cash 'significantly deteriorated'...
PAPER: Wall Street fears big bank is in trouble...
President Bush expresses confidence in economy-boosting measures...
Dollar falls below Swiss franc...

Paulson Says He'll `Do What It Takes' to Calm Markets (Update4)

By Brendan Murray

March 16 (Bloomberg) -- Treasury Secretary Henry Paulson, defending the bailout of Bear Stearns Cos., said policy makers will do whatever is needed to prevent disruptions in financial markets from hurting the economy.

``The government is prepared to do what it takes to maintain the stability of our financial system,'' Paulson told the ``Fox News Sunday'' television program in Washington today. ``Our focus, our No. 1 priority, is the stability of our financial system.''

Paulson, 61, spoke two days after the Federal Reserve rescued Bear Stearns, the fifth-largest U.S. securities firm, with an emergency loan. The move failed to avert a crisis of confidence among Bear Stearns customers and shareholders, who drove the stock down a record 47 percent.

In three appearances today, the former chairman of Goldman Sachs Group Inc. several times said the Fed made ``the right decision'' and expressed ``great confidence'' in its chairman, Ben S. Bernanke. Paulson said that in the case of Bear Stearns, the risk to financial stability outweighed his concern about so- called moral hazard, in which investors come to expect government rescues.

``I'm as aware as anyone is of moral hazard,'' he said in a CNN interview. ``I'm also aware of the importance of keeping our economy strong, of orderly capital markets, of the stability of the financial system doing things that promote orderliness and minimize the disruption.''

Weekend Talks

Paulson said ``conversations are going on over the weekend'' about Bear Stearns. ``I'm very involved in those conversations.'' He declined to be specific about the future of the 85-year-old firm, the second-biggest underwriter of U.S. mortgage bonds, or to say whether any additional government steps are planned.

``There's always a decision to be made to say what's best for the stability of the marketplace, the orderliness of the marketplace,'' Paulson said. ``I think we made the right decision.''

The Treasury chief refused to say what a growing number of economists have concluded -- that the economy has entered a recession.

Economic Debate

``Economists are going to be debating that for months and months,'' he said. ``It's much less important what you call it than what you're doing about it.''

The Standard & Poor's 500 Index is down 12.3 percent this year, while the dollar is down 5 percent against a basket of currencies of major U.S. trading partners. Home foreclosures in January and February were up 58 percent from the first two months of 2007.

``I've got great confidence in our financial markets and our financial institutions,'' Paulson said. ``Our markets are resilient, are flexible. Our institutions -- our banks and investment banks -- are strong.''

Paulson repeated his support for a ``strong dollar,'' and said the long-term strength of the U.S. economy would be reflected in the country's currency.

President George W. Bush is scheduled to meet tomorrow with his Working Group on Financial Markets. Paulson chairs the group, which includes Bernanke and Securities and Exchange Commission Chairman Christopher Cox.

The Bush administration has resisted the use of government funds or guarantees to stem the surge in foreclosures. Paulson has brokered a series of voluntary accords among lenders to freeze interest rates on subprime loans and negotiated a one- month moratorium on foreclosures.

Plans in Congress

A credit crisis that began in August has left markets ``more fragile than we would like right now,'' Paulson said in a separate interview on ABC News's ``This Week'' program. ``My concern is to minimize the impact on the broader economy.''

Paulson said the administration doesn't support measures in Congress to help struggling homeowners.

House Financial Services Committee Chairman Barney Frank and Senate Banking Committee Chairman Christopher Dodd offered a plan last week to let the Federal Housing Administration insure refinanced mortgages after lenders reduce principal to help struggling borrowers.

The two lawmakers are leading congressional efforts to tackle the surge in foreclosures, which reached record levels in the fourth quarter of 2007. Their plan goes beyond the Bush administration's approach that relies on voluntary agreements between lenders and loan servicers to modify mortgages for borrowers who can't make their monthly payments.

Weighing Response

``I'm looking very carefully at any proposal, but all the ones I've seen call for much more government intervention, raise more problems, do more harm than do good,'' Paulson said in the ABC interview.

