Posted on 02/16/2009 7:47:40 PM PST by dangermouse
8:17 CT
I do not know what is going on here, and I don't think I want to.
Someone, apparently someone in Asia, wants dollars. A LOT of dollars. There is a forced-liquidation event underway that is massive, it is against all asset classes and it is spreading.
It originated at approximately 7:15 CT this evening and originated out of Asia somewhere. All of the primary currency crosses got hit at once - Euro, Pound, Yen - all weakened dramatically against the dollar and it is still going on. The Asian stock markets got walloped at the same time in coordinated waves of forced selling.
At the same time the US futures markets got nailed as well, down some six handles on the /ES in a near-vertical drop. While this sounds "not that big" to move these markets in a coordinated fashion like this is a trillion-dollar enterprise - this is not some small company that went bankrupt, or even a large company.
There is no news coverage at the present time identifying the source of this but it is not small and contrary to some reports it is not "automatic selling"; this is forced liquidation.
Folks, if this translates into Eastern Europe where there are severe instabilities already brewing literally everything in the financial world could come apart "all at once."
The worse news is that if this happens Bernanke will have killed us (in the US) by extending those swap lines all over the planet during the last six months. These will become utterly uncollectable and they are massive, in the many hundreds of billions of dollars.
To those who are reading this, I hope if you're in the markets you are prepared for extreme levels of violence. You must expect that the authorities will try to arrest the destruction if they are able, but you must also be prepared for the possibility that we have reached a "critical mass" point beyond which "duck and cover" is the only winning strategy.
Unfortunately.
I hope I'm wrong; this is going to be a long night.
Europe on the brink of currency crisis meltdown
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/3260052/Europe-on-the-brink-of-currency-crisis-meltdown.html
October 26, 2008
“Experts fear the mayhem may soon trigger a chain reaction within the eurozone itself. The risk is a surge in capital flight from Austria – the country, as it happens, that set off the global banking collapse of May 1931 when Credit-Anstalt went down – and from a string of Club Med countries that rely on foreign funding to cover huge current account deficits.
The latest data from the Bank for International Settlements shows that Western European banks hold almost all the exposure to the emerging market bubble, now busting with spectacular effect.
They account for three-quarters of the total $4.7 trillion £2.96 trillion) in cross-border bank loans to Eastern Europe, Latin America and emerging Asia extended during the global credit boom – a sum that vastly exceeds the scale of both the US sub-prime and Alt-A debacles.”
I think one of the Dave’s name was NVDave, wasn’t it?
Good to see you drop by...I am thinking about moving my small change from Mutual funds in stocks to one holding Treasuries....
January 20, 2009
France turns to US investors for bail-outs
http://www.freerepublic.com/focus/f-news/2168435/posts
“A French state-controlled agency is looking to US investors for the first time to help raise several billion dollars of bail-out funding for the country’s banks.
Société de Financement de l’Economie Française (SFEF) – the French agency created to raise funding in the bond markets using a government guarantee for its banks – said selling dollar-denominated bonds would help diversify its investor base.
It is the first time France has sold government guaranteed bonds in dollars and highlights moves by European banks and agencies to diversify funding sources, ahead of a tidal wave of issuance that could weigh on the market.”
So Bush didn't cause the world's problems....
Thanks for the info :)
Thank you! Finally it makes sense. Scary if you ask me.
Looks like our Austrian Guberner's homeland ain't doin any bedder than he is!!! CA's biggest mistake in history... Arnold Schwartzenstupid!!!
We are definitely a problem, but we are NOT the ONLY problem.
PhiKapMom; please ping me when you reply.
Thx.
Thanks for the ping. I don’t understand this, but it looks like economic warfare using the US dollar to crush the economies of other countries. I wonder if there is a pattern in the entities that are buying US dollars.
American In Tokyo;
Ping.
Hey, are you cashing in the dollars?
Euro's getting pasted because the crap they've been hiding in their banks is about to be exposed, as well as the distinct possibility of various EMU members (round up the usual suspects, Spain, Portugal, Greece, Ireland, Italy, and might as well throw in Latvia and Lithuania too) having to default on their sovereign debt.
If there was EVER a time to be short the EUR/USD pair (that's ''sell the Euro'', for those in Rio Linda), it is now.
Full disclosure: been short, one way or another, since 1 January. Looking to get shorter tomorrow in the US session.
Good trading to you, Southack, and FReegards!
Forced liquidation, “six handles”, ES, swap line. Thanks for the help!
Works for me! Nice to have a sense of humor in all of this because in the middle of the night not much else you can do.
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