Archive for January, 2008

Financial Tsunami, Titanic Shift

Thursday, January 31st, 2008

A further continuation of analysis by F. William Engdahl:

The worst financial crisis in US history is just now appearing in its real dimension. It spells the end of New York�s reign as the globally dominant financial power, the heart of the power of the American Century. It is a shift whose true significance has not yet been appreciated. It soon will be. Let Shadowtraders help you find a new solution to your income problem.

Tapeworm Economics

Thursday, January 31st, 2008

If you’ve ever cared to know just how a real racket starts, this will tell you everything.
I was facing the futility of trying to craft investment solutions without some basic consensus about the economic tapeworm that is killing us and all living things � while we blindly feed the worm. In a world of economic warfare, we have to see the strategy behind each play in the game. We have to see the economic tapeworm and how it works parasitically in our lives. A tapeworm injects chemicals into a host that causes the host to crave what is good for the tapeworm. In America, we despair over our deterioration, but we crave the next injection of chemicals from the tapeworm.
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Just breathe!

Wednesday, January 30th, 2008

OK, we know you see a lot of “bad news” data on the markets. Some of these market insiders can stoop lower than a pygmy limbo dancer in order to reach their bonus levels. A lot of people, pension funds and institutions, who, thinking their financial assets are being defended by “Joe Broker”, are reaping the whirlwind sown by some corrupt and greedy companies. We want you to stay informed, not get all sweaty and paralyzed with fear! The data is here so you can be aware of what’s happening right now, and what’s coming up over the horizon.

Financial markets are like martial arts: One’s ability to have technique, flexibility, speed and anticipation all contribute to being able to win– and stay alive. The data we post is intended to give you an edge in anticipating the patterns of the game. Fully understanding the theory and practice of trading in the market requires regular study and drilling. This is where you will achieve the technique, flexibility, and speed. If you haven’t done so yet, take advantage of Shadowtraders self-paced courses and live seminars. Knowing the data cold and being able to execute in real time is the only way to achieve financial independence. Don’t wring your hands in despair. Get out there and do something about it!

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PMI and the credit crunch

Wednesday, January 30th, 2008

An excerpt from an article, The Great Credit Unwind of 2008, found here:

So, in practical terms, what does it mean if the bond insurers go under?
It means that the system will freeze and the stock market will crash. Listen to TV stock guru Jim Cramer summed it up last week in an interview with MSNBC’s Chris Matthews:

“But, Chris, there is something I would urge all the candidates to think about and our Treasury Secretary, which is that there are a group of insurance companies which insure all these bad mortgages and, Chris, I think they are all about to go belly-up, and that will cause the Dow Jones to decline 2,000 points. They’ve got to be shut down and the insurance given to a New Resolution Trust. This is going to happen in maybe two or three weeks, Chris, it’s going to be on the front of every newspaper and no one in Washington is even willing to admit it.” (more…)

An interest-free world?

Wednesday, January 30th, 2008

I read this article and was struck by this data:

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Compound interest has allowed a private global banking cartel to control most of the resources of the world. The debt trap was set in 1974, when OPEC was induced to trade its oil only in U.S. dollars. The price of oil then suddenly quadrupled, and countries with insufficient dollars for their oil needs had to borrow them. In 1980, international interest rates shot up to 20 percent. At 20 percent interest compounded annually, $100 doubles in under 4 years; and in 20 years, it becomes a breathtaking $3,834. The impact on Third World debtors was devastating. President Obasanjo of Nigeria complained in 2000:

“All that we had borrowed up to 1985 was around $5 billion, and we have paid about $16 billion; yet we are still being told that we owe about $28 billion. That $28 billion came about because of the injustice in the foreign creditors’ interest rates. If you ask me what is the worst thing in the world, I will say it is compound interest.”