In an interview on CNN, Paulson said there's ``no silver bullet'' to prevent home prices from falling and foreclosures from rising.

Paulson last week proposed that U.S. regulators heighten their scrutiny of lenders, mortgage brokers and debt-rating firms to prevent a reoccurrence of the credit crisis roiling capital markets. Writedowns from subprime securities will probably rise to $285 billion, Standard & Poor's said in a report March 13.

Schumer Attacks

``This has become the Bush recession,'' Senator Charles Schumer, a New York Democrat, said on the Fox News program. ``The president's hands-off attitude is reminiscent of Herbert Hoover,'' who led the country from 1929 to 1933.

Bush yesterday said he won't be stampeded into ``bad policy decisions'' that might harm the economy.

``The market now is in the process of correcting itself, and delaying that correction would only prolong the problem,'' he said in his weekly radio address. ``I believe the government can take sensible, focused action to help responsible homeowners weather this rough patch.''

To contact the reporter on this story: Brendan Murray at brmurray@bloomberg.net

Last Updated: March 16, 2008 13:08 EDT

oh i didnt know oil was this close to going sky rocketing in a few years
http://www.ibtimes.com/articles/20080314/global-oil-shock-rattles-world-stock-markets.htm

Bear Stearns was digging its own grave but we have to pay or the funeral People at the top need to understand that sending the jobs abroad will bring the economic collapse into this country

I agree coyote.  When you look at all the factors, it looks like the Perfect Economic Disaster over the next 90 days.  

Futures down beware thurs coming.I predict market down from where it is today by Thursday?

Yes, the economy is toast. Look for opportunity wherevever you can to make some cash. For those of you who don't know the banks are taking the fed cut and putting it in their own pocket which basically is the once rich stealing from the poor. They take the money from the govt at the discounted rate and 2.25% and buy bonds and take the profit in the spread to make their books look better. That money was intended to help the consumer but it has not made it there and won't. Have you noticed rates for new loans have not dropped? It will backfire on the financial institutions because no money is circulating thanks to their effort of self preservation. Good luck all and do what you can. Waterboy, today was just a dead cat bounce. Which financial institution goes next?

Truckers on strike? It would be recession time....     

Truckers "going broke" and threatening to strike

 

Wednesday, March 19, 2008

 What started as a small, online grassroots effort now appears to have the potential for something bigger.

Dan Little, the owner/operator of a livestock hauling company in Carrollton, Mo., estimated Tuesday that at least 1,000 other truckers from across the United States have committed so far to joining him in a strike on April 1.

Although none of the truckers interviewed Tuesday at the Iowa 80 Truck Stop, Walcott, which is just off Interstate 80 west of Davenport, has heard of the intended strike, some said they would shut down, too.

Weldon Kinnison, a Virginia trucker who was hauling soft drink from Indiana to Denver, heard about the plans for a strike for the first time Tuesday while stopping at Walcott.

"I'm an owner/operator with the American Truckers Association," he said. "I'd park my truck for a week with the cattle haulers.

"The fuel is too high, and there's no reason for it. I don't listen to the CB (radio) that much, but I guess I’ll start now."

At issue is the rising cost of diesel fuel, which has reached or exceeded $4 per gallon in at least 17 states. But Little does not expect his strike to bring down the per-gallon price of gas, nor does he expect to have any effect on the oil companies.

"What I would personally like to see is our federal and state governments, until our economy recovers, suspend federal and state fuel taxes," the 49-year-old said. "The second thing I'd like to see is an oversight committee for truck insurance, which is part of what's taking us down.

"The average owner/operator is paying $600 to $800 a month for truck insurance. It’s based on personal credit, which means the monthly cost is going up for a lot of truckers because their credit is going down.

"Everything in the world is going up (in price), except for what we do. I lose money if I start my truck, and that truck is paid for -- free and clear."

Mike Hills, a driver from Wyoming, Iowa, said he also would shut down to support Little and the others -- if he could.

"I can't strike with them because I'm company," he said while at the Walcott truck stop. "If I owned the truck, I'd strike with them. As far as I'm concerned, the gas prices are driving the economy.

"It might be a good thing if the drivers strike. They can't make payments. Maybe if the oil companies bought all the trucks, things would change. Everything in this country is trucked.”

Hills then removed his wristwatch, using it to explain his point of view: "Every piece of this watch was trucked from somewhere. If you can't keep up with the trucks, we're all screwed -- not just this country, but the world."

Keith Deblieck, the owner of a trucking company out of Geneseo, Ill., said that, for many drivers, the time for a strike has come.

"They ought to strike," he said. "We all ought to. They lose money every day they go out."

But officials from the Owner-Operator Independent Drivers Association are encouraging truckers to find options to a strike. The trade group represents the interests of more than 160,000 small business trucking companies and drivers.

"If we told our operators to shut down, we'd be slapped with a lawsuit because of anti-trust," said association spokeswoman Norita Taylor, adding that a poor economic outlook and rising fuel prices are creating "a lot of emotions" among truckers.

"It's hurting these people who are living paycheck to paycheck," she said. “People are upset. What can we do?"

One thing the association is trying to do is talk to lawmakers and truckers about making sure that surcharges being charged to shippers are getting back to the people who paid for the gas. Surcharges are supposed to compensate for high fuel charges, but they must be negotiated with each shipper, and the truckers who pay at the pump aren't always first in line to receive the surcharges.

 Even when the surcharges do make it back to the driver, they are not enough.

"I turn down loads every day," Little said. "The loads aren't the problem -- never have been.

"It's the only thing I know how to do, driving a truck. But I sold my trailer the other day, and I’m not buying another one until something gets done.

"In no way, shape or form do truckers want to hurt this country. My whole deal on this thing is that I’m shutting down on April 1. Call it a strike, a shutdown or just flat-ass going broke."

Jim Johnston, president of Owner-Operator Independent Drivers Association, warned that a strike "is not the answer," saying, "Calling for a strike without the support of the majority would show weakness rather than strength, and the result would be increased economic hardship to the small percentage of truckers who do participate in the shutdown with no gains to justify their sacrifice."

Little said he has no other choice.

"Our federal government is subsidizing railroads, airlines, banks and farmers," he said. "“Meanwhile, we’re being taxed to death."
               

I posted about this very problem last month.  I wish I wasn't right. 

well i think they should shut down.  if the fed can help the big rich bankers out on wall street , then it should be able to help get the food delivered also.  They are throwing as much money as the bankers think they need, why not help everyone out.  P.S. I just read that people who let their houses go into foreclosure are going to end up with a free house since the banks are unable to prove they own it, and the judges won't let them forclose unless they are the origionators of the loan.

Wall Street May Be Facing 'Up to $460 Billion Credit Losses'...
HOARDING BY BANKS STOKES FEAR ON CRISIS...

Markets will turn down today I believe. Home prices continue to drop in California,and Oil continues to rise.

7laws wrote: I am hearing rumors that silver is becoming very difficult to find. Anyone else hear that?

Its going to be a tough week on the market. This week will be like the "TITANIC" sinking. Beware stay out of the termoil. Yea thats it GAS prices at the pump.Credit problems,housing market,and all the other wicked stuff. I dont want to forget NORTH/SOUTH KOREA SHOWDOWN?Keep prepping please. Save your families lives,and relatives,and friends. EMAIL anyone you know www.avianflutalk.com   This stuff isnt a "JOKE".

Treasury Secretary Henry Paulson today unveiled a 218-page blueprint for regulatory reform that would represent the largest federal overhaul since the Great Depression.

The blueprint, widely previewed before the secretary's remarks, would give the Federal Reserve more authority to oversee the markets and would create one superagency to oversee both investor protection and market stability, assuming many of the tasks of current agencies, such as the Securities and Exchange Commission and the Office of Thrift Supervision.(http://www.latimes.com/business/)

The Federal Reserve are independent, privately owned and locally controlled corporations. (if you dont already know then google it)

Today were going to see a rally because of commodity prices on the decline. Beware after profit taking they will go the other way. Want to get rich??? Long, buy commodities. Almost all of them will be back up BIG by friday!!!!!$$$$$$$$$ Long silver exspecially!!!!!