[background: Islamic and Christian holy texts decry the practice of usury, in this context the charging of any interest, calling it immoral and destructive]. Islamic scholars have been seeking to devise a global banking system that would serve as an alternative to the interest-based scheme that is in control of the world economy, and Iran has led the way in devising that model. Iran was able to escape the debt trap that captured other developing countries because it had its own oil. Few Islamic banks existed before Iran became an Islamic Republic in 1979, but the concept is now spreading globally. With the fall of the Iron Curtain in 1989, the viable economic model that threatens the global dominance of the Western banking clique may no longer be Communism. It may be the specter of an Islamic banking system that would strip a private banking cartel of the compound interest scheme that is its most powerful economic weapon.
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Just for fun, I indulged the concept of a non-usury world. I’m not talking about any religious beliefs, changes, or enforcements– just a clean slate non-usury world. What would that be like? Let’s say your 30-year mortgage is at $600,000. Right now, in our usurious world, the monthly payment on that is around $4500. That also means that at the end of that 30 years you’d pay a total of nearly $1.8 million. Ouch! Now our non-usury payment, over the same 30 year period, would be $1666.67. If only a 15 year repayment period, $3333.34/mo. If only 10 years, $5000/mo. OK, we know administration isn’t free. Let’s round that up to $2000/mo for 30 years. $720,000 total paid out. The lender collects $120,000 for keeping up your paperwork for 30 years (720,000 – 600,000). $4000/year for admin fees is not bad when one considers how little effort is expended for one account. And that maintenance fee is not compounding on top of the existing balance. This also means you have $2500 per month extra cash. If you save that money for a year ($30,000) you have enough to buy a new car with no further encumbrances. Or help someone else in need. Or donate to charity. Boy, this gets better and better. This, of course, assumes that you have the willpower to actually save for a goal and not fritter it away on 1,000 Starbucks mochas in the ensuing 365 days.

Ah, another point: does your own income need to go up? If none of us are forced to deal with inflation created from the pyre of interest payments, then perhaps not. At least not so much. If you don’t want to acquire vastly more than you have, and your basic needs for life are in, you’re good to go. Remember, you’re saving $30,000 per year not sacrificing at the altar of usury. You can handle emergencies or unanticipated needs.

Before any closet economists write in to tell me how crazy this is, fine, I will admit it is hypothetical. In a globalized finance world, there would be obstacles to implementing such a system, especially with cheating and manipulation by those who aren’t so keen to help their fellow man. But, it is worth it to indulge in postulating a more ideal scene. I would encourage all of you to do the same, and to that degree, we will have a new agreed upon reality– one with less slavery to the almighty dollar, yen, pound or dinar.

Q4 2007 numbers

Wednesday, January 30th, 2008

GDP was announced this morning just 0.6 percent for the 4th quarter, 2007. Analysts had forecast 1.2% increase, so .6% is far lower than forecast. That makes 2007 the worst year since 2002. The housing market worsened and credit became harder to get for businesses, making consumers and businesses more cautious in their spending.

For 2007, the economy grew only 2.2%. This is the weakest GDP growth in five years.Last year, housing collapsed, with new home builders cutting prices on homes. For 2007, housing projects declined by 16.9%, the most in 25 years.

Consumer spending is critical to the GDP. In the 4th quarter, consumer spending was down to 2 percent. This was down from 2.8% in the 3rd quarter. For 2007, consumers’ spending increased 2.9 percent. This is the smallest rise since 2003.

While consumers stopped spending, businesses cut their inventories of goods. That narrowed the GDP by 1.25 percentage points from fourth-quarter GDP. Business equipment spending slowed to 3.8% in the 4th quarter, and for 2007, just 1.4%. This is the slowest movement since 2002.

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Exports, which had been keeping business market afloat while the housing market crashed, grew at 3.9%, down from 19.1% in the third quarter. For 2007, exports were up by 7.9%, the smallest growth in 2 years.

While GDP was downtrending, inflation was uptrending in the 4th quarter. Core prices (excluding food and energy) increased a rate of 2.7% in the 4th quarter, up from 2% in the third quarter. The Feds comfort level is 1-2%, so inflation is far beyond the Feds comfort zone.

If consumers and businesses continue to tighten their belts, the economy cannot recover and will go right into a recession.

FBI investigates 14 firms in subprime crackdown

Tuesday, January 29th, 2008

“It’s all fun and games till someone gets their eye poked out!”

The FBI is investigating the corporate cases in parallel with the Securities and Exchange Commission, which has opened about three dozen civil investigations into the subprime market collapse. Some of the probes overlap, an official said.

Targets of the SEC probe include Swiss bank UBS AG and U.S investment banks Morgan Stanley, Merrill Lynch, Bear Stearns, as well as bond insurer MBIA.

The SEC, which has formed an internal subprime mortgage task force, is looking at how financial firms priced mortgage-based securities and whether they should have told investors earlier about the declining value of those securities.

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Story continues here: http://news.yahoo.com/s/nm/20080129/ts_nm/subprime_crime_dc;_ylt=AqhOLaSenuN0SbsRnw0J8jKs0NUE

As goes Citicorp, so go the rest?

Tuesday, January 29th, 2008

Consider this: Citigroup Inc. has ended last year holding at least $18 billion in mortgage-backed junk which they have had to write off. Their share price has been halved in a year causing their shareholders billions in losses. From a venerable bank, they have been reduced to a tincup institution, selling parts of themselves at fire sale prices. All this, while recent legal discovery has increased their liability exposure to the Enron bankruptcy.

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For their management skills, the following awards have been visited on the Citigroup visionaries. Vikram Pandit, Cititgoup’s new CEO, after just six weeks on the job has been awarded a $26.7 million stock bonus and 3 million in stock options. This for a man who when he was appointed to run trading, investment banking and alternative investments at Citigroup in early October caused Deutsche Bank AG analysts to pronounce that “… to restructure the investment bank means that changes in the Office of the Chairman, which we feel are needed, are unlikely to be forthcoming.” Thus according to Deutsche Bank’s prescient assessment, Pandit’s appointment showed nothing more than that the past was prologue.

For his brilliance in 2007, CEO Charles “Chuck” Prince who was replaced by Pandit in December, was awarded $10.7 in stock in addition to a $13.2 million cash bonus. Wrecking franchises seems to be good work if you can get it.

Story continues here…

Societe Generale losses an inside job?

Tuesday, January 29th, 2008

(LPAC) — The final disintegration of the global monetary system was but a hair’s breadth away on January 21 and 22 of this year. Stock markets all around the world dropped precipitously on Monday the 21st, except for markets in the U.S., which were closed for the Martin Luther King holiday. Faced with the prospect of a bloodbath in the U.S. markets when they opened on Tuesday, the Federal Reserve made a pre-emptive emergency interest-rate cut of three-quarters of a point. This cut, undoubtedly combined with more covert market-supporting operations, stopped a meltdown of the stock market, but this apparent success came at the expense of accelerating a much larger problem, the hyperinflationary collapse of the U.S. dollar. (more…)

Wall Street Bonuses — Good to be King!

Tuesday, January 29th, 2008

Wall Street bonuses totaled $33.2 billion in 2007. This is down only 2 percent from 2006. These estimates were made by the New York state comptroller’s office.

In fact, there were 7 Wall Street firms that actually increased their compensation and benefits package to a total of $122 billion, an increase of 10 percent over 2006. This amazing increase comes at a time when their net combined revenue fell 6 percent. Subprime losses from these 7 firms combined were over $55 billion, taking away more than $200 billion from their shareholders.

Who are these 7 firms — Merrill Lynch, Citigroup, Bear Stearns, Morgan Stanley, J.P. Morgan Chase, Lehman Brothers and Goldman Sachs. Watch this…employee compensation equaled 47% of 2007 net revenue in 2007, compared with 40% in 2006. Bonus payments generally represent 60 to 80 percent of an employee’s take-home pay. The bonuses are based on a combination of performance by the employee, the section’s performance, and the entire institutional performance. Clearly the brokerages believed that their performance for 2007 deserved this massive compensation.

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